SUMITOMO CHEMICAL INDIA P.LTD, MUMBAI V. ASST CIT 1(3)(1), MUMBAI

ITA 7244/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8138 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 271(1)(c); 143(3); 27; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 7244 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 2008 - 09 ) SUMITOMO CHEMCIAL INDIA P. LTD. 6 TH FLOOR, MOTI MAHAL, 195, J TATA ROAD, CHURCHGATE, MUMBAI - 400020 . / VS. ACIT - 1(3)(1) AAYKAR BHAVAN, M.K ROAD, CHURCHGATE, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAECS 3750 L ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 24 . 12 .201 8 / DATE OF PRONOUNCEMENT : 26. 12 .2018 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 29 .0 9 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2008 - 09 I N WHICH THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE CONFIRMED . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THAT ON FACTS AND IN LAW, THE LD CIT(A) ERRED IN NOT HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WAS WITHOUT JURISDICTION, BAD IN LAW AND VOID - AB - INITIO. ASSESSEE BY : SHRI PARAS S. SAVLA/ HARSH SHAH REVENUE BY: SHRI MANOJ KUMAR SINGH ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 2 2. THAT ON FACTS AND IN LAW, THE LD CIT(A) ERRED IN NOT QUASHING THE ORDER, WHEN THE IMPUGNED PENALTY ORDER HAD BEEN PASSED WITHOUT PROPER SATISFACTION BEING RECORDED I N THE NOTICE ISSUED / ASSESSMENT ORDER, AS TO WHETHER THE APPELLANT HAD CONCEALED PARTICULARS OF INCOME AND / OR FURNISHED INACCURATE PARTICULARS OF INCOME, WHICH, IS SINE QUA NON FOR ASSUMPTION OF VALID JURISDICTION. 3. THAT ON FACTS AND IN LAW, THE LD CI T(A) ERRED IN NOT HOLDING THAT THE IMPUGNED PENALTY ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT IS BAD IN LAW SINCE THE ORDER HAS BEEN PASSED WITHOUT AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 4. THAT ON THE FACTS AND IN LAW, THE LD CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS 42,40,672, WITHOUT APPRECIATING THAT THE EXPLANATION OF THE APPELLANT WAS BONA FIDE AND ALL MATERIAL F ACTS IN RESPECT OF PROVISIONS MADE FOR DISCOUNT & REBATE AND PROVISION FOR LEAVE ENCASHMENT WERE ON RECORDS. 4.1 THAT ON THE FACTS AND IN LAW, THE LD CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER LEVYING PENALTY IN RELATION ABOVE MENTIONED PROVISIONS ALLEGING THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS AND OR CONCEALED PARTICULARS OF INCOME. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETUR N OF INCOME FOR THE A.Y. 2008 - 09 ON 25.03.2009 DECLARING TOTAL INCOME TO THE TUNE OF RS.54,80,768 / - . THEREAFTER, THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 10.02.2009 DETERMINING THE TOTAL INCOME TO THE TUNE OF RS.11,04,65,510/ - . THEREAFTER, THE COMMISSIONER OF INCOME TAX - 3, MUM BAI INVOKED THE PROVISION U/S 26 3 OF THE I.T. ACT AND DIRECTED THE FRESH ASSESSMENT BY VIR TUE OF ORDER DATED 10.03.2014 . T HE REAFTER, THE ASSESSMENT U/S 143(3 ) OF THE ACT R.W.S. 263 OF THE ACT WAS COMPLETED . IN THE SAID ASSESSMENT ORDER, THE ASSESSEE MADE THE PROVISION FOR DISCOUNT AND REB ATE OF ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 3 RS.1,05,94,855/ - AND PROVISIONS MADE FOR LEAVE ENCASHMENT OF RS.18,81,377/ - WHICH WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THEREAFTER, THE PENALTY PROCEEDING WAS INITIATED AND PENALTY TO THE TUNE OF RS.42,40,672/ - WAS LEVIED. THE ASSE S SEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRM ED THE PENALTY ORDER , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUT SET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE PENALTY NOTICED NOWHERE SPEAKS ABOUT SPECIFIC LIMB TO LEVY THE PENALTY BECAUSE THE PARTICULAR CHARGE WAS NOT TICK OFF IN THE NOTICE, THEREFORE, IN THE SAID CIRCUMSTANCES THE PENALTY IS NOT JUS TIFIABLE 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 I TA. 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 TITLED AS MEHERJEE CASSINATH HOLDINGS P. LTD. VS. ACIT, CIRCLE - 4(2). HOWEVER, ON THE OTHER HAND, THE L D. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. THE COPY OF THE COPY OF NOTICE DATED 07.08.2013 IS ON THE FILE IN WHICH THE ASSESSING OFFICER NOWHERE SPECIFY ANY LIMB TO LEVY THE ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 4 PENALTY BECAUSE NO OF THE CHARGE WAS TICK OFF IN THE NO TICE. IT IS NOT IN DISPUTE THAT THE PENALTY U/S 271(C) OF THE ACT IS LEVIABLE ON ACCOUNT OF THE CONCEALMENT OF PART ICULAR OF INCOME AND ON ACCOUNT OF F URNISHING THE INACCURATE PARTICULARS OF INCOME. BOTH HAVE DIFFERENT CONNOTATIONS. IN THIS REGARD, THE HON BLE SUPREME COURT AS APPRECIATED THE DISTINCTION BETWEEN BOTH THE LIMB IN THE CASE DILIP N. SHROFF 161 TAXMAN 218 (SC). AS PER THE RECORD THE ASSESSMENT ORDER SPEAKS ABOUT LEVYING THE PENALTY ON ACCOUNT OF FURNISHING THE INACCURATE PARTICULARS OF INCOME A ND CONCEALMENT OF PARTICULARS INCOME BUT THE NOTICE THE NOTICE NOWHERE SPECIFY ANY LIMB TO LEVY THE PENALTY. 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. REPRESENTATIVE 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 T HAT 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 PENALTY CAN BE LEVIED ON THE EXISTENCE OF ANY OF THE TWO SITUATIONS, NAMEL Y, 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 IMPOSITION OF PENALTY IS INVITED ONLY WHEN THE ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 5 CONDITIONS PRESCRIBED U/S 27 1(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 DI STINCTION 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 IN COME 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 ASSESSE E - 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, WITHOUT 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 NON - APPLICATION OF MIND BY THE ASSESSING OFFICER, AND IN SUPPORT, REFERENCE HAS BEEN MADE TO THE FOL LOWING 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 OFFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTUL ATES 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 THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED IN ACCURATE 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. ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 6 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON - APPLICATION OF MIND. IT WA S 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 B Y 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 PROPOSITION WAS ALSO ENUNCIATED BY THE HON'BLE KARNATAKA H IGH 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 ORDER DATED 5.8.2016, A COPY OF WHICH IS ALSO PLACED ON RECO RD. 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 DEMONSTRATED FROM THE DISCUSSION IN THE ASSESSMENT ORDER, WHER EIN 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 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 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 SUPREME COURT, WE PROCEED TO REJECT THE ARGUMENTS ADVANCED BY THE LD. CIT - DR BASED ON THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. 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 HOL DING LEVY OF PENALTY IN SUCH CIRCUMSTANCES BEING BAD, HAS BEEN APPROVED. ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 7 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 CAN VASS 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 IS SUE 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 H ON'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 (S UPRA) 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 I SSUED 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 T HAT 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 CA LLED 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 PROCEEDINGS WERE INITIATED AND FURTHER HE HAS ISSUED A NOTICE MEANT FOR CALLING THE ASSESSEE TO FURNISH THE RETURN OF INCO ME. HENCE, IN THE INSTANT CASE, THE ASSESSING OFFICER DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY PROCEEDINGS 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 WHE N 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 DISCUSSED ABOUT NON - APPLICATION OF MIND IN THE CASE OF KAUSHALYA (SUPRA) AND OBSERVED AS UNDER: - ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 8 ....THE NOTICE CLEARLY DEMONSTRATED NON - APPLICATION OF MIND ON THE PART OF THE INSPECTING ASSISTANT COMMISSIONER. THE VAGUENESS AND AMBIGUITY 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 F ACE. 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. FURTHE R 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 REA SONS 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 DECISION OF OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA), WE HEREBY REJECT THE AFORESAID AR GUMENT 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 DEMONSTRATE THE IMPORTANCE OF NON - STRIKING OFF OF IRRELEVANT CLAUSE IN THE NOTICE BY THE ASSESSING OFFICER. AS N OTED 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 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 NOTICE AND THE IRRELEVANT CLAUSE HAS NOT BEEN STRUCK - OFF. QUITE CLEARLY, THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND NO N - 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. AS NOTED BY TH E 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 ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 9 OFFICER I N 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 ASSESSEE QUA SEC. 271(1)(C) OF THE ACT IS NOT FIRM AND, THEREFORE, THE PROCEEDINGS SUFFER FROM NON - COMPLIANC E 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 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'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 PENAL TY HAS BEEN DELETED ON THE PRELIMINARY POINT, THE OTHER ARGUMENTS RAISED BY THE APPELLANT ARE NOT BEING DEALT WITH. 5 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS QUITE CLEAR THAT THE PENALTY IS NOT LEVIABLE IN ACCORDANCE WITH LAW . IT IS ALSO REQU IRED TO BE SEEN ON WHICH BASIS THE PENALTY HAS BEEN LEVIED BY AO . B ASICALLY THE ADDITION WAS RAISED ON ACCOUNT OF DISALLOWANCE OF PROVISION MADE FOR DISCOUNT AND REBATE OF RS.1,05,94,855/ - AND ON ACCOUNT OF DISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT OF RS.18,81,377/ - . SO FAR AS THE PENALTY RAISED IN ASS ESSMENT ORDER FOR THE PROVISION MADE FOR DISCOUNT AND REBATE OF RS.1,05,94,855/ - HAS BEEN REMANDED TO THE AO BY T HE HONBLE ITAT IN ITA. NO.3381/M/2014 AND M.A. NO.40/M/2017 WHO DELETED THE SAID ADDITION. NO DOUBT, IN THE SAID CIRCUMSTANCES, NO PENALTY IS LEVIABLE ON ACCOUNT OF THE SAID ADDITION BEING THE QUANTUM IN CONNECTION WITH THE PROVISION MADE FOR ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 10 DISCOUNT AND REBATE OF RS.1,05,94,855/ - HAS BEEN DELETED. SO FAR AS THE DISALLOWANCE OF PROVISION MADE FOR ON ACCOUNT OF LEAVE ENCASHMENT OF RS.18,81,377/ - IS CONCERNED, I T IS CONTENDED BY THE LD. REPRESENTATIVE OF THE ASSESSEE THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE DECISION OF KOLKATA HIGH COURT IN CASE TITLED AS EXIDE IND USTRIES LTD. V . UOI (2007) 292 ITR 470 (CAL) IN WHICH IT IS SPECIFICALLY HELD THAT THE PROVISIONS OF MADE FOR LEAVE ENCASHMENT CANNOT BE DISALLOWED IN THE HANDS OF THE ASSESSEE. THE APPEAL OF THE SAID ORDER IS PENDING BEFORE THE HONBLE SUPREME COURT. IT I S ALSO ARGUED THAT THE HONBLE ITAT, MUMBAI HAS ALSO DELETED THE DISALLOWANCE MADE ON ACCOUNT OF PROVISIONS OF LEAVE ENCASHMENT IN THE CASE OF ADITYA BIRLA NUVO LTD. VS. ACIT (ITA. NO.659/M/2009 AND (2015) 68 SOT 403 (MUM - TRIB.) ALL THE SAID DECISION SPEAK S THIS FACT THAT THE ISSUE IS DEBATABLE, THEREFORE, NO PENALTY IS LEVIABLE IN VIEW OF THE LAW SETTLED IN CYBERTECH SYSTEM & SOFTWARE LTD. VS. DCIT (B OMBAY HIGH COURT) (ITA. NO. 578 , 579 & 582 OF 2016). FURTHER, WE ALSO NOTICED THAT THE ASSESSEE RAISED THE CLAIM ON ACCOUNT OF PROVISIONS OF LEAVE ENCASHMENT OF RS.18,81,377/ - WHICH HAS BEEN DECLINED, THEREFORE, IN SAID CIRCUMSTANCES, WHEN THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTABLE , THEREFORE, NO PENALTY IS LEVIABLE IN VIEW OF THE DECISION OF HOBLE SUPREME C OURT IN THE CASE RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 . TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE ITA. NO.7244 /M/201 6 A.Y. 20 08 - 09 11 CIT(A) IS NOT JUSTIFIABLE , THEREFORE WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DE LETE THE PENALTY . 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 26. 12 . 201 8 SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 26. 12 . 201 8 VIJAY / C OPY 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