SHAILESH G. SHETH, MUMBAI V. ACIT 13(2), MUMBAI

ITA 701/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7811 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 27-07-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Sale consideration of property below Jantri Value; Invalid notice; Gift; Principle of natural justice; Question of law; Tax effect
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 701 / MUM/20 12 ( ASSESSMENT YEAR : 2005 - 06 ) SHRI SHAILESH G. SHETH 424, GIRIRAJ BUILDIG S.T.ROAD, IRON MARKET MUMBAI 400 009 VS. AC IT 13(2) AAYAKAR BHAVAN CHURCHGATE MUMBAI PAN/GIR NO. ADFPS2137N APPELLANT ) .. RESPONDENT ) ITA NO. 67/ MUM/20 12 ( ASSESSMENT YEAR : 2005 - 06 ) ACIT 13(2) R.NO.477, AAYAKAR BHAVAN M.K.ROAD MUMBAI VS. SHRI SHAILESH G. SHETH 424, GIRIRAJ BUILDIG S.T.ROAD, IRON MARKET MUMBAI 400 009 PAN/GIR NO. ADFPS2137N APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI DEVENDRA JAIN REVENUE BY SHRI V. JUSTIN DATE OF HEARING 06 / 11 /201 7 DATE OF PRONOUNCEME NT 22 / 12 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 24, MUMBAI DATED 04/10/2011 FOR THE A.Y.2005 - 06 IN THE MATTER OF PENALTY IMPOSED U/S.271(1)(C) OF THE IT ACT. 2. FACTS IN BRIEF ARE THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE RECEIVED GIFT FROM NRI DONOR OUT OF NATURAL LOVE AND AFFECTION, HOWEVER, SA ME WAS DECLINED BY THE AO AND ADDED IN ASSESSEES INCOME. ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 2 AFTER ADDITION WAS CONFIRMED, AO ALSO LEVIED PENALTY U/S.271(1 )(C). PENALTY WAS ALSO LEVIED BY AO FOR THE ADDITION MADE U/S.50C OF THE IT ACT. 3. BY THE IMPUGNED ORDER, CIT(A) DELETED PENALTY WITH RESPECT TO THE ADDITION MADE U/S.50C. HOWEVER, HE HAS CONFIRMED PENALTY WITH RESPECT TO ADDITION MADE U/S.68 OF TH E IT ACT. 4. LEARNED AR HAS TAKEN LEGAL GROUND TO THE EFFECT THAT NOTICE ISSUED BY AO U/S.274 R.W.S.271(1)(C) WAS IN THE STANDARD FORMAT WITHOUT POINTING OUT WHETHER PENALTY IS INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCUR ATE PARTICULARS OF INCOME, THUS, AO HAS NOT ST RIKED OUT THE IRRELEVANT PORTION. FOR SUCH NOTICE, NO PENALTY IS LEVIABLE. AS PER LEARNED AR , PENALTY ORDER PASSED ON THE BASIS OF SUCH INVALID NOTICE IS BAD IN LAW AS HELD IN THE FOLLOWING CASES. 1. CIT V . SHRI SAMSON PERINCHERY (HONORABLE BOMBAY HIGH COURT ITA NO. 1154,953,1097 & 1126 OF 2014 DATED 5.1.2017) 2. MEHERJEE CASSINATH HOLDINGS PVT.LTD. V. ACIT (ITA NO. 2555/MUM/2012) (MUMBAI) 3. CIT V. MANJUNATHA COTTON AND GINNING FACTORY [359 ITR 565] (K ARNATAKA) - DEPARTMENT'S SLP DISMISSED BY SC 4. HAFEEZ S. CONTRACTOR V, ACIT (ITA NO. 6222 - 6223/MUM/2013) (MUMBAI) 5. SANGHAVI SAVLA COMMODITY BROKERS PVT LTD V. ACIT (ITA NO. 1746/MUM/2011) (MUMBAI) 6. PARINEE DEVELOPERS PVT LTD V. ACIT (ITA NO. 6772 /MUM/2013) (MUMBAI) 7. ACIT V. DIPESH M PANJWANI (ITA NO. 6330/MUM/2012) (MUMBAI) 8. DCIT V. NEPA LIMITED (ITA NO. 683/IND/2013) (INDORE) 9. SUVAPRASANNA BHATTACHARYA V. ACIT (ITA NO. 1303/KO!/2010) (KOLKATA) 10. IDEAL UNEMPLOYED ENGINEERS C O - OP. SOC. LTD. V. DCIT (ITA NO. 2460/KOL/2013) (KOLKATA) 11. H. LAKSHMINARAYANA V. ITO (ITA NO. 992 TO 996/BANG/2014) (BANGALORE) ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 3 5. AS PER LEARNED AR, THE AO HAS NOT APPLIED HIS MIND IN SO FAR AS EVEN IN THE COURSE OF PENALTY PRO CEEDINGS, THE AO MADE DIFFERENT OBSERVATION IN DIFFERENT PARAGRAPH I.E., IN PARA 3, THE AO HAS MENTIONED THAT IT IS A CASE OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS, WHEREAS IN PARA 5, THE AO SAYS IT IS A CASE OF FURNISHING INACCURATE PARTIC ULARS OF INCOME. THEN AGAIN IN PARA 8, THE AO SAYS IT IS EITHER CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME. THUS, IT IS A CASE OF TOTAL NON - APPLICATION OF MIND BY AO AND NO PENALTY CAN BE LEVIED WITHOUT FRAMING AND CONCLUDING A SPECIFIC CHAN GE. 6. IT WAS FURTHER CONTENDED BY LEARNED AR THAT LEARNED AO HAS LEVIED PENALTY ONLY BECAUSE THE QUANTUM ADDITION IS CONFIRMED BY APPELLATE AUTHORITIES. CONFIRMATION OF ADDITION BY APPELLATE AUTHORITIES DOES NOT AUTOMATICALLY LEAD TO IMPOSITION OF PENAL TY. IT IS A SETTLED POSITION THAT PENALTY PROCEEDING IS A SEPARATE PROCEEDING DISTINCT FROM ASSESSMENT PROCEEDING. AO SHOULD MAKE AN INDEPENDENT ENQUIRY IN PENALTY PROCEEDING AND THEN COME TO A CONCLUSION WHETHER THERE IS A CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. RELIANCE IS PLACED ON FOLLOWING DECISIONS : 1. MOHD. HAJI ADAM & CO. V. DCIT (1TA NO. 4341/M/2009 - MUMBAI ITAT) 2. DY. CIT V. SHRI RAJEEV KUMAR SRIVASTAVA (ITA NO. 467/LKW/20IL - LUCKNOW I TAT) 3. CIT V. BHURAMAL MANICKCHAND (1981) 5 TAXMAN 315 (CAL.) 4. SIXTH ITOV. KUMAR METAL INDUSTRIES (199 1)36 ITD 261 (MUM.) 7. AS PER LEARNED AR , IN THE INSTANT CASE, THE AO HAS NOT MADE ANY INDEPENDENT ENQUIRY IN PENALTY PROCEEDING AN D LEVIED PENALTY ONLY ON THE BASIS OF CONFIRMATION OF ADDITION BY APPELLATE AUTHORITIES. ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 4 8. WITH REGARD TO MERIT OF THE PENALTY SO IMPOSED, IT WAS CONTENDED BY LEARNED AR THAT ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDENCE TO DISCHARGE INITIAL ONUS OF GIF T HAVING BEEN GENUINELY RECEIVED FROM NRI. CONFIRMATION OF DONOR WAS FILED ALONGWITH THE BANK STATEMENT. AS PER LEARNED AR IT WAS A CASE OF NOT PROVING AND NOT DISPROVING THE FACTS MENTIONED BY THE ASSESSEE. AS PER LEARNED AR, PROVISIONS OF SECTION 68 ARE DEEMING PROVISIONS WHERE UNLESS THE FACTS MENTIONED BY THE ASSESSEE ARE DISPROVED, NO PENALTY CAN BE IMPOSED. 9 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT AO HAS CORRECTLY RECORDED SATISFACTION REGARDING CONCEALMENT OF INCOME, THEREFORE, PENALTY WAS CORRECTLY LEVIED U/S.271(1)(C) OF THE IT ACT. 10 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS WITH REG ARD TO IMPOSITION OF PENALTY WHEN THERE IS A DEFECT IN THE NOTICE IN SO FAR AS IRRELEVANT PORTION IN THE STANDARD FORMAT HAS NOT BEEN DELETED. WE FOUND THAT NOTICE HAS BEEN ISSUED BY THE AO IN THE STANDARD FORMAT WHEREIN IT HAS NOT BEEN POINTED OUT WHETHE R PENALTY WAS TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME. WHAT IS THE EXACT CHARGE WAS NOT MENTIONED. 11 . THERE CAN BE NO DOUBT THAT PENALTY U/S. 271(1)(C) OF THE ACT IS LEVIED FOR CONCEALING PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME, WHICH ARE THE TWO LIMBS OF THIS PROVISION. IN OTHER WORDS, IT IS ONLY WHEN THE AUTHORITY INVESTED WITH THE REQUISITE POWER ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 5 IS SATISFIED THAT EITHER OF THE TWO EVENTS EXISTED IN A PARTICULAR CASE THAT PR OCEEDINGS U/S. 271(1)(C) OF THE ACT ARE INITIATED. THIS PRE - REQUISITE SHOULD INVARIABLY BE EVIDENT FROM THE NOTICE ISSUED U/S. 274 R.W.S. 271 OF THE ACT, WHICH IS THE JURISDICTIONAL NOTICE, FOR VISITING AN ASSESSEE WITH THE PENAL PROVISION. THE INTENT AND PURPOSE OF THIS NOTICE IS TO INFORM THE ASSESSEE AS TO THE SPECIFIC CHARGE FOR WHICH HE HAS BEEN SHOW CAUSED SO THAT HE COULD FURNISH HIS REPLY WITHOUT ANY CONFUSION AND TO THE POINT. IN THE PRESENT CASE, NEITHER THE ASSESSEE NOR ANYONE ELSE COULD MAKE OU T AS TO WHETHER THE NOTICE U/S. 274 R.W.S. 271 OF THE ACT WAS ISSUED FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME DISABLING IT TO MEET WITH THE CASE OF THE ASSESSING OFFICER. THERE ARE A CATENA OF JUDGMEN TS HIGHLIGHTING THE NECESSITY FOR IDENTIFYING THE CHARGE FOR WHICH THE ASSESSEE IS BEING VISITED AND IN ALL THOSE DECISIONS, HON'BLE COURTS HAVE REPEATEDLY HELD THAT WHERE THE JURISDICTIONAL NOTICE IS VAGUE, SIMILAR TO THE ONE IN THE PRESENT CASE, THE CONS EQUENT LEVY CANNOT BE SUSTAINED. 12 . IN THIS CONNECTION, RELIANCE IS FIRST PLACED UPON THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. MANJUNATHA COTTON AND GINNING FACTORY & ORS. AND VEERABHADRAPPA SANGAPPA AND CO. (359 ITR 565, 5 77, 601, 603 - 604) IN WHICH THE FACTS ARE SIMILAR. IN THOSE BUNCH OF TAX APPEALS, SEVERAL ASSESSEE AND SEVERAL ISSUES WERE INVOLVED. IN SO FAR AS I.T.A. NO. 5020 OF 2009 WAS CONCERNED, ONE OF THE SUBSTANTIAL QUESTIONS ON WHICH THE APPEAL WAS FILED BY THE RE VENUE WAS: ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 6 'WHETHER THE NOTICE ISSUED UNDER SECTION 271(1)(C) IN THE PRINTED FORM WITHOUT SPECIFICALLY MENTIONING WHETHER THE PROCEEDINGS ARE INITIATED ON THE GROUND OF CONCEALMENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS IS VALID A ND LEGAL?' 13 . WHILE ANSWERING THE ABOVE IN FAVOUR OF THE ASSESSEE, THE FOLLOWING FINDINGS WERE RECORDED BY THE HON'BLE COURT: '61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT THUS, THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURN ISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING P LTD REPORTED IN [2008 1 71 TAXMAN 156 HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. '(P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) I.E. WHETHER IT IS FOR CONCEALMENT OF I NCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND. 14 . THEREAFTER, IN SO FAR AS THE MANNER IN WHICH THE STATUTORY NOTICE WAS REQUIRED TO BE ISSUED, THE HON'BLE COURT CONCLUDED THUS: (P) NOTICE U/S 274 OF THE ACT SHOULD BE SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCO ME. ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 7 1 5 . FINALLY, IN CONCURRING WITH THE FINDINGS RECORDED IN THE ORDER OF THE TRIBUNAL, IT WAS HELD THUS: 66. IN VIEW OF THE AFORESAID LAW, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ENTIRE PROCEEDINGS ARE VITIATED AS THE NOT ICE ISSUED IS NOT IN ACCORDANCE WITH LAW AND ACCORDINGLY JUSTIFIED IN INTERFERING WITH THE ORDER PASSED BY THE APPELLATE AUTHORITY AS WELL AS THE ASSESSING AUTHORITY AND IN SETTING ASIDE THE SAME. HENCE, WE ANSWER THE SUBSTANTIAL QUESTIONS OF LAW FRAMED IN THIS CASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ' 1 6 . THE AFORESAID JUDGMENT WAS UNSUCCESSFULLY CHALLENGED BY THE REVENUE BEFORE THE SUPREME COURT, AS IT WAS REJECTED VIDE PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO. 13898/2014 DATED 11.07 .2016. RELIANCE WAS NEXT PLACED UPON ANOTHER JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE CIT V. SSA'S EMERALD MEADOWS (INCOME TAX APPEAL NO. 380 OF 2015 DECIDED ON 23.11.2016). IN THIS CASE ALSO S SIMILAR SITUATION AROSE IN AS MUCH AS THE HON BLE COURT WAS REQUIRED TO ADJUDICATE ON THE FOLLOWING SUBSTANTIAL QUESTION: (1) WHETHER, OMISSION OF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE?' 17 . THE AFORESAID QUESTION WAS DEALT WITH BY THE HONBLE COUR T IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING WORDS: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME - TAX ACT 1961 (FOR SHORT 'THE A CT; TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE PENALTY PROCEEDINGS HAD BEEN INITIATED LE. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 8 FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNEL WHILE ALLO WING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 1 8 . THE SLP FILED BY THE DEPARTMENT IN THE AFORESAID CASE ALSO WAS DISMISSED BY THE HON'BLE SUPREME COURT VIDE PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO .... ./2016 (CC NO. 11485/2016) DATED 05.08.2016. 19 . THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SHRI SAMSON PERINCHERY [INCOME TAX APPEAL NO. 1 154 OF 2014 AND OTHERS DATED 05.01.2017] HAD ALSO OCCASION TO CONSIDER A SIMILAR ISSUE. IN THIS CASE, THOUGH PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, IN THE NOTICE ISSUED U/S. 274 R.W.S. 271 O F THE ACT IN THE STANDARD FORM, THE CHARGE FOR WHICH IT WAS ISSUED WAS ALSO NOT IDENTIFIED, AS IN THE PRESENT CASE. IN DELETING THE LEVY, SO FAR AS NON - SPECIFICATION OF THE DEFAULT IN THE JURISDICTIONAL NOTICE, THE FOLLOWING FINDINGS WERE RECORDED BY THE H ON'BLE BOMBAY HIGH COURT: '7 THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT - ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRE SENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MENJUNETH COTTON AND GINNING FACTORY (SUPRA). 8. IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED DO NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW THUS, NOT ENTERTAINED' 20 . THE HON'BLE SUPREME COURT IN DILIP N. SHROFF V/S JCIT, [2007] 291 ITR 519 (SC), HAS OBSERVED THAT WHILE ISSUING THE NOTICE UNDER SECTION ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 9 274 R/W SECTION 271, IN THE STANDARD FORMAT, THE ASSESSING OFFICER SHOULD DELETE THE INAPPROPR IATE WORDS OR PARAGRAPHS, OTHERWISE, IT MAY INDICATE THAT THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THIS, ACCORDING T O THE HON'BLE SUPREME COURT, DEPRIVES THE ASSESSEE OF A FAIR OPPORTUNITY TO EXPLAIN ITS STAND, THEREBY, VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. AS HELD BY THE HON'BLE SUPREME COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC), TH E AFORESAID PRINCIPLE LAID IN DILIP N. SHROFF (SUPRA) STILL HOLDS GOOD IN SPITE OF THE DECISION OF THE HON'BLE SUPREME COURT IN UOI V/S DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC). THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S SMT. KAUSHALYA & ORS., [1995] 216 ITR 660 (BOM), OBSERVED THAT NOTICE ISSUED UNDER SECTION 274 MUST REVEAL APPLICATION OF MIND BY THE ASSESSING OFFICER AND THE ASSESSEE MUST BE MADE AWARE OF THE EXACT CHARGE ON WHICH HE HAD TO FILE HIS EXPLANATION. THE COURT OBSERVED, VAG UENESS AND AMBIGUITY IN THE NOTICE DEPRIVES THE ASSESSEE OF REASONABLE OPPORTUNITY AS HE IS UNAWARE OF THE EXACT CHARGE HE HAS TO FACE. THE HON'BLE JURISDICTIONAL HIGH COURT IN SAMSON PERINCHERY (SUPRA), FOLLOWING THE DECISION OF HON'BLE KARNATAKA HIGH COU RT IN CIT V/S MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565 (KAR.), HELD, ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 10 2 1 . IN ADDITION TO THE AFORESAID BINDING JUDGMENTS, THERE ARE SEVERAL ORDERS PASSED BY CO - ORDINATE BENCHES OF THE TRIBUNAL ON THIS VERY POINT. IN ALL THOSE ORDERS ALSO PENALTY LEVIED U S. 271(L)(C) OF THE ACT ON THE BASIS OF SIMILAR VAGUE NOTICE WAS CANCELLED. 22 . IT MAY BE MENTIONED THAT IN THIS REGARD, NO CONTRA RY DECISION OF THE HON'BLE APEX COURT OR THE HON'BLE BOMBAY HIGH COURT HAS BEEN BROUGHT TO OUR NOTICE OR PLACED BEFORE US FOR CONSIDERATION. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY REPORTED IN (2013) 359 ITR 565 (KAR), DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VRS SAMSON PERINCHERY DATED 05.01.2017, WE HOLD THAT THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271 OF THE ACT DATED 29.11.2007 FOR A.Y. 2005 - 06 FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IN THE CASE ON HAND IS INVALID AND CONSEQUENTLY, THE PENALTY PROCEEDINGS ARE ALSO INVALID. 23. UNDER THESE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THE IMPOSITION OF PEN ALTY U/S.271(1)(C) OF THE IT ACT. 24. REVENUE IS ALSO AGGRIEVED BY THE ORDER OF CIT(A) FOR DELETING PENALTY ATTRIBUTABLE TO THE ADDITION MADE U/S.50C OF THE IT ACT. WE FOUND THAT AFTER RELYING ON THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN CASE OF RENU HINGORANI IN ITA NO.2210/MUM/2010, THE CIT(A) HAS DELETED THE PENALTY. AS P ER OUR CONSIDERED VIEW DECLINE OF LEGAL CLAIM W ILL NOT ENTAIL ANY ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 11 PENALTY U/S.271(1)(C) IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN CASE OF RELIANCE UTILITIES & POWER LTD., HOWEVER, SINCE THE TAX EFFECT IN THE REVENUES APPEAL IS LESS THAN RS.10 LAKHS, THE APPEAL IS DISMISSED ON THE PLEA OF TAX EFFECT ALSO. 25. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED I N THE OPEN COURT ON THIS 22 / 12 /2017 S D/ - ( RAM LAL NEGI ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 22 / 12 /201 7 KARUNA SR. PS COPY OF THE O RDER FORWARDED TO : 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// ITA NO. 701/MUM/2012 & 67/MUM/2012 SHRI SHAILESH G.SHETH 12 DATE INITIAL 1. DRAFT DICTATED ON 19/12/2017 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 20/12/2017 (DICTATION PAD HAS BEEN ENCLOSED HEREWITH ALONGWITH ORIGINAL FILE ) SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.