ARJUNLAL KHEMRAJ KOTHARI, MUMBAI V. ITO 23(2)(1), MUMBAI

ITA 6413/MUM/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0126 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G. S. PANNU , AM AND SHRI AMARJIT SINGH , JM I .T.A. NO.6413 /M/ 20 1 3 (ASSESSMENT YEAR: 20 07 - 08 ) MR. ARJUNLAL KHEMRAJ KOTHARI M/S. CHETAN JEWELERS SHOP NO. 9, BODKE BLDG S.V.P. ROAD MULUND (W) MUMBAI - 400080 MAHARASHTRA. VS. ITO - 23(2)(1) PRATYAKSHAKAR BHAVAN, INCOME TAX OFFICE, BANDRA KURLA COMPLEX BANDRA MUMBAI - 400051 ./ ./ PAN/GIR NO. : AABPK 7705 P APPELLANT ) .. RESPONDENT ) DATE OF HEARING : 19 . 12 .201 7 DATE OF PRONOUNCEMENT : 09.03 .2018 O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 02 .0 8 .201 3 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 33 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 07 - 08 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - ASSESSEE BY: SMT. DEVENDRA H. JAIN (AR) DEPARTMENT BY: SHRI M. C. OMI NINGSHEN ( DR ) ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 2 THE LD. CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY ON THE AMOUNT OF RS.29,70,450/ - U/S 271(1)(C) BY THE ASSESSING OFFICER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, SUPPLEMENT, ALTER AND/OR DELETE ANY OF THE ABOVE GROUND OF APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HIS RETURN OF INCOME ON 31.10 .20 0 7 DECLARING TOTAL INCOME TO THE TUNE OF RS.21,22,914 /. THE SAID INCOME WAS INCLUSIVE OF ADDITIONAL INCOME DECLARED BY THE ASSESSEE DURING THE COURSE OF SURVEY ACTION CARRIED OUT DURING THE YEAR UNDER CONSIDERATION ON ACCOUNT OF EXCESS ST OCK FUND . THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 31.12.2009 ASSESSING THE TOTAL INCOME TO THE TUNE OF RS.62,46,555/ - BY MAKING FOLLOWING ADDITIONS: - (I) NET PROFIT ON THE REGULAR NORMAL BUSINESS ACTIVITY TAKEN AT 2.5% BEING THE AVERAGE OF LAST 3 YEARS AS PROPOSED BY THE ASSESSEE IN LETTER DT. 24.12.2009 2,98,513/ - (II) GROSS PROFIT ON EXCESS STOCK OF 14KT GOLD JEWELLERY FOUND ON SURVEY @ 23.03% AS PROPOSED BY THE ASSESSEE IN LETTER DT.24.12.2009 5,27 ,606/ - (III) EXCESS STOCK OF 14KT GOLD JEWELLERY 29,70,450/ - (IV) EXCESS STOCK OF SILVER 87,381/ - (V) EXCESS STOCK OF DIAMOND JEWELLERY 1,62,140/ - (VI) DIFFERENCE IN VALUE OF CLOSING STOCK FOUND DUE TO ADOPTION OF FIFO METHOD INSTEAD OF LIFO RESORTED TO BY THE ASSESSEE WHICH AO FOUND TO BE DETRIMENTAL TO THE INTEREST OF REVENUE. 4. ON APPEAL THE CIT(A) GIVEN THE RELIEF OF RS.7,370/ - IN RESPECT OF VALUATION OF DIAMOND AND THE REMAINING ADDITION TO THE T UNE OF ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 3 RS.22,86,736/ - WAS UPHELD . THEREAFTER PENALTY NOTICE WAS GIVEN AND AFTER THE REPLY OF THE NOTICE , THE PENALTY TO THE TUNE OF RS.20,46,492/ - WAS LEVIED. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE PENALTY , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 5 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE PENALTY WAS INITIAT ED ON ACCOUNT OF FURNISHING THE INACCURATE PARTICULAR OF INCOME BUT THE NOTICE WAS GIVEN FOR THE CONCEALMENT OF PARTICULAR OF INCOME, THEREFORE, IN THE SAID CIRCUMSTANCES, THE PENALTY IS NOT JUSTIFIABLE HENCE THE ORDER OF THE CIT(A) CONFIRMING THE PENALTY ORDER OF THE AO IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. IN SUPPORT OF THESE CONTENTIONS THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN ITA. NO.1154/M/2014 IN THE CASE OF CIT - 11 VS. SAMSON PERINCHERY AND THE ORDER OF THE ITAT, MUMBAI BENCH IN ITA. NO.2555/M/2012 VIDE ORDER DATED 28.04.2017 TITLE D AS MEHERJEE CASSINATH HOLDINGS P. LTD. VS. ACIT, CIRCLE - 4(2). HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONT ENTIONS . THE COPY OF ASSESSMENT ORDER DATED 31.12.2009 IS ON THE FILE IN WHICH THE ASSESSING OFFICER HAS INITIATED THE PENALTY ON ACCOUNT OF FURNISHING THE INACCURATE PARTICULAR OF INCOME. COPY OF NOTICE DATED ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 4 31.12.2009 IS ON RECORD IN WHICH THE ASSESSING OFFICER HAS ISSUED THE NOTICE TO THE ASSESSEE ON ACCOUNT OF CONCEALMENT OF PARTICULAR OF INCOME. IT IS NOT IN DISPUTE THAT THE PENALTY U/S 271(C) OF THE ACT IS LEVIABLE ON ACCOUNT OF THE CONCEALMENT OF PARTICU LAR OF INCOME AND ON ACCOUNT OF FURNISHING THE INACCURATE PARTICULAR S OF INCOME. BOTH HAVE DIFFERENT CONNOTATIONS. IN THIS REGARD, THE HONBLE SUPREME COURT AS APPRECIATED THE DISTINCTION BETWEEN BOTH THE LIMB IN THE CASE DILIP N. SHROFF 161 TAXMAN 218 (S C). AS PER THE RECORD THE ASSESSMENT ORDER SPEAKS ABOUT LEVYING THE PENALTY ON ACCOUNT OF FURNISHING THE INACCURATE PARTICULARS OF INCOME AND THE NOTICE HAS BEEN ISSUED FOR CONCEALMENT OF PARTICULARS OF INCOME . THE NOTICE HAS BEEN ISSUED CONTRARY TO THE L IMB AS INITIATED IN THE ASSESSMENT ORDER, T HEREFORE, THE NOTICE IS NOT JUSTIFIABLE IN VIEW OF THE LAW SETTLED BY THE BOMBAY HIGH COURT IN THE CASE OF CIT - 11 VS. SAMSON PERINCHERY AND THE ORDER OF THE ITAT, MUMBAI BENCH . AT THE TIME OF ARGUMENT, THE LD. REP RESENTATIVE OF THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE FINDING OF THE HONBLE ITAT IN ITA. NO. 2555/M/2012 TITLED AS MEHERJEE CASSINATH HOLDINGS P. LTD. VS. ACIT, CIRCLE - 4(2). THE RELEVANT PARA IS HEREBY REPRODUCED BELOW : - 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 SPECIFIED IF, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, HE IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PA RTICULARS 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 PENALTY CAN BE LEVIED ON THE EXISTENCE OF ANY ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 5 OF THE TWO SITUATIONS, NAMELY, FOR CONCEALING THE PARTICULARS O F 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 IMPOSITION OF PENALTY IS INVITED ONLY WHEN THE CONDITIONS PRESCRIBED U/S 271(1)(C) OF THE ACT EXIST. IT IS AL SO 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 NOTI CE HAS BEEN PLACED ON RECORD AND THE LEARNED REPRESENTATIVE CANVASSED THAT THE SAME HAS BEEN ISSUED BY THE ASSESSING OFFICER IN A STANDARD PROFORMA, WITHOUT STRIKING OUT THE IRRELEVANT CLAUSE. IN OTHER WORDS, THE NOTICE REFERS TO BOTH THE LIMBS OF SEC. 27 1(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 NON - APPLICATION OF MIND BY THE ASSESSING OFFICER, AND IN SUPPORT, REFERENCE HAS BEEN MADE TO THE FOLLOWING SPECIFIC DISCUSSION IN THE O RDER 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 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 ASSE SSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 6 OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSES SMENT 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 RECORD 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 F ROM THE VICE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. IN FACT, A SIMILAR PROPOSITION 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 PETIT ION FILED BY THE REVENUE HAS SINCE BEEN DISMISSED BY THE HON'BLE SUPREME 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 LD. CIT - DR HAS NOT DISPUTED THE FACTUAL MATRIX, BUT SOUGHT TO POIN T OUT THAT THERE 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 A RE 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 TO DEMONSTRATE APPLICATION OF MIND BY THE ASSESSING OFFICER IS NO DEFENCE INASMUCH AS THE HON'BLE SUPREME CO URT HAS APPROVED THE FACTUM OF NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE AS REFLECTIVE 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 SUP REME COURT, WE PROCEED TO REJECT THE ARGUMENTS ADVANCED BY THE LD. CIT - DR BASED ON THE OBSERVATIONS 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 ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 7 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 IMP OSITION 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 BEN CH, 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 CLE AR 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 PART ICULARS 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 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 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 PROCEEDIN GS WERE INITIATED AND ALSO 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 ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 8 ISSUED NOTICE TO THE ASSESSEE AND HE WAS NOT SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HONBLE BOM BAY HIGH COURT HAS DISCUSSED 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 AMB IGUITY IN THE NOTICE HAD ALSO 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 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'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) I S TO PREVAIL. FOLLOWING THE DECISION 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 FE ATURE OF THIS CASE WHICH WOULD DEMONSTRATE THE IMPORTANCE OF NON - STRIKING OFF OF IRRELEVANT CLAUSE IN THE NOTICE BY THE ASSESSING OFFICER. AS NOTED EARLIER, IN THE ASSESSMENT ORDER DATED 10.12.2010 THE ASSESSING OFFICER RECORDS THAT THE PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT ARE TO BE INITIATED 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 N OTICE AND THE IRRELEVANT CLAUSE HAS NOT BEEN 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 CRYSTALLISED CHARGE BEING CONVEYED TO THE ASSESSEE U/S 271(1)(C), WHICH HAS TO BE MET BY HIM. ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 9 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 THA T THE CHARGE BEING MADE AGAINST THE ASSESSEE 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 MAD E 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 UNTENA BLE 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 OF DILIP N. SHROFF (SUPRA) AS WELL AS THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRI SAMSON PE RINCHERY (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 WI TH. 6 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS QUITE CLEAR THAT THE PENALTY IS NOT LEVIABLE IN ACCORDANCE WITH LAW. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DELETE THE PENALTY. ACCORDINGLY, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED. ITA. NO.6413 /M/201 3 A.Y. 2007 - 08 10 ORDER PRONOUNCED IN THE OPEN COURT ON . 09.03. 2018 SD/ - SD/ - (G.S.PANNU) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 09.03. 201 8 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI