SADHANA NITRO CHEM LTD, MUMBAI V. DCIT 7(2), MUMBAI

ITA 6287/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0582 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: V MOHAN
• Keywords: Bogus purchase; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6287/MUM/2014 (ASSESSMENT YEAR- 2009-10) SADHANA NITRO CHEM LTD. HIRA BAUG, 1 ST FLOOR, KASTURBA CHOWK (C.P. TANK), MUMBAI 400 004. PAN: AABCS1231R VS. DCIT 7(2), ROOM NO. 670, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.MOHAN (AR) REVENUE BY : SHRI RAM TIWARI (DR) DATE OF HEARING : 26.12.2017 DATE OF PRONOUNCEMENT : 07.02.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-13, [CIT(A)] MUMBAI DATED 17.07.2014 FOR ASSESSMENT YEA R 2009-10, WHICH IN TURN ARISES FROM THE ORDER PASSED BY ASSESSING O FFICER (AO) UNDER SECTION 271(1)(C) OF THE ACT DATED 25.09.2013. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY OF RS. 6,50,380/- UNDER SECT ION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. APPELLANT CRAVES LEAVE TO AMEND OR ALTER THE EXISTI NG GROUND OR ADD FURTHER GROUNDS AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-COMPANY I S ENGAGED IN MANUFACTURING AND TRADING IN CHEMICALS, FILED ITS R ETURN OF INCOME FOR 2 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. RELEVANT AY ON 26.09.2009 DECLARING LOSS OF RS. 11, 97,69,880/-. THE ASSESSMENT WAS COMPLETED ON 20.03.2013 UNDER SECTIO N 143(3) OF THE ACT. THE AO WHILE FRAMING THE ASSESSMENT ORDER DISALLOWE D RS. 19,13,448/- ON ACCOUNT OF BOGUS PURCHASES. THE AO INITIATED THE PE NALTY PROCEEDING UNDER SECTION 271(1)(C). THE AO LEVIED THE PENALTY @ 100 % F THE TAX SOUGHT TO BE EVADED. THE AO WORKED OUT THE PENALTY OF RS. 6,5 0,380/-. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF AO WAS UPHELD. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT (A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (A R) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD AR FOR THE AS SESSEE ARGUED THAT THE AO ISSUED NOTICE UNDER SECTION 271(1)(C) R.W.S. 271 (C) VIDE NOTED DATED 20.03.2013. IN THE NOTICE, THE AO HAS NOT STRIKE OU T THE INAPPROPRIATE PORTION SPECIFICALLY MENTION, IF THE PENALTY IS INI TIATED FOR CONCEALING THE INCOME OR FURNISHING INACCURATE PARTICULAR OF SUCH INCOME., THUS THE NOTICE ISSUED BY HIM IS DEFECTIVE. IT WAS FURTHER ARGUED THAT EVEN WHILE INITIATING THE PENALTY IN ASSESSMENT ORDER, THE AO HAS NOT SPE CIFIED THE SPECIFIC LIMB OF CHARGES AS PER CLAUSE-C OF SUB-SECTION 271 OF TH E ACT. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISIONS OF UTTAM VALUE STEELS LTD. VS. ACIT (ITA NO. 3622 TO 3625/M/ 16 DATED 22.05.2017), M/S. ORBIT ENTERPRISES VS. ITO (ITA NO S. 1596 & 1597/M/12 3 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. DATED 01.09.2017), MEHERJEE CASSINATH HOLDINGS PVT. LTD. VS. ACIT (ITA NO. 2555/M/14 DATED 28.04.17), SHRI HIRALAL CHUNILA L JAIN VS. ITO (ITA NO. 4457/M/14 DATED 01.01.2016 & HARANBA INDUSTRIES LTD. VS. DCIT (ITA NO. 2292/M/13 DATED 08.04.2015). IT WAS FURTHER ARG UED THAT THE ASSESSEE VOLUNTARILY OFFERED FOR DISALLOWANCE OF THE PURCHAS ES FROM TARA ENTERPRISES FOR RS. 5,69,762/-, R.K. ISPAT FOR RS. 8,97,266/- AND CENTURIAL SALES CORPORATION FOR RS. 4,46,420/-, THUS, TOTAL O F RS. 19,13,448/-. ON MERIT IT WAS ARGUED THAT THE ASSESSEE ITSELF WITHDR AWN THE CLAIM OF DEDUCTION DURING THE ASSESSMENT. THE ASSESSEE HAS P LACED ON RECORD ALL THE DETAILS OF THE PURCHASES IN ORDINARY COURSE OF ITS BUSINESS AND NO PENALTY IS LEVIABLE ON THE ASSESSEE. THE LD. AR OF THE ASSESSE E PRAYED FOR DELETING THE PENALTY. ON THE OTHER HAND, THE LD. DR FOR THE REVE NUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FOR THE REVENUE RE LIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. SMT. K AUSHALYA [1994] 75 TAXMAN 549 (BOM). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT DURING THE ASSESSMENT PROCEEDING, THE AO CONFRONTED THE ASSESS EE REGARDING THE INFORMATION RECEIVED FROM DGIT (INV.) ABOUT THE HAW ALA DEALERS FROM WHOM THE ASSESSEE HAS SHOWN THE PURCHASES. THE ASSE SSEE VOLUNTARILY WITHDRAWN THEIR CLAIM FOR DEDUCTION IN RESPECT OF T HE PURCHASES OF RS. 19,13,448/-. THE AO DISALLOWED AND ADDED THE SAME T O THE INCOME OF THE 4 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. ASSESSEE. THE AO INITIATED THE PENALTY FOR PROVIDIN G INACCURATE PARTICULARS OF INCOME AND FOR CONCEALMENT OF PARTICULAR OF INCO ME. THE NOTICE UNDER SECTION 274 R.W.S. 271 DATED 20.03.2013 WAS ISSUED TO THE ASSESSEE. WE HAVE NOTED THAT THE AO HAS NOT STRIKE OUT THE INAPP ROPRIATE PORTION SPECIFICALLY MENTIONING, IF THE PENALTY IS INITIATE D FOR CONCEALING THE PARTICULAR OF INCOME OR FOR FURNISHING INACCURATE P ARTICULAR OF SUCH INCOME. 5. THE CAREFUL PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT DURING THE ASSESSMENT PROCEEDING, THE ASSESSEE VOLUNTARILY OFF ERED THE DEDUCTION CLAIMED ON ACCOUNT OF PURCHASES FOR TAXATION. WE HA VE FURTHER NOTED THAT THE AO HAS NO OTHER MATERIAL EXCEPT FOR SURRENDER O F THE DEDUCTION ON ACCOUNT OF PURCHASES. THE HONBLE SUPREME COURT IN CASE OF CIT VS. SURESH CHANDRA MITTAL (2001) 251 ITR 9 (SC) HELD TH AT IF ASSESSEE OFFERED THE ADDITIONAL INCOME TO BUY PEACE OF MIND AND TO A VOID LITIGATION, THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. W E HAVE NOTED THAT AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THE MALAFIDE INTENTION OF THE ASSESSEE ABOUT THE CONCEALMENT OF INCOME. THERE IS NO INVESTIGATION BY THE AO ABOUT THE NON-GENUINE CLAIM OF THE ASSESSEE IN RESPECT OF THE DEDUCTION OF PURCHASES CLAIMED BY ASSESSEE. IN OUR VIEW, THERE IS NO EVIDENCE TO SUPPORT THE DISALLOWANCE EXCEPT THE SUR RENDER MADE BY THE ASSESSEE HIMSELF. 6. THE HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS M/S SIDHARTHA ENTERPRISES IN ITA NO 908 OF 2008 DATED 1 4.07.2009 WHILE 5 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. CONSIDERING THE DECISION OF THE SUPREME COURT IN UNION OF INDIA V S DHARAMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277/ 174 TAXMAN 571 CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WH ERE PARTICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HA S BEEN LAID DOWN IS THAT QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABIL ITY UNDER SECTION 276C AND PENALTY UNDER SECTION 271(1)(C) HAS TO BE KEPT IN MIND AND APPROACH ADOPTED FOR THE TRIAL OF A CRIMINAL CASE NEED NOT B E ADOPTED WHILE CONSIDERING THE LEVY OF PENALTY. EVEN SO, CONCEPT O F PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF THE SAID JUDGMENT. PE NALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT AN D NOT FOR A MERE MISTAKE . 7. THE ORDINATE BENCH OF THE TRIBUNAL ON ALMOST SIMILA R FACTS IN MEHERJEE CASSINATH HOLDINGS PVT. LTD. (SUPRA) AFTER CONSIDER ING THE DECISION OF JURISDICTIONAL HIGH COURT IN KAUSHALYA (SUPRA) REL IED BY LD DR HELD AS UNDER: 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. SEC. 271(1)(C) OF THE ACT EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY TO THE EXTENT SPECIFIED IF, IN THE COURSE O F ANY PROCEEDINGS UNDER THE ACT, HE IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. IN OTHER WORDS, WHAT SEC. 271(1)(C) OF THE ACT POSTULATES IS THAT THE PENALTY CAN BE LEVIED ON THE EXISTENCE OF ANY OF THE TWO SITUATIONS, NAMELY, FOR CONCEALING THE P ARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS OBVIOUS FROM THE PHRASEOLOGY OF SE C. 271(1)(C) OF THE ACT THAT THE IMPOSITION OF PENALTY IS INVITED O NLY WHEN THE CONDITIONS PRESCRIBED U/S 271(1)(C) OF THE ACT EXIS T. IT IS ALSO A WELL ACCEPTED PROPOSITION THAT 'CONCEALMENT OF THE PARTICULARS OF 6 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. INCOME' AND 'FURNISHING OF INACCURATE PARTICULARS O F INCOME' REFERRED TO IN SEC. 271(1)(C) OF THE ACT DENOTE DIF FERENT CONNOTATIONS. IN FACT, THIS DISTINCTION HAS BEEN AP PRECIATED 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 'CO NCEALMENT OF THE PARTICULARS OF INCOME' AND 'FURNISHING OF INACC URATE PARTICULARS OF INCOME' HAVE DIFFERENT CONNOTATIONS, IT IS IMPER ATIVE 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. I T IS IN THIS BACKGROUND THAT ONE HAS TO APPRECIATE THE PRELIMINA RY 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 BE EN ISSUED TO THE ASSESSEE- COMPANY. A COPY OF THE SAID NOTICE HAS BE EN PLACED ON RECORD AND THE LEARNED REPRESENTATIVE CANVASSED THA T THE SAME HAS BEEN ISSUED BY THE ASSESSING OFFICER IN A STANDARD PROFORMA, WITHOUT STRIKING OUT THE IRRELEVANT CLAUSE. IN OTHE R WORDS, THE NOTICE REFERS TO BOTH THE LIMBS OF SEC. 271(1)(C) O F THE ACT, NAMELY CONCEALMENT OF THE PARTICULARS OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. QUITE CLEARLY, NO N-STRIKING-OFF OF THE IRRELEVANT LIMB IN THE SAID NOTICE DOES NOT CON VEY TO THE ASSESSEE AS TO WHICH OF THE TWO CHARGES IT HAS TO R ESPOND. THE AFORESAID INFIRMITY IN THE NOTICE HAS BEEN SOUGHT T O BE DEMONSTRATED AS A REFLECTION OF NON-APPLICATION OF MIND BY THE ASSESSING OFFICER, AND IN SUPPORT, REFERENCE HAS BE EN MADE TO THE FOLLOWING SPECIFIC DISCUSSION IN THE ORDER OF HON'B LE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA):- '83. IT IS OF SOME SIGNIFICANCE THAT IN TH E STANDARD PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPIT E THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGR APHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, T HE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD P ROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOM E OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, T HE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDE R OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUA TIONS. 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON-APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINCIPL ES OF NATURAL 7 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. JUSTICE. ( SEE MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 2 SCC 718]' 9. FACTUALLY SPEAKING, THE AFORESAID PLEA OF ASSESSEE IS BORNE OUT OF RECORD AND HAVING REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. S HROFF (SUPRA), THE NOTICE IN THE INSTANT CASE DOES SUFFER FROM THE VICE OF NON- APPLICATION OF MIND BY THE ASSESSING OFFICER. IN FA CT, A SIMILAR PROPOSITION WAS ALSO ENUNCIATED BY THE HON'BLE KARN ATAKA HIGH COURT IN THE CASE OF M/S. SSA'S EMERALD MEADOWS (SU PRA) AND AGAINST SUCH A JUDGMENT, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE HAS SINCE BEEN DISMISSED BY THE HON'BLE SUP REME COURT VIDE ORDER DATED 5.8.2016, A COPY OF WHICH IS ALSO PLACED ON RECORD. 10. IN FACT, AT THE TIME OF HEARING, THE L D. CIT-DR HAS NOT DISPUTED THE FACTUAL MATRIX, BUT SOUGHT TO POINT OUT THAT TH ERE IS DUE APPLICATION OF MIND BY THE ASSESSING OFFICER WHICH CAN BE DEMONSTRATED 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. IN OUR CONSIDERED OPINION, THE ATTEMPT OF THE LD. CIT-DR T O 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 IRRELEVANT CLAUSE IN THE NOTICE AS REFLECTIVE OF NON-APPLICATION OF MIND BY THE ASSESS ING OFFICER. SINCE THE FACTUAL MATRIX IN THE PRESENT CASE CONFOR MS 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 OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. FURTHER, IT IS ALSO NOTICEABLE THAT SUCH PROPOSITIO N HAS BEEN CONSIDERED BY (SUPRA) AND THE DECISION OF THE TRI BUNAL HOLDING LEVY OF PENALTY IN SUCH CIRCUMSTANCES BEING BAD, HA S BEEN APPROVED. 11. APART FROM THE AFORESAID, THE LD. CIT- DR MADE AN ARGUMENT BASED ON THE DECISION OF THE HON'BLE BOMBAY HIGH CO URT IN THE CASE OF SMT. KAUSHALYA & OTHERS, 216 ITR 660 (BOM.) TO CANVASS SUPPORT FOR HIS PLEA THAT NON-STRIKING OFF OF THE I RRELEVANT PORTION OF NOTICE WOULD NOT INVALIDATE THE IMPOSITION OF PE NALTY U/S 8 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. 271(1)(C) OF THE ACT. WE HAVE CAREFULLY CONSIDERED THE SAID ARGUMENT SET-UP BY THE LD. CIT-DR AND FIND THAT A S IMILAR 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 TH E CASE OF SMT. KAUSHALYA & ORS., (SUPRA) AS ALSO THE JUDGMENT S OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROF F (SUPRA) AND DHARMENDRA TEXTILE PROCESSORS, 306 ITR 277 (SC) DED UCED AS UNDER :- '12. A COMBINED READING OF THE DECISION R ENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. B KAUSHALYA A ND OTHERS (SUPRA) AND THE DECISION RENDERED BY HON'BLE SUPREM E COURT IN THE CASE OF DILIP N SHROFF (SUPRA) WOULD MAKE IT CL EAR 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 IN COME BUT LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF IN COME. THE HON'BLE GUJARAT HIGH COURT QUASHED THE PENALTY SINC E THE BASIS FOR THE PENALTY PROCEEDINGS DISAPPEARED WHEN IT WAS HELD THAT THERE WAS NO SUPPRESSION OF INCOME. THE HON'BLE KER ALA HIGH COURT HAS STRUCK DOWN THE PENALTY IMPOSED IN THE CA SE OF N.N.SUBRAMANIA IYER VS. UNION OF INDIA (SUPRA), WHE N THERE IS NO INDICATION IN THE NOTICE FOR WHAT CONTRAVENTION THE PETITIONER WAS CALLED UPON TO SHOW CAUSE WHY A PENALTY SHOULD NOT BE IMPOSED. IN THE INSTANT CASE, THE AO DID NOT SPECIFY THE CHA RGE FOR WHICH PENALTY PROCEEDINGS WERE INITIATED AND FURTHER HE H AS ISSUED A NOTICE MEANT FOR CALLING THE ASSESSEE TO FURNISH TH E RETURN OF INCOME. HENCE, IN THE INSTANT CASE, THE ASSESSING O FFICER DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY PROCEEDING S WERE INITIATED AND ALSO ISSUED AN INCORRECT NOTICE. BOTH THE ACTS OF THE AO, IN OUR VIEW, CLEARLY SHOW THAT THE AO DID NOT A PPLY HIS MIND WHEN HE ISSUED NOTICE TO THE ASSESSEE AND HE WAS NO T SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HON'BLE BOM BAY HIGH COURT HAS DISCUSSED ABOUT NON-APPLICATION OF MIND I N THE CASE OF KAUSHALYA (SUPRA) AND OBSERVED AS UNDER:- '....THE NOTICE CLEARLY DEMONSTRATED NON-AP PLICATION OF MIND ON THE PART OF THE INSPECTING ASSISTANT COMMISSIONER. THE VAGUENESS AND AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE RIG HT OF REASONABLE OPPORTUNITY OF THE ASSESSEE SINCE HE DID NOT KNOW W HAT EXACT 9 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. CHARGE HE HAD TO FACE. IN THIS BACK GROUND, QUASHIN G OF THE PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 1967-68 SEEMS T O BE FULLY JUSTIFIED.' IN THE INSTANT CASE ALSO, WE ARE OF THE V IEW THAT THE AO HAS ISSUED A NOTICE, THAT TOO INCORRECT ONE, IN A ROUTINE MANN ER. FURTHER THE NOTICE DID NOT SPECIFY THE CHARGE FOR WHICH THE PEN ALTY NOTICE WAS ISSUED. HENCE, IN OUR VIEW, THE AO HAS FAILED TO AP PLY HIS MIND AT THE 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'BL E SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) IS TO PREVAIL. FOLLOWING THE DECISION OF OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA), WE HEREBY REJECT THE AFORESA ID 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 D EMONSTRATE THE IMPORTANCE OF NON-STRIKING OFF OF IRRELEVANT CL AUSE IN THE NOTICE BY THE ASSESSING OFFICER. AS NOTED EARLIER, IN THE ASSESSMENT ORDER DATED 10.12.2010 THE ASSESSING OFFICER RECORDS THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE TO BE INIT IATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOW EVER, IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT O F EVEN DATE, BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT ARE REPRODUC ED IN THE PROFORMA NOTICE AND THE IRRELEVANT CLAUSE HAS NOT B EEN STRUCK-OFF. QUITE CLEARLY, THE OBSERVATION OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER AND NON-STRIKING OFF OF THE IRRELE VANT CLAUSE IN THE NOTICE CLEARLY BRINGS OUT THE DIFFIDENCE ON THE PART OF ASSESSING OFFICER AND THERE IS NO CLEAR AND CRYSTALLISED CHAR GE BEING CONVEYED TO THE ASSESSEE U/S 271(1)(C), WHICH HAS T O BE MET BY HIM. AS NOTED BY THE HON'BLE SUPREME COURT IN THE C ASE OF DILIP N. SHROFF (SUPRA), THE QUASI-CRIMINAL PROCEEDINGS U /S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF NATU RAL JUSTICE, AND IN THE PRESENT CASE, CONSIDERING THE OBSERVATIONS O F THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ALONGSIDE HIS ACTIO N OF NON- STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE SHOWS THAT THE CHARGE BEING MADE AGAINST THE ASSESSEE QUA SEC. 271 (1)(C) OF THE ACT IS NOT FIRM AND, THEREFORE, THE PROCEEDINGS SUF FER FROM NON- COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE INASM UCH AS THE ASSESSING OFFICER IS HIMSELF UNSURE AND ASSESSEE IS NOT MADE 10 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. 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 DI SCUSSION, 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 NON- APPLICATION OF MIND HAVING REGARD TO THE RATIO OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F DILIP N. SHROFF (SUPRA) AS WELL AS THE JUDGMENT OF THE HON'B LE BOMBAY HIGH COURT IN THE CASE OF SHRI SAMSON PERINCHERY (S UPRA). THUS, ON THIS COUNT ITSELF THE PENALTY IMPOSED U/S 271(1) (C) OF THE ACT IS LIABLE TO BE DELETED. 8. CONSIDERING THE ABOVE REFERRED FACTUAL AND LEGAL PO SITION AS NARRATED ABOVE, WE HELD THAT THE NOTICE ISSUED BY ASSESSING OFFICER UNDER SECTION 274RWS 271(1)(C) WAS DEFECTIVE AS THE ASSESSEE WAS NOT INF ORMED ABOUT SPECIFIC CHARGE OF PENALTY. MOREOVER, THERE IS NO FINDING OF THE ASSESSING OFFICER ON RECORD TO SHOW THE MALAFIDE INTENTION OF THE ASSESS EE ABOUT THE CONCEALMENT OF INCOME. THERE IS NO INVESTIGATION BY THE AO ABOU T THE NON-GENUINE CLAIM OF THE ASSESSEE IN RESPECT OF THE DEDUCTION O F PURCHASES CLAIMED BY ASSESSEE. THUS, THE LEVY OF PENALTY IN THE PRESENT CASE IS NOT JUSTIFIABLE. HENCE, WE ACCEPT THE SUBMISSION OF LD. AR OF THE AS SESSEE AND DIRECT THE AO TO DELETE THE PENALTY. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF FEBRUARY, 2018. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 07/02/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : 11 ITA NO.6287/M/2014 SADHANA NITRO CHEM LTD. BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/