IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.5323, 5324, 5325 & 5326/M/2013 ASSESSMENT YEARS: 1990-91, 1991-92, 1992-93 & 1993- 94 SHRI BHUPENDRA C. DALAL, DALAL STREET, MUMBAI 400 023 PAN: AABPD 3308H VS. DCIT (OSD-II), CR-7, AAYAKAR BHAVAN, 4 TH FLOOR, 101 M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIPUL JOSHI, A.R. REVENUE BY : DR. P. DANIEL, D.R. DATE OF HEARING : 09.05.2019 DATE OF PRONOUNCEMENT : 24.05.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED FOUR APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 31.05.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 1990-91, 1 991-92, 1992-93 & 1993-94. 2. THE COMMON ISSUE RAISED BY THE ASSESSEE IN ALL T HE FOUR APPEALS IS AGAINST THE PART CONFIRMATION OF PENALTY BY LD. CIT(A) AS LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 3. WE SHALL TAKE UP FIRST THE ITA NO.5323/M/2013 A. Y. 1990- 91. ITA NO.5323/M/2013 & ORS. SHRI BHUPENDRA C. DALAL 2 ITA NO.5323/M/2013 A.Y. 1990-91 4. THE ASSESSEE ALSO RAISED THE ADDITIONAL GROUNDS OF APPEAL CHALLENGING THE JURISDICTIONAL ISSUE ON THE GROUND THAT NECESSARY CONDITION FOR INITIATING PENALTY PROCEEDINGS WERE N OT FULFILLED AND NO PROPER CHARGE WAS INTIMATED TO THE ASSESSEE. TH E ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCED AS UN DER: 2.1 IT IS SUBMITTED THAT IN THE FACTS AND THE C IRCUMSTANCES OF THE CASE, AND IN LAW, THE PENALTY LEVIED IS BAD AND ILLEGAL AS THE NECESS ARY CONDITIONS FOR INITIATING THE PENALTY PROCEEDING AND THE COMPLETION THEREOF WERE NOT FULFILLED. 2.2 WITHOUT PREJUDICE TO THE GENERALITY OF THE A BOVE GROUND AND MORE SPECIFICALLY, IT IS SUBMITTED THAT THE PENALTY ORDER IS BAD IN LA W, IN AS MUCH AS: (I) NO PROPER CHARGE WAS CONSIDERED, INTIMATE D AND / OR LEVIED DURING THE PENALTY PROCEEDING; AND / OR (II) THE ISSUANCE OF NOTICE U/S. 271 (1) (C) O F INCOME - TAX ACT, 1961 WAS NOT PROPER. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY THE ABOVE GROUND AT THE TIME OF HEARING. 5. THE LD. COUNSEL OF THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE IN THE ADDITI ONAL GROUNDS OF APPEAL ARE OF PARAMOUNT SIGNIFICANCE AND ARE ARI SING OUT OF THE ASSESSMENT RECORDS BEFORE THE AUTHORITIES BELOW AND GOES TO THE ROOT OF THE MATTER. THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT ISSUE RAISED IN THE ADDITIONAL GROUN D OF APPEAL DOES NOT REQUIRE ANY FURTHER VERIFICATION OF FACTS AND THEREFORE, THE SAME MAY KINDLY BE ADMITTED FOR ADJUDICATION AS THESE WERE NOT RAISED BEFORE THE LD. CIT(A). THE LD. A.R. REL IED ON A SERIES OF DECISIONS WHICH ARE AS UNDER: 1. NATIONAL THERMAL POWER CORPORATION VS. CIT (229 ITR 386 SC) 2. JUTE CORPORATION OF INDIA VS. CIT [187 ITR 688 (SC)] 3. AHMEDABAD ELECTRICITY CO. LTD. VS. CIT [199 ITR 351 (BOM.) (FB)] ITA NO.5323/M/2013 & ORS. SHRI BHUPENDRA C. DALAL 3 4. CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LT D. (2012) 349 ITR 336 (BOM.) 6. THE LD. D.R., ON THE OTHER HAND, OPPOSED THE ADM ISSION OF ADDITIONAL GROUND ON THE GROUND THAT SAME WERE NOT RAISED BEFORE THE LD. CIT(A) AND THEREFORE CAN NOT BE TAKE N UP AT THIS STAGE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE OBSERVE THA T THE ASSESSEE HAS RAISED LEGAL ISSUE IN THE ADDITIONAL G ROUNDS FILED WHICH ARE RAISING OUT OF THE FACTS AND ASSESSMENT R ECORD BEFORE THE AUTHORITIES BELOW AND DOES NOT REQUIRE ANY FURT HER VERIFICATION OF FACTS. WE ARE THEREFORE INCLINED T HE TO ADMIT THE SAME FOR ADJUDICATION BY FOLLOWING THE DECISION OF APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION VS. CIT (SUPRA), JUTE CORPORATION OF INDIA VS. CIT (SUPRA) AND ALSO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF AHMEDABAD ELECTRICITY CO. LTD. VS. CIT (SUPRA) AND CIT VS. PR UTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (SUPRA). 8. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT WAS F RAMED IN THIS CASE UNDER SECTION 254A READ WITH SECTION 143( 3) OF THE ACT VIDE ORDER DATED 31.12.2007 WHEREIN THE PENALTY WAS INITIATED FOR CONCEALMENT OF INCOME IN SOME CASES WHEREAS IN SOME CASES NO CHARGE HAS BEEN STATED BY THE AO IN THE ASSESSME NT ORDER. THEREAFTER, THE NOTICE WAS ISSUED UNDER SECTION 271 (1)(C) OF THE ACT DATED 30.01.2012 WHICH WAS SERVED UPON THE ASSE SSEE ON 17.02.2012. THE AO HAS NOT MENTIONED IN THE NOTICE AS STATED ABOVE WHETHER THE PENALTY PROCEEDINGS WERE INITIATE D FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE ITA NO.5323/M/2013 & ORS. SHRI BHUPENDRA C. DALAL 4 PARTICULARS OF INCOME AND THUS THE NOTICE HAS BEEN ISSUED IN A VERY MECHANICAL MANNER WITHOUT ANY APPLICATION OF M IND. FINALLY THE PENALTY WAS LEVIED FOR CONCEALMENT OF INCOME HOWEVER, IN PARA 6, THE AO HAS MENTIONED BOTH THE C HARGES I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. 9. THE LD. A.R. SUBMITTED THAT THE PENALTY PROCEEDI NGS AND THE CONSEQUENT PENALTY ORDER ARE BAD IN LAW AS THE ASSESSEE WAS NOT GIVEN OPPORTUNITY BY CONFRONTING WITH THE SPECIFIC CHARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVI ED AND THEREFORE THE PENALTY ORDER HAS TO BE QUASHED. THE LEARNED A.R. ALSO DREW OUR ATTENTION TO THE NOTICE ISSUED UNDER SECTION 271(1)(C) OF THE ACT WHICH IS FILED AT THE TIME OF HEARING WHICH THE AO HAS ISSUED WITHOUT STATING MENTIONING THE O NE OF THE TWO LIMBS OR SPECIFY THE ONE OF THE TWO LIMB ON WHI CH THE PENALTY IS IMPOSED WHICH SHOWS NON APPLICATION OF MIND BY THE AO. TO DEFEND HIS ARGUMENTS THE LEARNED A.R. RELIED ON SER IES OF DECISIONS:- A)CIT VS SSAS EMERALD MEADOWS(SC) (2016) 73 TAXMANN.COM 241 KARNATAKA SLP DISMISSED AS REPORT ED IN (2016) 73 TAXMANN.COM 248 (SC) B) CIT VS. MANJUNATH COTTON AND GINNING FACTORY (20 13) 359 ITR 565 (KAR.) C) CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) D) CIT VS. MRS. PIEDADE PERINCHERY ITXA NO.1310 OF 2014 ORDER DATED 10.01.2017 (BOM. HC) THE LD AR PRAYED THAT IN VIEW OF THE RATIO LAID D OWN BY THE HONBLE APEX COURT AND HON'BLE HIGH COURTS INCLUDIN G THE JURISDICTIONAL HIGH COURT THE PENALTY MAY BE DEL ETED ON ITA NO.5323/M/2013 & ORS. SHRI BHUPENDRA C. DALAL 5 ACCOUNT OF NON MENTIONING OF SPECIFIC CHARGE AND FO R NON APPLICATION OF MIND BY THE AO. 10. THE LEARNED D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF LD. CIT(A) BY SUBMITTING THAT THE PENALTY HAS BEEN RIGHTLY INITIATED AND IMPOSED BY THE AO. THE LD. D.R. SUBM ITTED THAT PENALTY WAS INITIATED FOR CONCEALMENT OF INCOME THO UGH CANDIDLY ADMITTED THAT IN SOME CASES NO CHARGE MENTIONED IN THE ASSESSMENT ORDER. THE LD. D.R. SUBMITTED THAT IT I S NOT NECESSARY TO MENTION THE SPECIFIC CHARGE IN THE PEN ALTY NOTICE AS ALL THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE HAS BEEN CONSIDERED DURING THE COURSE OF PENALTY PROCEEDINGS AND THEREFORE THE ADDITIONAL GROUND RAISED BY THE ASSES SEE CHALLENGING THE JURISDICTION OF THE AO TO LEVY PENA LTY MAY BE DISMISSED. 11. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT IN THE PRESENT CASE THE AO HAS ISSUED NOT ICE WITHOUT STATING THE SPECIFIC CHARGE ON WHICH THE PENALTY WA S PROPOSED TO BE LEVIED THEREBY DEPRIVING THE ASSESSEE TO RESPOND TO THE SPECIFIC CHARGE AND THUS THE PRINCIPLES OF NATURAL JUSTICE ARE VIOLATED. IN THIS CASE THE ASSESSEE HAS NOT GOT AN OPPORTUNITY TO REPLY AS TO ON WHICH LIMB THE PENALTY IS BEING IMPO SED THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION S AS REFERRED AND RELIED BY THE LD AR AND AS STATED ABOVE. IN TH E CASE OF CIT VS SSAS EMERALD MEADOWS(SUPRA) , THE HONBLE KARNATK A HIGH COURT HAS DISMISSED THE APPEAL OF THE REVENUE ON TH E GROUND THAT THERE ARISES NO SUBSTANTIAL QUESTION OF LAW OU T OF THE ORDER OF TRIBUNAL WHEREIN THE COORDINATE BENCH HAS HELD T HAT NOTICE ISSUED U/S 274 R.W.S. 271(1) OF THE ACT TO BE BAD IN LAW AS IT ITA NO.5323/M/2013 & ORS. SHRI BHUPENDRA C. DALAL 6 DID NOT SPECIFY THE LIMB OF SECTION 271(1) OF THE ACT ON WHICH PENALTY PROCEEDINGS HAD BEEN INITIATED WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY RELYING ON THE DECISION OF CIT VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA). THE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. SHRI SAMSON PERINCHERY (SUPRA) AND CIT VS. MRS. PIEDADE PERINCHERY (SUPRA) HAS HELD THAT FAILURE OF THE AO TO SPECIFY IN THE NOTICE WHETHER THE PENALTY IS INITIATED FOR INA CCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF INCOME IS FATAL AND REFLECTS NON APPLICATION OF MIND ON THE PART OF THE AO AND RENDERED THE PENALTY PROCEEDINGS AND CONSEQUENT ORD ER AS INVALID. WE, THEREFORE, OF THE CONSIDERED VIEW THA T THE ORDER OF PENALTY IS BAD IN LAW FOR THE REASONS AS DISCUSSED HEREINABOVE AND ACCORDINGLY DIRECT THE AO TO DELETE SAME BY SET TING ASIDE THE ORDER OF THE CIT(A). 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.5324/M/2013 FOR A.Y. 1991-92 13. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDE NTICAL TO THE ONE AS STATED ABOVE IN ITA NO.5323/M/2013 FOR A.Y. 1990-91. THEREFORE, OUR FINDING IN ITA NO.5323/M/2013 FOR A. Y. 1990-91, WOULD, MUTATIS MUTANDIS APPLY TO THIS APPEAL AS WE LL. ACCORDINGLY THIS APPEAL OF THE ASSESSEE IS ALLOWED. ITA NOS.5325 & 5326/M/2013 FOR A.Y. 1992-93 & 1993-9 4 14. THE FACTS OF BOTH THESE CASES ARE SIMILAR TO T HE ONE AS DECIDED BY US IN ITA NO. 5323/M/2013 FOR A.Y. 1990- 91 EXCEPT THAT DURING THESE YEARS THE ASSESSEE HAD NOT FILED ANY RETURNS OF ITA NO.5323/M/2013 & ORS. SHRI BHUPENDRA C. DALAL 7 INCOME. SO THE ASSESSEE BESIDES RELYING ON THE PROP OSITIONS MADE ON NON SPECIFICATION OF CHARGE BY THE AO IN TH E PENALTY NOTICE ISSUED U/S 274 R.W.S.271(1)(C) OF THE ACT HA S ALSO RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. M/S GROWMORE RESEARCH AND ASSET MANAGEMENT LTD. IN ITA NO.675 OF 2008 WHEREIN THE HONBLE BOMBAY HIGH COURT HAS HELD THAT NO PENALTY IS TO BE IMPOSED WHERE THE ASS ESSEE HAS NOT FILED ANY RETURN OF INCOME. THE SAID DECISION OF T HE HONBLE BOMBAY HIGH COURT HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT IN SLP(CC) 2007/2010) ARISING OUT OF JUDGMENT AND ORDER DATED 10.02.2009 IN ITA NO.676 OF 2008 OF HONBLE B OMBAY HIGH COURT FILED BY THE REVENUE. 15. THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT AND AS AFFIRMED BY THE HONBLE SUPREME COURT IS THAT WH ERE THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME NO PENA LTY UNDER SECTION 271(1)(C) OF THE ACT, 1961 COULD BE LEVIED. IN ITA NO.5325/M/2013 AND ITA NO.5326/M/2013 A.Y. 1992-93 & 1993-94, THE ASSESSEE HAS NOT FILED THE RETURN OF I NCOME AND THEREFORE EVEN ON THAT ACCOUNT THE PENALTY IS NOT T O BE LEVIED. ACCORDINGLY WE HOLD THAT THE ORDER OF CIT(A) IS WR ONG AND CAN NOT BE SUSTAINED FOR TWO RATIOS ONE NON SPECIFICATI ON OF CHARGE IN THE PENALTY NOTICE AND SECOND THAT ASSESSEE HAS NOT FILED ANY RETURNS OF INCOME AND THUS PENALTY CAN NOT BE LEVIE D. THE AO IS DIRECTED ACCORDINGLY TO DELETE THE PENALTY. 16. SINCE WE HAVE DECIDED THE ISSUE ON JURISDICTION IN FAVOUR OF THE ASSESSEE THE OTHER ISSUE RAISED ON MERIT NEED N O ADJUDICATION. ITA NO.5323/M/2013 & ORS. SHRI BHUPENDRA C. DALAL 8 17. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASSE SSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.05.2019. SD/- SD/- (SANDEEP GOSAIN) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.05.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.