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TMI Blog2017 (6) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 to 4491/Mum/2014 - - - Dated:- 7-6-2017 - Shri Mahavir Singh, JM And Shri Rajesh Kumar, AM Assessee by : Shri Rajesh Shah Revenue by : Shri Rajat Mittal ORDER Per Bench These are five appeals filed by the assessee against the common order dated 26.5.2014 passed by the ld.CIT(A)-28, Mumbai for the assessment years 2001-2002 to 2005-06 arising out of penalty order passed u/s 271(1)(c) of the Income Tax Act, 1961 in respect of five assessment years of respective date. Since these appeals pertain to the same assessee and issue involved therein are common, therefore, these appeals were clubbed together, heard together and are being dispose of by this consolidated order for the sake of convenience. ITA NO.4491/Mum/2014 (AY-2005-06) 2. Lead year is taken as assessment year 2005-06 and hence this appeal is being dealt first wherein various grounds raised which are as under : Being aggrieved against order of the Commissioner of Income Tax (Appeals)- 28, Mumbai, this appeal petition is being filed to consider the following grounds of appeal, which are independent and without prejudice to each other: 1. On the facts and circumstances of the case and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the specific charge on which the penalty is proposed to be leivied i.e whether it is proposed to be levied for inaccurate particulars of income or for concealment of income. So without going into the merit of levying penalty, we are first deciding the issue of validity of imposition of penalty u/s 271(1)(c) of the Act. 5. The brief facts of the case are that the assessee filed return of income on 30.2.2006 declaring total income of ₹ 89,400/-. Notice under section 148 was issued after recording the reasons for reopening the assessment on 11.7.2006 after the AO received information from DIT(Inv) Unit-I, Mumbai that the assessee was not assessed to tax as he was not filing the return of income. On further inquiry it was found that he owned two residential properties in Navi Mumbai and the source of investments were out of foreign gifts. The gifts were received from outside India and were encashed through various foreign currency dealers. As per the Guidelines of Reserve Bank of India, direct foreign currency cannot be brought into India unless it is brought through Drafts, Banker Cheque and other banking channels. The foreign gifts received in India is not a gift and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication of mind which is bad in law and so is the consequential order passed u/s 271(1)(c) of the Act which is bad in law. In support of his contention, the ld. AR relied upon the number of decision as under : i) CIT vs. Manjunath Cotton Ginning Factory (359 ITR 565) (Kar HC) ii) CIT vs. V.S. Lad Sons (SLP) (SC) iii) CIT vs. Veerabhadrappa Sangappa Co. (SLP) (SC) iv) CIT vs. SSA's Emerald Meadows (SLP) (SC) Above SLPs have affirmed the High Court decisions the case of CIT vs. Manjunath Cotton Ginning Factory v) Dr. Sarita Milind Davare vs ACIT (Mumbai Tribunal) I.T.A. No. 2187/Mum/2014(AY-2009-10) 21.12.2016 vi) CIT vs Manu Engg. (122 ITR 306) (Guj. HC) vii) Dilip N. Shroof vs. JCIT (291 ITR 519) (SC) viii) UOl vs. Dharamendra Textile Processors (295 ITR 244) (SC) ix) CIT V/s Reliance Petrophoducts (P) Ltd (322 ITR 159) (SC) Finally, the ld.AR prayed before the Bench that in view of the defective notice which was incurable in view of the ratio laid down by the various decisions of the Hon ble High Courts and the decisions of the Tribunal, the penalty proceedings initiated by the AO was void abinitio and therefore the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayed for confirmation of the penalty order. The ld.DR relied upon the decision of the Mumbai Bench of the Tribunal in the case of DHAVAL K JAIN V/s ITO in ITA No.996/Mum/2014 (AY-2003-04) order dated 30.9.2016 which was passed after considering the decision of jurisdictional High Court in the case of Smt. Kaushalya And others(supra) the Karnataka High Court in the case of Manjunath Cotton Ginning Factory(supra). The ld.DR finally prayed that in view of the ratio laid down in the afore said decisions, the order of the AO levying the penalty and confirmation by the ld.FAA passed under section 274 r.w.s271(1)(c) should be upheld by dismissing the appeal of the assessee. 8. We have carefully considered the rival contentions, perused the material placed before us including the orders of authorities below and case law relied upon by the parties. The perusal of the assessment order reveals that the AO has only stated that the penalty proceedings under section 271(1)(c) of the Act are initiated separately without specifying or mentioning any specific charge under which the assessee is being proposed to be penalized i.e. whether the assessee has concealed a particulars of income or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s apparent from the highlighted portion of notice issued u/s 274 r.w.s. 271 of the Act. In the appellate proceeding challenging the penalty , the FAA partly allowed the appeal of the assessee. Now, the assessee is in appeal before us. Now first we will decide the technical ground no 2 raised in the additional grounds of appeal by the assessee. We find from the notice that it was issued in standard format without striking off any of the two limbs i.e. for concealing the particulars of income or furnishing inaccurate particulars of income of such income under which the penalty was initiated against the assessee. In view of these facts we are of the view that the AO lacked application of mind in initiating penalty proceedings while framing assessment and also while issuing the notice initiating penalty proceedings u/s 274 r.w.s 271(1)(c) of the Act which would go to the root of the order and is not curable. In the case of Manjunath Cotton Ginning Factory(supra), the Hon ble Karnataka High Court has held as under : Notice under section 274 should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e herein stands concluded in favour of the respondentAssessee 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 present facts which would warrant our taking a view different from the Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra). 9. We are therefore respectfully following the ratio laid down by the Hon ble High Courts including the jurisdictional High Court and Supreme Court hold that the order of the CT(A) upholding the imposition of penalty u/s 271(1)(c) of the Act where the AO had not specified or mentioned the charge on which the penalty has been imposed is not correct and cannot be sustained. In view of the foregoing discussion we set aside the order of CIT(A) and direct the AO to delete the penalty levied u/s 271(1)( c ) of the Act. 10. In the remaining appeals i.e ITA NOs.4487 to 4490/Mum/2014 (Assessment Years: 2001-2002 to 2004-05) the legal issue taken by the assessee are identical and hence the decision taken in ITA No.4491/Mum/2014 deleting the penalty would mutatis mutandis apply to these appeals as well. Accordingly, these appeals are a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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