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TMI Blog2018 (2) TMI 1638X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in law, the Hon'ble CIT (A) has erred in: 1. dismissing the ground of appeal without giving any reasons that the penalty order under section 271 (1) ( c) of the Act has been passed ex-parte by the learned AO i .e. without giving any opportunity of presenting its case and of being heard to the Appellant, which is in violation of the principles of natural justice. 2. upholding the penalty order on the premise that no appeal was filed against the addition made by the learned AO in the assessment order , thereby ignor ing the fact that the issue of subjecting the same income to tax twice, was a fit case for rectification under section 154 of the Act and proceeding to uphold the levy of penalty even without waiting for the disposal of the rectification application filed by the Appellant. 3. upholding the penalty order passed by the learned AO levying penalty of Rs. 22,62,959/- u/s 271(1)(c) on the premise that the Appellant had furnished inaccurate particulars and concealed the income. 4. confirming the penalty levied under Section 271(1)(c) of the Act, without appreciating the fact that the additions made by the learned AO of Rs. 66,57,721/- on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has no explanation to offer and also has no objection for the proposed levy of penalty. Accordingly, considering the facts of the case and also by relying upon the decision of Hon'ble Supreme Court in the case of Union of India vs. Dharmendra Textile Processors & others (2008) 306 ITR 277 levied penalty of Rs. 22,62,959/- under section 271(1)(c) of the Act. 4. Aggrieved by the penalty order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee has filed an elaborate written submissions. The assessee further contended that the AO was erred in levying penalty for disallowance of corporate revenue for computation of deduction claimed under section 10A/10AA on the ground that the assessee has furnished inaccurate particulars of income which attracts penalty under section 271(1)(c) of the Act, without appreciating the fact that though the assessee has filed revised computation working out correct disallowance of corporate revenue for computing deduction under section 10A/10AA this cannot be considered as furnishing of inaccurate particulars of income. The assessee has taken up a legal plea in as much as the notice issued by the AO under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO has issued printed form of notice without striking off irrelevant portion, therefore, it is a clear case of non application of mind from the AO whether penalty has been initiated for furnishing of inaccurate particulars of income or concealment of particulars of income. The Ld. A.R. further referred to the penalty order passed by the AO and submitted that though the AO has stated that penalty proceedings are initiated for furnishing of inaccurate particulars of income, in his order at paragraph No.1 in the concluding paragraphs he has not specifically mentioned whether penalty has been levied for concealment of particulars of income or furnishing of inaccurate particulars of income. Therefore, the penalty order passed by the AO consequent to invalid or vague notice cannot survive and hence the order passed by the AO should be quashed. 6. The Ld. D.R., on the other hand, strongly supported the order of the Ld. CIT(A). The Ld. D.R. further referring to the decision of Hon'ble Bombay High Court, Nagpur Bench in the case of M/s. Maharaj Garage & Company vs. CIT in Income Tax Reference No.21 of 2008 dated 22.08.17 submitted that the requirement of section 274 of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses on the ground that the assessee has concealed particulars of income and also furnished inaccurate particulars of income. The AO has initiated penalty by issuing notice u/s 274 r.w.s. 271(1)(c) in a printed form without striking off of irrelevant portion which were not applicable to the facts of assessee's case. The AO has issued notice which states that penalty has been initiated for concealment of particulars of income or furnishing of inaccurate particulars of income. In the assessment order, the AO has initiated penalty proceedings on both charges, i.e. for concealing the particulars of income and furnishing inaccurate particulars of income. The AO levied the penalty on both the charges, i.e. for concealing the particulars of income and furnishing inaccurate particulars of income. Right from the assessment stages to levy of penalty, the AO has initiated penalty on both charges which is not the case as per the provisions of section 271(1)(c) as the two charges, i.e. concealment of particulars of income or furnishing of inaccurate particulars of income are two different connotations. The issue of notice u/s 274 r.w.s. 271(1)(c) goes to the root of the matter of assumi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnishing of inaccurate particulars of income would definitely vitiate the entire penalty proceedings. 12. In this case, on perusal of the facts available on record it is abundantly clear that the AO has initiated penalty proceedings in the assessment order on both the grounds, i.e. concealment of particulars of income and also furnishing of inaccurate particulars of income. The AO also levied penalty on both the grounds of concealment of particulars of income and also furnishing of inaccurate particulars of income which is quite contrary to the provisions of section 271(1)(c) where it was categorically stated that both the charges are standing in a different footing and the AO has to initiate penalty proceedings for concealment of particulars of income or furnishing of inaccurate particulars of income. Initiation of penalty by injecting and in place of or would definitely go against the basic provisions of the Act. In this case, the AO has initiated penalty on both the grounds, which cannot be the case for initiation of penalty u/s 271(1)(c) of the Act. We further observe that it is not open to the authority, at the time of imposing penalty to impose penalty on the ground other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order is extracted below:- " 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 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 (2007) 292 ITR 11 (SC) at page 19 has held that concealnment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi High Court in the case of Virgo Marketing P.Ltd., reported in 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 stand and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 274 r.w.s. 271(1)(c) was bad in law as it did not specify under which limb of section 271(1)(c), penalty proceedings had been initiated. 16. Coming to the case laws relied upon by the Ld. DR. The Ld. DR relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Smt.Kaushalya (supra). We have gone through the case law relied upon by the Ld. DR in the light of the facts of the present case and find that the ITAT, Mumbai in the case of DCIT vs Dr. Sarita Milind Davare in ITA No.1789/Mum/2014 dated 21-12-2016 has considered the decision rendered by Hon'ble Bombay High Court in the light of Supreme Court judgement in the case of Dilip N Shroff 291 ITR 519 (SC) and observed that there should be application of mind on the part of the AO at the time of issuing notice. Since the co-ordinate bench has already considered the judgement of Hon'ble Bombay High Court, we are of the view that case law relied upon by the Ld.DR is not applicable to the facts of the present case." 8. In so far as the judgment of the Hon'ble Judicial Bombay High Court in the case of M/s. Maharaj Garage & Company vs. CIT (supra) relied upon by the Ld. D.R., the co-ordinate bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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