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TMI Blog2017 (3) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty proceedings were subsequently dropped. This fact has not been controverted by the ld. DR. The assessee has also furnished copy of the order dated 31.03.2014 passed u/s 271 (1) (c) of the Act for assessment year 2009-10 dropping penalty proceedings. Under such circumstances, it would not be logical to uphold the penalty in assessment year under appeal. - Decided n favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee filed appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax( Appeals) vide impugned order for the assessment year 2007-08 deleted the levy of penalty in respect of all the additions except penalty levied in respect of addition of prior period interest. Similarly, in the first appeal by assessee for assessment year 2008-09, the Commissioner of Income Tax (Appeals) deleted the levy of penalty in respect of all the additions except penalty levied on addition of prior period interest. Now both, the assessee and the Department are in appeal before the Tribunal. The assessee in its appeals for both the assessment years, have assailed confirming the levy of penalty on prior period interest, whereas the Department in its appeals has impugned the deleting of penalty on other additions, by the Commissioner of Income Tax (Appeals). The Assessee has filed additional grounds of appeal for both the impugned assessment years challenging validity of notice issued u/s 274 r.w.s 271 (1) (c ) of the Act. 4. Shri S.N Puranik appearing on behalf of the assessee submitted that the Assessing Officer, while recording satisfaction for levy of penalty during asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AR pointed that even the notice issued u/s 274 r.w.s 271 (1) ( c) for both assessment years is vague. The notice does not specify the charge for levy of penalty. The ld. AR submitted that the Hon'ble Bombay High Court in the case of CIT V/s. Shri Samson Perinchery in ITA No. 1154 of 2014 decided on 05.01.2017 deleted levy of penalty where satisfaction was not properly recorded and notice u/s 274 r.w.s 271 (1) (c ) mentioned both the charges for levying penalty. The ld. AR placed reliance on various decisions of the Tribunal wherein penalty levied u/s 271 (1) (c ) of the Act was deleted under similar circumstances. 4.2 The ld. AR submitted that similar additions were made during assessment proceedings for the assessment year 2009-2010. Penalty proceedings were also initiated u/s 271 (1) ( c) of the Act in respect of such additions. Subsequently, the Assessing Officer vide order dated 31.03.2014 dropped the penalty proceedings. The ld. AR placed on record copy of order passed by Assistant Commissioner of Income Tax dated 31.03.2014 dropping penalty proceeding, at page No. 43 of the paper book. 5. On the other hand, Shri Mukesh Jha representing the Department vehemently supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re separately initiated for furnishing inaccurate particulars or concealment of its income." While passing order of levy of penalty u/s 271 (1) (c ) of the Act dated 28.03.2013, the Assessing Officer in the concluding paragraph of the order remarked : " I am satisfied that the assessee bank has furnished inaccurate particulars of its income and it has concealed it's income and thereby made itself liable for levy of penalty under section 271 (1) (c ) of the Act." A perusal of the satisfaction recorded by the Assessing Officer at the time of assessment and while passing penalty order for both the assessment years, makes it evident that the Assessing Officer is not sure about the charge for levy of penalty. 8. In the notice issued u/s 274 r.w.s 271 (1) (c ) of the Act again the Assessing Officer has erred in mentioning both the charges for levy of penalty. It would be relevant to mention here that in the notice both the charges i.e 'concealment of income' and 'furnishing inaccurate particulars of income' are linked by conjunction 'or'. Thus, the notice does not clearly specify the charge for levy of penalty. 9. The Hon'ble Bombay High Court in the case of CIT Vs. Shri Samson Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the grounds on which they intend imposing penalty on him as section 274 makes it clear that the assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in section 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100 per cent. to 300 per cent. of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under section 274 should satisfy the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended if the showcause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing 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] 171 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. The standard proforma without striking of the relevant clauses will lead to an inference as to nonapplication of mind." 11Thus, in view of the facts of the case and judgments discussed above, we hold that the notice issued u/s 274 r.w.s 271 (1) ( c ) of the Act is bad in law and subsequent proceedings arising therefrom are vitiated. 12. On merits, the ld. AR has pointed that similar additions were made in assessment year 2009-10 and penalty proceedings u/s 271 (1)(c) were initiated. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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