PARAS PORWAL, MUMBAI V. ACIT CEN CIR 47, MUMBAI

ITA 5741/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4119 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR OJHA
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR , HON'BLE ACCOUNTANT MEMBER ITA NO. 5739 TO 5742 /MUM/201 6 ( A. YS : 2009 - 10, 2008 - 09, 2007 - 08 & 2006 - 07) SHRI PARAS PORWAL B - 2101, SHANTI KAMAL CHS, DR. B.A. ROAD, CHINCHPOKALI, MUMBAI 400 012 PAN: AGUPP 7069 G V. ACIT CENTRAL CIRCLE 47 MUMBAI (APPELLANT) (RESPONDENT) ITA NO.5743 & 5744/MUM/2016 (A. YS: 2007 - 08 & 2006 - 07) SHRI DHEERAJ KUMAR C. JAIN 1604, SHATRUNJAY TOWER, VITTAL CHAVAN MARG , PAREL, MUMBAI 400 012 PAN: AGUPP 19 2 5 H V. ACIT CENTRAL CIRCLE 47 MUMBAI (APPELLANT) (RESPONDENT) ITA NO.5745 TO 5749/MUM/2016 (A. YS: 2012 - 13, 2011 - 12, 2008 - 09, 2007 - 08 & 2006 - 07) SMT MANJU P. PORWAL B - 2101, SHANTI KAMAL CHS, DR. B.A. ROAD, CHINCHPOKALI, MUMBAI 400 012 PAN: AAJPP 1941 L V. ACIT CENTRAL CIRCLE 47 MUMBAI (APPELLANT) (RESPONDENT) 2 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL ASSESSEE BY : SHRI VIMAL PUNMIYA DEPARTMENT BY : SHRI AJAY KUMAR OJHA DATE OF HEARING : 28 .08.2018 DATE OF PRONOUNCEMENT : 29 .10 .2018 O R D E R PER C. N. PRASAD (JM) 1. ALL THESE APPEALS ARE FILED BY DIFFERENT ASSESSEES OF SAME GROUP CHALLENGING THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 50, MUMBAI I N SUSTAINING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 2. IN ALL THESE APPEALS ASSESSEE HAS RAISED ADDITIONAL GROUNDS OF APPEAL WHICH ARE AS UNDER: - 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD.A.O DID NOT STRIKE OFF THE RELEVANT LIMB OF PENALTY IN THE PENALTY NOTICE, H ENCE IT IS VIOLATION OF NATURAL JUSTICE AND THE ORDER PASSED BY HIM IS BAD IN LAW WITHOUT JURISDICTION. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD.A.O LEVIED PENALTY U/S. 271(1)(C), EVEN WHEN SPECIAL PROVISION UNDER SECTION 271AAA WAS THERE IN LAW. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE G ROUNDS RAISED BY THE ASSESSEE ARE PURELY LEGAL GROUNDS THE SAME MAY BE ADMITTED AND DISPOSED O F F. 3 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL 4. LD. DR HOWEVER OPPOSED FOR ADMISSION OF ADDITIONAL GROUNDS OF APPEAL . HE SUBMIT TED THAT THESE GROUNDS WERE NEVER RAISED BEFORE THE LD.AO / LD.CIT(A) BY THE ASSESSEES AND T HEREFORE SHOULD NOT BE ADMITTED AT THIS STAGE. 5. ON HEARING BOTH THE SIDES AND PERUSING THE ADDITIONAL GROUNDS OF APPEAL , WE ARE OF THE VIEW THAT BOTH THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE S ARE PURELY LEGAL GROUNDS HENCE THEY ARE ADMITTED FOR ADJUDICATION. 6. THE FIRST ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS THAT THE ASSESSING OFFICER DID NOT STRIKE OFF THE RELEVANT LIMB IN THE PENALTY NOTICE , THE ORDER PASSED BY HIM IS BAD IN LAW AND WITHOUT JURISDICTION SINCE IT IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE . WITH RESPECT TO THIS ADDITIONAL GROUND THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO APPLICATION OF MIND BY THE AS SESSING OFFICER IN INITIATING THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE. THE ASSESSING OFFICER IS NOT CLEAR IN HIS MIND AS TO THE CHARGE AGAINST WHICH HE IS IMPOSING PENALTY. THEREFORE, HE SUBMITTED THAT IN THE ABSENCE OF ANY SPECIFIC CHARGE AND NON - S TRIKING OFF THE LIMB IN THE PENALTY NOTICE THE ASSESSING OFFICER FAILED TO SPECIFY THE CHARGE BEING MADE AGAINST THE ASSESSEE FOR LEVYING OF PENALTY U/S. 271(1)(C) OF THE ACT. IT IS SUBMITTED THAT NON - STRIKING OFF THE 4 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL IRRELEVANT PORTION OF THE STANDARD FO RM OF NOTICE U/S. 274 R.W.S. 271(1) OF THE ACT IS A LEGAL INFIRMITY AND IS FATAL TO THE IMPOSITION OF PENALTY BECAUSE IN THE ABSENCE OF THE SPECIFYING THE GROUND ON WHICH THE PENALTY IS INITIATED THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. REFERR ING TO THE COPY OF THE NOTICE ISSUED BY THE ASSESSING OFFICER THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A PERUSAL OF THE NOTICE SHOWS THAT THERE IS NON - APPLICATION OF MIND BY THE ASSESSING OFFICER IN AS MUCH AS THE NOTICE HAS BEEN ISSUED IN A STA NDARD PROFORMA AND THE IRRELEVANT PORTION OF THE CHARGE IN THE NOTICE HAS NOT BEEN STR UCK OFF. IT IS SUBMITTED THAT ON IDENTICAL SITUATION IN THE FOLLOWING CASES T HE COORDINATE BENCH ES OF THIS TRIBUNAL FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V . SHRI SAMSON PERINCHERY [ITA.NO. 1154, 953. 1097 & 1226 OF 2014] HELD THAT LEVY OF PENALTY U/S.271(1)(C) OF THE ACT WITHOUT SPECIFYING THE CHARGE IN THE NOTICE I S BAD IN LAW . (I) MEHERJEE CASSINATH HOLDINGS PVT LTD. IN ITA.NO. 2555/MUM/2012 DATED 28.04.2017. (II) JEHANGIR HC JEHANGIR IN ITA.NO. 1261/MUM/2011 DATED 17.05.2017 . (III) M/S. WADHWA ESTATE & DEVELOPERS INDIA PVT. LTD., IN ITA.NO. 2158/MUM/ 2016 DATED 24.02.2017. LD. COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S. SSAS EMERALD MEADOWS [CC NO.11485/2016 DATED 05.08.2016] IN SUPPORT OF HIS CONTENTION S. 5 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW, THE NOTICE ISSUED U/S. 274 R.W.S. 271 OF THE ACT, ASSESSMENT ORDER AND THE PENALTY ORDERS. ON A PERUSAL OF THE NOTICE ISSUED U/S. 271(1)(C) OF THE ACT FOR INITIATION OF PROC EEDINGS, WE FIND THAT THE ASSESSING OFFICER DID NOT STRIKE OFF AND SPECIFY THE CHARGE/LIMB FOR WHICH HE IS PROPOSING TO INITIATE PENALTY PROCEEDINGS. HOWEVER, IN THE PENALTY ORDER, ASSESSING OFFICER RECORDS THAT THE PENALTY WAS LEVIED FOR FURNISHING INACC URATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME. 8. AN IDENTICAL SITUATION HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN MEHERJEE CASSINATH HOLDINGS V. ACIT (SUPRA) AS TO WHETHER THE ACTION OF THE ASSESSING OFFICER IN INITIATING PENALTY PROCEEDI NGS U/S.271(1)(C) OF THE ACT WITHOUT STRIKING OFF ONE OF THE LIMBS AND WITHOUT SPECIFYING THE SPECIFIC CHARGE IN THE NOTICE INITIATING PENALTY PROCEEDINGS FOR INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER AND THE COORDINATE BENCH CONSIDERING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V . SAMSON PERINCHERY [392 ITR 4] AND ALSO VARIOUS DECISIONS HELD THAT ACTION OF THE ASSESSING OFFICER IN NON - STRIKING OFF RELEVANT CLAUSE IN THE NOTICE SHOWS THAT THE CHARGE BEING MADE A GAINST THE ASSESSEE IS NOT FIRM THEREFORE PROCEEDINGS SUFFER FROM NON - COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS THE ASSESSING OFFICER HIMSELF IS NOT SURE 6 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL OF THE CHARGE AND THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF SEC TION U/S. 271(1)(C) OF THE ACT HE HAS TO RESPOND. WHILE HOLDING SO THE COORDINATE BENCH OBSERVED AS UNDER: - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. SEC. 271(1)(C) OF THE ACT EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY TO THE EXTENT SPECI FIED IF, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, HE IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN OTHER WORDS, WHAT SEC. 271(1)(C) OF THE ACT POSTULATES IS THAT THE P ENALTY CAN BE LEVIED ON THE EXISTENCE OF ANY OF THE TWO SITUATIONS, NAMELY, FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS OBVIOUS FROM THE PHRASEOLOGY OF SEC. 271(1)(C) OF THE ACT THAT THE IMP OSITION OF PENALTY IS INVITED ONLY WHEN THE CONDITIONS PRESCRIBED U/S 271(1)(C) OF THE ACT EXIST. IT IS ALSO A WELL - ACCEPTED PROPOSITION THAT CONCEALMENT OF THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME REFERRED TO IN SEC . 271(1)(C) OF THE ACT DENOTE DIFFERENT CONNOTATIONS. IN FACT, THIS DISTINCTION HAS BEEN APPRECIATED EVEN AT THE LEVEL OF HON'BLE SUPREME COURT NOT ONLY IN THE CASE OF DILIP N. SHROFF (SUPRA) BUT ALSO IN THE CASE OF T.ASHOK PAI, 292 ITR 11 (SC). THEREFORE, IF THE TWO EXPRESSIONS, NAMELY CONCEALMENT OF THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME HAVE DIFFERENT CONNOTATIONS, IT IS IMPERATIVE FOR THE ASSESSEE TO BE MADE AWARE AS TO WHICH OF THE TWO IS BEING PUT AGAINST HIM FOR THE PURPOSE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, SO THAT THE ASSESSEE CAN DEFEND ACCORDINGLY. IT IS IN THIS BACKGROUND THAT ONE HAS TO APPRECIATE THE PRELIMINARY PLEA OF ASSESSEE, WHICH IS BASED ON THE MANNER IN WHICH THE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 10.12.2010 HAS BEEN ISSUED TO THE ASSESSEE COMPANY. A COPY OF THE SAID NOTICE HAS BEEN PLACED ON RECORD AND THE LEARNED REPRESENTATIVE CANVASSED THAT THE SAME HAS BEEN ISSUED BY THE ASSESSING OFFICER IN A STANDARD PROFORMA, WITHO UT STRIKING OUT THE IRRELEVANT CLAUSE. IN OTHER WORDS, THE NOTICE REFERS TO BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT, NAMELY CONCEALMENT OF THE PARTICULARS OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. QUITE CLEARLY, NON - STRIKING - OFF OF THE IRRELEVANT LIMB IN THE SAID NOTICE DOES NOT CONVEY TO THE ASSESSEE AS TO WHICH OF THE TWO CHARGES IT HAS TO RESPOND. THE AFORESAID INFIRMITY IN THE NOTICE HAS BEEN SOUGHT TO BE DEMONSTRATED AS A REFLECTION OF 7 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL NON - APPLICATION OF MIND BY THE ASSES SING OFFICER, AND IN SUPPORT, REFERENCE HAS BEEN MADE TO THE FOLLOWING SPECIFIC DISCUSSION IN THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA): - 83. IT IS OF SOME SIGNIFICANCE THAT IN THE STANDARD PROFORMA USED BY THE ASSESSING O FFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS TH AT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON - APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. (SEE MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 2 SCC 718] 9. FACTUALLY SPEAKING, THE AFORESAID PLEA OF ASSESSEE IS BORNE OUT OF RECOR D AND HAVING REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA), THE NOTICE IN THE INSTANT CASE DOES SUFFER FROM THE VICE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. IN FACT, A SIMILAR P ROPOSITION WAS ALSO ENUNCIATED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S. SSAS EMERALD MEADOWS (SUPRA) AND AGAINST SUCH A JUDGMENT, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE HAS SINCE BEEN DISMISSED BY THE HON'BLE SUPREME COURT VIDE ORD ER DATED 5.8.2016, A COPY OF WHICH IS ALSO PLACED ON RECORD. 10. IN FACT, AT THE TIME OF HEARING, THE LD. CIT - DR HAS NOT DISPUTED THE FACTUAL MATRIX, BUT SOUGHT TO POINT OUT THAT THERE IS DUE APPLICATION OF MIND BY THE ASSESSING OFFICER WHICH CAN BE DEMONSTRA TED FROM THE DISCUSSION IN THE ASSESSMENT ORDER, WHEREIN AFTER DISCUSSING THE REASONS FOR THE DISALLOWANCE, HE HAS RECORDED A SATISFACTION THAT PENALTY PROCEEDINGS ARE INITIATED U/S 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. I N OUR CONSIDERED OPINION, THE ATTEMPT OF THE LD. CIT - DR TO DEMONSTRATE APPLICATION OF MIND BY THE ASSESSING OFFICER IS NO DEFENCE INASMUCH AS THE HON'BLE SUPREME COURT HAS APPROVED THE FACTUM OF NON - STRIKING OFF OF THE 8 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL IRRELEVANT CLAUSE IN THE NOTICE AS RE FLECTIVE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. SINCE THE FACTUAL MATRIX IN THE PRESENT CASE CONFORMS TO THE PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT, WE PROCEED TO REJECT THE ARGUMENTS ADVANCED BY THE LD. CIT - DR BASED ON THE OBSERV ATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FURTHER, IT IS ALSO NOTICEABLE THAT SUCH PROPOSITION HAS BEEN CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT ALSO IN THE CASE OF SHRI SAMSON PERINCHERY, ITA NOS. 1154, 953, 1097 & 1126 OF 2014 DATED 5.1 .2017 (SUPRA) AND THE DECISION OF THE TRIBUNAL HOLDING LEVY OF PENALTY IN SUCH CIRCUMSTANCES BEING BAD, HAS BEEN APPROVED. 11. APART FROM THE AFORESAID, THE LD. CIT - DR MADE AN ARGUMENT BASED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. KAUSHALYA & OTHERS, 216 ITR 660 (BOM.) TO CANVASS SUPPORT FOR HIS PLEA THAT NON - STRIKING OFF OF THE IRRELEVANT PORTION OF NOTICE WOULD NOT INVALIDATE THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. WE HAVE CAREFULLY CONSIDERED THE SAID ARGUMENT SET - UP BY THE LD. CIT - DR AND FIND THAT A SIMILAR ISSUE HAD COME UP BEFORE OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA). OUR COORDINATE BENCH, AFTER CONSIDERING THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. KAUSHALYA & ORS., (SUPRA) AS ALSO THE JUDGMENTS OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) AND DHARMENDRA TEXTILE PROCESSORS, 306 ITR 277 (SC) DEDUCED AS UNDER : - 12. A COMBINED READING OF THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. B KAUSHALYA AND OTHERS (SUPRA) AND THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF DILIP N SHROFF (SUPRA) WOULD MAKE IT CLEAR THAT THERE SHOULD BE APPLICATION OF MIND ON THE PART OF THE AO AT THE TIME OF ISSUING NOTICE. IN THE CASE OF LAKHDIR LALJI (SUPRA), THE AO ISSUED NOTICE U/S 274 FOR CONCEALMENT OF PARTICULARS OF INCOME BUT LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE GUJARAT HIGH COURT QUASHED THE PENALTY SINCE THE BASIS FOR THE PENALTY PROCEEDINGS DISAPPEARED WHEN IT WAS HELD THAT THERE WAS NO SUPPRESSION OF INCOME. THE HONBLE KERALA HIGH COURT HAS STRUCK DOWN THE PENALTY IMPOSED IN THE CASE OF N.N.SUBRAMANIA IYER VS. UNION OF INDIA (SUPRA), WHEN THERE IS NO INDICATION IN THE NOTICE FOR WHAT CONTRAVENTION THE PETITIONER WAS CALLED 9 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL UPON TO SHOW CAUSE WHY A PENALTY SHOULD NOT BE IMPOSED. IN THE INSTANT CASE, THE AO DID NOT SPECIFY THE CHARGE FOR WHICH PENALTY PR OCEEDINGS WERE INITIATED AND FURTHER HE HAS ISSUED A NOTICE MEANT FOR CALLING THE ASSESSEE TO FURNISH THE RETURN OF INCOME. HENCE, IN THE INSTANT CASE, THE ASSESSING OFFICER DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY PROCEEDINGS WERE INITIATED AND AL SO ISSUED AN INCORRECT NOTICE. BOTH THE ACTS OF THE AO, IN OUR VIEW, CLEARLY SHOW THAT THE AO DID NOT APPLY HIS MIND WHEN HE ISSUED NOTICE TO THE ASSESSEE AND HE WAS NOT SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HONBLE BOMBAY HIGH COURT HAS DISCU SSED ABOUT NON - APPLICATION OF MIND IN THE CASE OF KAUSHALYA (SUPRA) AND OBSERVED AS UNDER: - ....THE NOTICE CLEARLY DEMONSTRATED NON - APPLICATION OF MIND ON THE PART OF THE INSPECTING ASSISTANT COMMISSIONER. THE VAGUENESS AND AMBIGUITY IN THE NOTICE HAD AL SO PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY OF THE ASSESSEE SINCE HE DID NOT KNOW WHAT EXACT CHARGE HE HAD TO FACE. IN THIS BACK GROUND, QUASHING OF THE PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 1967 - 68 SEEMS TO BE FULLY JUSTIFIED. IN THE INSTANT CASE ALSO, WE ARE OF THE VIEW THAT THE AO HAS ISSUED A NOTICE, THAT TOO INCORRECT ONE, IN A ROUTINE MANNER. FURTHER THE NOTICE DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY NOTICE WAS ISSUED. HENCE, IN OUR VIEW, THE AO HAS FAILED TO APPLY HIS MIND AT T HE TIME OF ISSUING PENALTY NOTICE TO THE ASSESSEE. 12. THE AFORESAID DISCUSSION CLEARLY BRINGS OUT AS TO THE REASONS WHY THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) IS TO PREVAIL. FOLLOWING THE DECISI ON OF OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA), WE HEREBY REJECT THE AFORESAID ARGUMENT OF THE LD. CIT - DR. 13. APART FROM THE AFORESAID DISCUSSION, WE MAY ALSO REFER TO THE ONE MORE SEMINAL FEATURE OF THIS CASE WHICH WOULD DEMONSTR ATE THE IMPORTANCE OF NON - STRIKING OFF OF IRRELEVANT CLAUSE IN THE NOTICE BY THE ASSESSING OFFICER. AS NOTED EARLIER, IN THE ASSESSMENT ORDER DATED 10 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL 10.12.2010 THE ASSESSING OFFICER RECORDS THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE TO BE INI TIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOWEVER, IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT OF EVEN DATE, BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT ARE REPRODUCED IN THE PROFORMA NOTICE AND THE IRRELEVANT CLAUSE HAS NOT B EEN STRUCK - OFF. QUITE CLEARLY, THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE CLEARLY BRINGS OUT THE DIFFIDENCE ON THE PART OF ASSESSING OFFICER AND THERE IS NO CLEAR AND CRYSTAL LISED CHARGE BEING CONVEYED TO THE ASSESSEE U/S 271(1)(C), WHICH HAS TO BE MET BY HIM. AS NOTED BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA), THE QUASI - CRIMINAL PROCEEDINGS U/S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE, AND IN THE PRESENT CASE, CONSIDERING THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ALONGSIDE HIS ACTION OF NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE SHOWS THAT THE CHARGE BEING MADE AGAINST THE ASSESSE E QUA SEC. 271(1)(C) OF THE ACT IS NOT FIRM AND, THEREFORE, THE PROCEEDINGS SUFFER FROM NON - COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE INASMUCH AS THE ASSESSING OFFICER IS HIMSELF UNSURE AND ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF SEC . 271(1)(C) OF THE ACT HE HAS TO RESPOND. 14. THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 10.12.2010 IS UNTENABLE AS IT SUFFERS FROM THE VICE OF NONAPPLICATI ON OF MIND HAVING REGARD TO THE RATIO OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) AS WELL AS THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA). THUS, ON THIS COUNT ITSELF THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT IS LIABLE TO BE DELETED. WE HOLD SO. SINCE THE PENALTY HAS BEEN DELETED ON THE PRELIMINARY POINT, THE OTHER ARGUMENTS RAISED BY THE APPELLANT ARE NOT BEING DEALT WITH. 9. FOLLOWING THE ABOVE DECISION, SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH IN THE CASE OF ORBIT ENTERPRISES V. INCOME TAX OFFICER [60 ITR (TRIB.) 252]. RESPECTFULLY FOLLOWING THE SAID DECISION, WE HOLD THAT THE NOTICE ISSUED BY THE ASSESSING OFFICE R U/S. 274 R.W.S. 271(1)(C) OF THE 11 ITA NO.5739 TO 5749/MUM/2016 SHRI PARAS PORWAL, SHRI DHEERAJ KUMAR C. JAIN SMT MANJU P. PORWAL ACT IS ON ACCOUNT OF NON - APPLICATION OF MIND AND THEREFORE ON THIS ACCOUNT ITSELF THE PENALTY IMPOSED U/S.271(1)(C) IS LIABLE TO BE DELETED. THUS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S.271(1)(C ) OF THE ACT. AS WE HAVE HELD THAT THE PENALTY BE DELETED ON THE PRELIMINARY POINT THE OTHER ARGUMENTS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE ON OTHER ADDITIONAL AND REGULAR GROUNDS ARE NOT BEING DEALT WITH. 10. IN THE RESULT, APPEAL S FILED BY THE ASSESSEE S ARE ALLOWED AS INDICATED ABOVE . ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH OCTOBER , 2018 SD/ - SD/ - ( R AJESH KUMAR ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 29 / 10 / 2018 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM