ARCHANA AJIT VAIDYA, MUMBAI V. ITO- 21(1)(1), MUMBAI

ITA 5797/MUM/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4716 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Initiation of penalty proceedings; Time period of passing order
• Section: 271(1)(c); 143(3); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN, HON'BLE ACCOUNTANT MEMBER ITA NO . 2794 /MUM/201 2 (A.Y: 2008 - 09 ) & ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA FLAT NO. 9, PLOT NO. 51 SHREE GURU CH HAYA SOCIETY , TEJPAL SCHEME ROAD 2, VILE PARLE (E), MUMBAI 400 057 PAN: ABSPV 8586 B V . INCOME TAX OFFICER 21(1)(1) C - 10, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI 400 051 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NEELKANTH KHANDELWAL DEPARTMENT BY : SHRI CHAUDHARY ARUN KUMAR SINGH SHRI SATISHCHANDRA RAJORE DATE OF HEARING : 19.02.2019 DATE OF PRONOUNCEMENT : 22 . 02.2019 O R D E R PER C. N. PRASAD (JM) 1. THESE TWO APPEAL S ARE FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE L D. COMMISSIONER OF INCOME TAX (APPEALS) 32, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 14.03.2012 & 21.08.2013 FOR THE A .YS. 2008 - 09 & 2009 - 10 IN SUSTAINING T HE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 2 ITA NO. 2794/MUM/2012 (A.Y: 2008 - 09) ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA 2. AT THE OUTSET, L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT , ASSESSEE SMT ARCHANA AJIT VAIDYA I NSTRUCTED HIM TO WITHDRAW THE APPEAL. HENCE, IT IS REQUEST ED THE TRIBUNAL TO PERMIT THE ASSESSEE TO WITHDRAW HER APPEAL IN ITA.NO. 5797/MUM/2013 FOR THE A.Y. 2009 - 10. LD. COUNSEL FOR THE ASSESSEE FILED LETTER FOR WITHDRAWAL OF APPEAL . LD. DR HAS NO SERIOUS OBJECTION IN WITHDRAWING THE APPEAL BY THE ASSESSEE . 3. CONSIDERING THE SUBMISSION S OF THE LD. COUNSEL AND THE LETTER FILED BEFORE US, WE PERMIT THE ASSESSEE TO WITHDRAW THE APPEAL. ACCORDINGLY, APPEAL OF THE ASSESSEE IN ITA.NO. 5797/MUM/2013 FOR THE A.Y. 2009 - 10 IS DISMISSED AS WITHD RAWN. 4. COMING TO THE APPEAL IN ITA.NO. 2794/ MUM /2012 FOR A.Y. 2008 - 09, A T THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INITIATION OF PENALTY PROCEEDINGS IS BAD IN LAW AS THE ASSESSING OFFICER HAS NOT SPECIFIED THE LIMB ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE NOTICE ISSUED U/S. 274 R.W.S 271(1)(C) OF THE ACT SUBMITTED THAT THE ASSESSING OFFICER IS NOT CLEAR AS TO THE CHARGE FOR WHICH THE PENALTY IS INITIATED I.E. EITHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING IN ACCURATE PARTICULARS. REFERRING TO THE NOTICE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INAPPROPRIATE LIMB IN THE NOTICE WAS NOT STRIKE OFF. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE 3 ITA NO. 2794/MUM/2012 (A.Y: 2008 - 09) ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA ASSESSMENT ORDER SUBMITTED THAT THE ASSESSING OFFICER STATED THAT PENALTY U/S. 271(1)(C) INITIATED FOR FURNISHING INACCURATE DETAILS. LD. COUNSEL SUBMITTED THAT THE ADDITION WAS MADE IN THE ASSESSMENT PROCEEDINGS BASED ON THE AIR INFORMATION AND THAT THE ASSESSEE HAD NOT DISCLOSED INCOME IN THE RETURN OF INCOME. W HEN AN INCOME IS NOT DISCLOSED IN THE RETURN OF INCOME IT CAN ONLY BE CONCEALMENT OF INCOME BUT CERTAINLY NOT FURNISHING INACCURATE DETAILS. THUS, LD. COUNSEL SUBMITS THAT THERE IS COMPLETE NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. THEREFORE , LD. COUNSEL SUBMITS THAT THE INITIATION OF PENALTY PROCEEDINGS ITSELF IS IMPROPER AND NOT VALID. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS COMPLETE NON - APPLICATION OF MIND BY THE ASSESSING OFFICER IN INITIATING THE PENALTY PROCEEDINGS AND THERE FORE, LEVY OF PENALTY IS ILLEGAL, VOID, BAD IN LAW, INITIATED BY NON - APPLICATION OF MIND AND IS WITHOUT JURISDICTION AS THE PENALTY NOTICE ISSUED BY THE ASSESSING OFFICER DOES NOT STRIKE OFF THE IR RELEVANT PORTION THEREON. 5. LD. DR VEHEMENTLY SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW, NOTICE ISSUED U/S. 274 R.W.S 271(1)(C) OF THE ACT FOR INITIATION OF PENALTY PROCEEDINGS, WE FIND THAT ASSESSING OFFICER DID NOT STRIKE OFF AND SPECIFY THE CHARGE/LIMB FOR WHICH HE IS PROPOSING TO INITIATE 4 ITA NO. 2794/MUM/2012 (A.Y: 2008 - 09) ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA THE PENALTY PROCEEDINGS. IN THE ASSESSMENT ORDER A.O. STATED THAT ASSESSEE FURNISHED INACCURATE DETAILS OF INCOME. HOWEVER, IN THE PENALTY ORDER PASSED IT IS STATED THAT PENALTY PROCEEDINGS W ERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME AND ISSUED NOTICE U/S. 274 R.W.S. 271(1)(C) OF THE ACT AN D FINALLY PENALTY WAS IMPOSED. 7. AN IDENTICAL SITUATION HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN MEHERJE E CASSINATH HOLDINGS V. ACIT IN ITA.NO. 2555/MUM/2012 DATED 28.04.2017 AS TO WHETHER THE ACTION OF THE ASSESSING OFFICER IN INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WITHOUT STRIKING OFF ONE OF THE LIMBS AND WITHOUT SPECIFYING THE SPECIFIC C HARGE IN THE NOTICE INITIATING PENALTY PROCEEDINGS FOR INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER AND THE COORDINATE BENCH CONSIDERING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SAMSON PERINCHERY [392 ITR 4] A ND 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 AGAINST THE ASSESSEE IS NOT FIRM THEREFORE PROCEEDINGS SUFFER FROM NON - COMPLIANCE WITH PRINCIPLES OF NATU RAL JUSTICE IN AS MUCH AS THE ASSESSING OFFICER HIMSELF IS NOT SURE OF THE CHARGE AND THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF SECTION 271(1)(C) OF THE ACT HE HAS TO RESPOND. 5 ITA NO. 2794/MUM/2012 (A.Y: 2008 - 09) ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA 8. FOLLOWING THE ABOVE DECISION, SIMILAR VIEW HAS BEEN TAKEN B Y THE COORDINATE BENCH IN THE CASE OF ORBIT ENTERPRISES V. ITO [60 ITR(TRIB.) 252]. IN THE CASE OF DCIT V. SHRI DHAVAL D. SHAH IN ITA.NO. 1337/MUM/2016 & C.O. NO. 08/MUM/2018 DATED 16.05.2018 THE COORDINATE BENCH CONSIDERED SIMILAR AND IDENTICAL ISSUE AND FOLLOWING THE RATIO LAID DOWN IN THE DILIP N. SHROFF [210 CTR 228 (SC)] AND THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SAMSON PERINCHERY (SUPRA) HELD THAT THE PENALTY PROCEEDINGS INITIATED BY THE ASSESSING OFFICER IS BAD I N LAW. WHILE HOLDING SO THE COORDINATE BENCH HELD AS UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. WE BEGIN WITH THE DECISIONS RELIED ON BY THE LD. DR. IN THE C ASE OF SMT. KAUSHALYA & ORS. (SUPRA), THE HONBLE BOMBAY HIGH COURT HELD: 9. WE WILL FIRST TAKE UP THE SHOW - CAUSE NOTICE DATED MARCH 29, 1972, PERTAINING TO THE ASSESSMENT YEARS 1968 - 69 AND 1969 - 70. THE ASSESSMENT ORDERS WERE ALREADY MADE AND THE REASONS FOR ISSUING THE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) WERE RECORDED BY THE INCOME - TAX OFFICER. THE ASSESSEE FULLY KNEW IN DETAIL THE EXACT CHARGE OF THE DEPARTMENT AGAINST HIM. IN THIS BACKGROUND, IT COULD NOT BE SAID THAT EITHER THERE WAS N ON - APPLICATION OF MIND BY THE INCOME - TAX OFFICER OR THE SO - CALLED AMBIGUOUS WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF THE ASSESSEE TO REASONABLE OPPORTUNITY OF BEING HEARD. AFTER ALL, SECTION 274 OR ANY OTHER PROVISION IN THE ACT OR THE RUL ES, DOES NOT EITHER MANDATE THE GIVING OF NOTICE OR ITS ISSUANCE IN A PARTICULAR FORM. PENALTY PROCEEDINGS ARE QUASI - CRIMINAL IN NATURE. SECTION 274 CONTAINS THE PRINCIPLE OF NATURAL JUSTICE OF THE ASSESSEE BEING HEARD BEFORE LEVYING PENALTY. RULES OF NATU RAL JUSTICE CANNOT BE IMPRISONED IN ANY STRAIGHT - JACKET FORMULA. FOR SUSTAINING A COMPLAINT OF FAILURE OF THE PRINCIPLES OF NATURAL JUSTICE ON THE GROUND OF ABSENCE OF OPPORTUNITY, IT HAS TO BE ESTABLISHED THAT PREJUDICE IS CAUSED TO THE CONCERNED PERSON B Y THE PROCEDURE FOLLOWED. THE ISSUANCE OF NOTICE IS AN ADMINISTRATIVE DEVICE FOR INFORMING THE ASSESSEE ABOUT THE PROPOSAL TO LEVY PENALTY IN ORDER TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DONE. MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRI KING OF THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. THE ENTIRE FACTUAL BACKGROUND WOULD FALL FOR CONSIDERATION IN THE MATTER AND NO ONE ASPECT WOULD BE DECISIVE. IN THIS CONTEXT, USEFUL REFERENCE 6 ITA NO. 2794/MUM/2012 (A.Y: 2008 - 09) ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA MAY BE MADE TO THE FOLLOWING OBSERVATION IN THE CASE OF CIT V. MITHILA MOTOR'S (P.) LTD. [1984] 149 ITR 751 (PATNA) (HEAD NOTE): UNDER SECTION 274 OF THE INCOME - TAX ACT, 1961, ALL THAT IS REQUIRED IS THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO SHOW CAUSE. NO STATUTORY NOTICE HAS BEEN PRESCRIBED IN THIS BEHALF. HENCE, IT IS SUFFICIENT IF THE ASSESSEE WAS AWARE OF THE CHARGES HE HAD TO MEET AND WAS GIVEN AN OPPORTUNITY OF BEING HEARD. A MISTAKE IN THE NOTICE WOULD NOT INVALIDATE PENALTY PROCEEDINGS. IN M/S MAHARAJ GARAGE & CO. (SUPRA), THE HONBLE BOMBAY HIGH COURT AT PARA 15 HELD: THE REQUIREMENT OF SECTION 274 OF THE INCOME TAX ACT FOR GRANTING REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER CANNOT BE STRETCHED TO THE EXTENT OF FRAMING A SPECIFIC CHARGE OF ASKING THE ASSESSEE AN E XPLANATION IN RESPECT OF THE QUANTUM OF PENALTY PROPOSED TO BE IMPOSED, AS HAS BEEN URGED. THE ASSESSEE WAS SUPPLIED WITH THE FINDINGS RECORDED IN THE ORDER OF RE - ASSESSMENT, WHICH WAS PASSED ON THE SAME DATE ON WHICH THE NOTICE U/S 271(1)(C) WAS ISSUED, I NITIATING THE PROCEEDINGS OF IMPOSING THE PENALTY. THE ASSESSEE HAD SUFFICIENT NOTICE OF THE ACTION OF IMPOSING PENALTY. WE, THEREFORE, DO NOT FIND EITHER ANY JURISDICTION ERROR OR UNJUST EXERCISE OF POWER BY THE AUTHORITY. IN SKY LIGHT HOSPITALITY LLP (S UPRA), THE ASSESSEE (SKY LIGHT HOSPITALITY LLP) WHO HAD TAKEN OVER ON 13.05.2016 AND ACQUIRED RIGHTS AND LIABILITIES OF M/S SKY LIGHT HOSPITALITY PVT. LTD. UPON CONVERSION UNDER THE LIMITED LIABILITY PARTNERSHIP ACT, 2008, FILED A WRIT PETITION IMPUGNING N OTICE DATED 30.03.2017 ISSUED BY THE AO U/S 147/148 FOR THE AY 2010 - 11. THE CONTENTION OF THE ASSESSEE BEFORE THE HONBLE HIGH COURT WAS THAT NOTICE U/S 147/148 OF THE ACT DATED 30.03.2017 WAS ADDRESSED AND ISSUED TO M/S SKY LIGHT HOSPITALITY PVT. LTD., PA N NO. AALCS3800N, A COMPANY WHICH HAD CEASED TO EXIST AND WAS DISSOLVED ON 13.05.2016. IT WAS STATED THAT THE SAID NOTICE ISSUED TO A DEAD JURISTIC PERSON IS INVALID AND VOID IN THE EYES OF LAW. ALSO CONTENTIONS WERE RAISED STATING THAT SECTION 292B WAS IN APPLICABLE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. OUR ATTENTION WAS DRAWN TO PARASHURAM POTTERY WORKS CO. LTD. V. ITO, CIRCLE I, WARD A, RAJKOT, (1977) 106 ITR 1 (SC) WHICH RECORDS THAT THE ASSESSING OFFICER ENTRUSTED WITH THE TASK OF CALCULATIN G AND REALIZING TAX SHOULD FAMILIARIZE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL VERSED WITH THE LAW ON THE SUBJECT. THIS IS A SALUTARY ADVICE. INDEED, THERE HAVE BEEN LAPSES AND FAULTS RESULTING IN THE PRESENT LITIGATION. NOTICE UNDER SECTIO N 147/148 OF THE ACT WAS ISSUED AT THE END OF THE LIMITATION PERIOD. NOTICEABLY, ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2013 - 2014 WAS PASSED ON 31.03.20I6, ONE YEAR EARLIER. SECOND LAPSE IS ALSO APPARENT. DESPITE CORRECTLY NOTING THE BACKGROUND, NOTICE U NDER SECTION 147/148 OF THE ACT WAS NOT ADDRESSED IN THE CORRECT NAME AND EVEN THE PAN NUMBER MENTIONED WAS INCORRECT. NEVERTHELESS, HUMAN ERRORS AND MISTAKES CANNOT AND SHOULD NOT NULLIFY PROCEEDINGS WHICH ARE OTHERWISE VALID AND NO PREJUDICE HAD BEEN CAU SED. THIS IS THE EFFECT AND MANDATE OF SECTION 292B OF THE ACT. IN SMT. SHANTIDEVI MAHAVIR PRASAD GUPTA (SUPRA), THE TRIBUNAL HELD AS UNDER: 10. THE QUESTION BEFORE US IS NOT WHETHER THE INCOME IS OF THE NATURE OF NOTIONAL INCOME BUT THE QUESTION IS WH ETHER THE ASSESSEE HAS FILED INACCURATE PARTICULARS OR CONCEALED THE TRUE FACTS. AS STATED HEREINABOVE, IN OUR HUMBLE OPINION, THE ASSESSEE HAS CONCEALED THE TRUE FACTS THEREBY FILED INACCURATE PARTICULARS. THEREFORE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). THE PENALTY U/S. 271(1)(C) IS LEVIABLE ON THE FACTS OF THE CASE. THE RELIANCE ON THE DECISION OF THE TRIBUNAL IS CLEARLY 7 ITA NO. 2794/MUM/2012 (A.Y: 2008 - 09) ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA DISTINGUISHABLE ON THE FACTS. WE, ACCORDINGLY CONFIRM THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. IN MS. LAUDRES AUSTIN (SUPRA), THE TRIBUNAL HELD THE FOLLOWING : IN THE INSTANT CASE ALSO WE HOLD THAT PENALTY PROCEEDINGS WERE INITIATED PROPERLY AS THERE IS NO DEFECT IN THE RECORDING OF SATISFACTION BY THE AO AS WELL THERE IS NO DEFECT IN THE NOTICE ISSUED U/S 271 R.W.S. 274 OF THE 1961 ACT. THE DECISION OF HONBLE BOMBAY HIGH COURT IN SAMSON PERINCHERRY (SUPRA) IS CONCERNING THE ISSUANCE OF PENALTY PROCEEDINGS UNDER ONE LIMB WHILE LEVYING OF PENALTY UNDER ANOTHER LIMB OF SECTION 271(1)(C) WHICH IS NO PERMISSIBLE AS PER RATIO OF THIS DECISION. THE HONBLE SUPREME COURT IN SSAS EMERALD MEADOWS (SUPRA) WHILE DISMISSING SLP RECORDED FINDING THAT THE HONBLE LORDSHIPS DID NOT FIND ANY MERIT IN THIS PETITION WHICH MEANS RATIO OF DECISION OF HONBLE KARNATA KA HIGH COURT IN SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 STOOD CONFIRMED. THE HONBLE KARNATAKA HIGH COURT IN SSAS EMERALD MEADOWS HAS AFFIRMED THE RATIO OF JUDGMENT OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). WE HAVE ALREADY SEEN THAT HONBLE KARNATAKA HIGH COURT IN MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS AFFIRMED THAT ALTERNATE CHARGE IS POSSIBLE UNDER BOTH THE LIMBS SIMULTANEOUSLY. 9.1 IN THE INSTANT CASE, THE AO VIDE HIS ORDER U/S 143(3) DATED 28.12.2011 HAS INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IN THE DRAFT PENALTY ORDER U/S 271(1)(C) DATED 24.03.2014, THE AO HAS IMPOSED PENALTY OF RS.46,59,047/ - FOR CONCEALMENT OF INCOME. ALSO WE FIND THAT THERE I S NO PROVISION IN THE INCOME TAX ACT, 1961 FOR A DRAFT PENALTY ORDER U/S 271(1)(C) OF THE ACT. 9.2 IT WOULD BE APPOSITE TO REFER HERE TO THE DECISION IN DILIP N. SHROFF V. JCIT (2007) 210 CTR (SC) 228, WHEREIN IT HAS BEEN HELD : 83. IT IS OF SOME SIGNIFIC ANCE THAT IN THE STANDARD PROFORMA USED BY THE ASSESSING OFFICER 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 W AS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT 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. COMMISSIONER OF INCOME TAX, KERALA STAT E, (2000) 2 SCC 718] IN CIT VS. SAMSON PERINCHERRY (ITA NO. 953, 1097, 1154 & 1226 OF 2014), THE HONBLE BOMBAY HIGH COURT HELD: THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271( 1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE ORDER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFOR E, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN DILIP N. SHROFF (SUPRA) AND SAMSON PERINCHERRY (SUPRA), WE HOLD THAT THE PENALTY PROCEEDINGS INITIATED BY THE AO IS BAD IN LAW. WE MAY HEREIN OBSERVE THAT SINCE THE ORDER OF THE AO HAS BEEN HELD AS BAD IN LAW ON THE PRELIMINARY GROUND, THE OTHER GROUNDS RAISED BY THE REVENUE 8 ITA NO. 2794/MUM/2012 (A.Y: 2008 - 09) ITA NO. 5797/MUM/2013 (A.Y: 2009 - 10) SMT ARCHANA AJIT VAIDYA ON MERITS BEFORE US HAVING BEEN RENDERED AS ACADEMIC, ARE THUS NOT BEING DEALT WITH. 9. RESPECTFULLY FOLLOWING THE ABOVE SAID DECISION, WE HOLD THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 274 R.W.S 271(1)(C) OF THE ACT IS ON ACCOUNT OF N ON - APPLICATION OF MIND AND THEREFORE THE PENALTY PROCEEDINGS INITIATED ARE BAD IN LAW. THUS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 10. AS WE HAVE HELD THAT THE PENALTY BE DELETED ON THE PRELIMINARY POINT THE O THER ARGUMENTS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT BEING DEALT WITH AS IT BECOMES ONLY ACADEMIC. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA.NO. 5797/MUM/2013 IS DISMISSED AS WITHDRAWN AND ITA.NO. 2794/MUM/2012 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 22 ND FEBRUARY, 2019 SD/ - SD/ - ( N.K. PRADHAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 22 / 0 2/2019 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