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TMI Blog2017 (12) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... lant u/s.36(1)(viia) is found to be excess/not acceptable and restricted to the extent of provision for Bad and Doubtful Debt debited to Profit and Loss account by any stretch of imagination does not tantamount to concealment of income or furnishing incorrect particulars of income. 'Further for few rural branches advances not found to be eligible for claim ix]«, 36(1)(viia) is brought to the notice of Learned A.O. by appellant himself, during the course of assessment and the said claim was made on the basis of data, information then available to bank from branches is not amounts to concealment of income or furnishing incorrect details and ACIT -circle-3 passing and CIT(A)-l Thane confirming the penalty order u/s. 271 (1)(c) levy of penalty is for away from real facts baseless, ignoring law, against weight of evidence, against principle and natural justice and bad in law therefore penalty order deserved to be quashed in toto. 2. The learned CIT(A)1-Thane failed to appreciate that the bank has claimed deduction u/s. 36(1)(viia) in good faith and on the basis of then available data from the branches with the bank which is not amounts to concealment of income or furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomatically lead to levy of penalty. In support of additional grounds of appeal, the ld. AR of the assessee argued that the penalty order passed by AO is bad-in-law. The AO failed to mention, if the penalty is being levied for concealment or for furnishing inaccurate particulars of income in the assessment order. The show-cause notice dated 19.01.2011 u/s 274 r.w.s. 271(1)(c) of the Act does not satisfied the specific charge as the AO has not specified the charge the notice of penalty is bad in law. The ld. AR of the assessee placed on record the copy of notice dated 19.11.2011 issued u/s 274 r.w.s. 271(1)(c) of the Act along with the computation of income, balance-sheet and Profit & Loss A/c. In support of his submission, the ld. AR of the assessee relied upon the decision of Hon'ble Bombay High Court in case of CIT vs. Samson Perinchary (392 ITR 4) and the decision of Co-ordinate Bench of Tribunal in case of Meherjee Cassinath Holdings P. Ltd. v/s. ACIT in ITA No. 2555/Mum/2012 dated 28.04.2017. 5. On the other hand, ld. DR for the Revenue strongly supported the order of authorities below and would argue that the assessee was given full opportunity before levying the penalty. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer to impose penalty to the extent specified if, in the course of any proceedings under the Act, he is satisfied that 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, namely, 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 conditions prescribed u/s 271(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 distinction 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 income' and 'furnishing of inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of non-application of mind by the Assessing Officer. In fact, a similar proposition was also enunciated by the Hon'ble Karnataka High Court in the case of M/s. SSA's 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 record. 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, wherein 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish the return of income. 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 when he issued notice to the assessee and he was not sure as to what purpose the notice was issued. The Hon'ble Bombay High Court has discussed about non-application of mind in the case of Kaushalya (supra) and observed as under:- "....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 face. 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. Further 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in the case of 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." 7. The ld. DR for the Revenue relied upon the decision of Co-ordinate Bench in Dhaval K. Jain (supra) and the decision of jurisdictional High Court in CIT v/s Smt. Kaushalya & Ors. (supra) may refer that the Hon'ble jurisdictional High Court in a recent decision of similar ground as raised by assessee in the present appeal in case of CIT vs. Samson Perinchary (supra) held that the failure on the part of AO to specify in the notice u/s 274 whether the penalty is being initiated for furnishing of inaccurate particulars of income or for concealment of income (is fatal). The Hon'ble Court further held that none-mentioning of charge reflects non-application of mind and renders the levy of penalty invalid. The Hon'ble jurisdictional High Court followed the decision of Karnataka High Court in CIT v/s. Manjunatha Cotton and Ginning Factory [(2013) 359 ITR 0565]. The Hon'ble Court delivered the said decision on 05.01.2017. The ld. DR for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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