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TMI Blog2017 (11) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM For The Assessee : Ms. Shraddha Gor, AR For The Revenue : Kumar Sanjay, Ld. CIT DR ORDER PER MAHAVIR SINGH, JM: 1. This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-47 Mumbai [in short CIT(A)] in appeal No. CIT(A)-36/AP.342/14-15 dated 23-02-2016. The Assessment for impugned AY was framed by Ld. Deputy Commissioner of Income Tax, Centre Circle-47, Mumbai (in short DCIT or AO) for the Assessment Year 2009-10 (in short AY) vide order dated 30-12-2011 under section 153A read with section 143(3) of the Income Tax Act, 1961(hereinafter the Act ). The penalty was levied by Ld. AO under section 271(1)(c) of the Act vide order dated 29.03.2014. 2. The first issue in this appeal of assessee assails the order of CIT(A) qua confirmation of penalty under section 271(1)(c) of the Act. The assessee has contested the same on jurisdictional issue as well as on merits. Since, the legal issue questions the very levy of penalty, we take up the same first. The assessee has raised following legal grounds: - I) The learned Commissioner of Income Tax (Appeals) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering the reply of the assessee, proceeded to levy penalty amounting to ₹ 9,45,03,556/- u/s 271(1)(c). Aggrieved, the assessee preferred appeal before CIT(A) on legal grounds as well as on merits, who confirmed the action of the AO on jurisdictional issue by observing in Para 5.15 as under: - 5.15 Thus after giving due consideration to the facts of the instant case as also to the judicial pronouncements cited above, the levy of penalty under section 271(1)(c) is upheld and the ground raised by the appellant are dismissed. Aggrieved, the assessee is in further appeal before us. 4. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us, the learned Counsel for the assessee argued that the AO in his quantum assessment order framed under section 153 A read with Section 143(3) of the Act at Para 7.14 initiated penalty by stating that The assessee has furnished inaccurate particulars of its income, therefore penalty is separately initiated under section 271(1)(c) . The learned Counsel for the assessee drew attention to Para 7 to Para 12 of the penalty order passed by Ld. AO under section 271(1)(c) to contend t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non-application of mind on the part of the Assessing Officer while issuing the penalty notice. 4 The impugned order relied upon the following extract of Karnataka High Court's decision in CIT v/s. Manjunath Cotton and Ginning Factory 359 ITR 565 to delete the penalty: The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any 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 as 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra). She also stated that Hon ble Bombay High court has followed the decision of Hon ble Karnataka High Court rendered in Manjunath Cotton Ginning Factory (Supra), wherein similar view is taken. 6. On the other hand, the learned CIT Departmental Representative (DR) filed written submissions, which reads as under: - In addition to the above Case Laws, my arguments in brief are as follows. a) The assessee's contention that, in the assessment order passed under section u/s 153A r.w.s. 143(3) of the Act, the Ld AO at end of para 7.14 has merely stated that 'the assessee has furnished inaccurate particulars of its income therefore penalty is separately initiated u/s 271(1)(c)' While in the order passed u/s 271(1 )(c) the Ld. AO has in para 9 to para 11 discussed the limb' concealing particulars of such income by invoking Explanation 1 and thereafter in para 12 held that the assessee has deliberately filed inaccurate particulars of income within the meaning of section 271(1)(c) of the Act, 1961 read with Explanation I thereto. In the penalty order the A.O. has also stated that though concealment and furnishing of inaccurate particulars are two d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. The issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) (headnote): Under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings. In nutshell, the arguments are as follows: - I) Rules of natural justice cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs thereof and, consequently be liable to the penalty provided by that section. No express invocation of the explanation to Section 271 in the notice u/s 271 is, in our view, necessary before the provisions of the explanation therein are applied. This case has nowhere been argued in the case of Samson Perincherry or Manjunatha Cotton which has a strong relevance for the application of the said section. vi) I am also relying on the two judgments of Hon ble ITAT Mumbai in the case of Mahesh M Gandhi v/s ACIT(Mumbai) order dated 27.02.2017 and in the case of Earth Moving Equipment Service Corporation v/s. DCIT (ITAT E Bench Mumbai order dated 2.05.2017 where favourable orders have been passed in the favour of the department. My prayer will be that either the judgment of Kaushalya and others (2016 ITR 660 Bombay should be followed as it is a more speaking order of a jurisdictional High Court or alternatively this should be referred to the Hon ble President, ITAT for constitution of a Special Bench on this issue. 7. In the given facts and circumstance and discussion carried out above, we are of the view that the AO has initiated penalty proceedings for furnishing of ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench of the Hon ble Supreme Court in the case of CIT Vs M/s. Dharmendra Processors (306 ITR 277) it was held that levy of penalty is a civil liability and willful concealment is not essential ingredient for attracting a civil liability as in the matter of prosecution uls.276C of the Act. It was held by the Hon'ble Supreme Court after considering the provisions of section 271(1)(c) and the explanation appended thereto that The explanations appended to section 271(1)(c) of the Income- tax Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return . The object behind the enactment of section 271(1)(c) read with the explanation indicates that the said section has been enacted to provide for a remedy for loss of revenue. 11. Further, the Reliance is placed in the case of CIT Vs. Zoom Communication Pvt. Ltd. reported in 191 Taxman 179 (Delhi), where it was held that whether if assessee makes a claim which is not only incorrect in law, but also wholly without any basis and explanation furnished by him for making such a claim is not found to be bona fide, explanation I to Sec. 271(1)(c) wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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