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TMI Blog2018 (6) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) of the Act in the absence of the original assessment order passed under section 143(3) of the Act. Subsequent setting aside of the revision order passed under section 263 of the Act by the Tribunal vide order dated 4th November 2015 is not material considering the fact that it has to be seen what is the status of the original assessment order on the date penalty order was passed by the Assessing Officer. Since, on the date of penalty order, the original assessment order under section 143(3) of the Act was not in existence, the impugned penalty order is also invalid. For this reason, the penalty order passed under section 271(1)(c) of the Act is legally unsustainable. Invalid notice - Assessing Officer has imposed penalty u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed expenditure of ₹ 1,01,29,908. After calling for details of expenditure claimed by the assessee and verifying them, the Assessing Officer disallowed expenditure to the tune of ₹ 41,71,036, claimed under various heads and accordingly he completed the assessment under section 143(3) of the Act determining the total income at ₹ 11,59,696. As stated before us, though, the assessee filed an appeal before the learned Commissioner (Appeals) challenging the disallowances made by the Assessing Officer, however, subsequently he withdrew the appeal. Accordingly, vide order dated 27th December 2013, learned Commissioner (Appeals) dismissed the appeal as withdrawn. When the matter stood thus, learned Commissioner of Income Tax call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty imposed under section 271(1)(c) of the Act. 3. The learned Authorised Representative contesting the imposition of penalty under section 271(1)(c) of the Act submitted that the penalty order is invalid primarily for the reason that on 30thMarch 2015, the date on which the Assessing Officer passed the impugned penalty order, the original assessment order on the basis of which the penalty order was passed stood revised by the order passed by the learned Commissioner under section 263 of the Act. Thus, he submitted, on the date of penalty order the assessment order passed under section 143(3) of the Act was not in existence. Therefore, the Assessing Officer could not have imposed penalty under section 271(1)(c) of the Act in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Authorised Representative relied upon the following decisions: i) K.C. Builders v/s ACIT, [2004] 265 ITR 562; and ii) CIT v/s S.M.J. Builders [2003] 262 ITR 60 Bom. 4. Without prejudice to the aforesaid submissions, the learned Authorised Representative submitted, in the show cause notice dated 7th December 2011, issued under section 274 r/w 271(1)(c) of the Act, the Assessing Officer has not indicated the specific limb of penalty provision of section 271(1)(c) which the assessee has violated to attract imposition of penalty under the said provision. He submitted, as the Assessing Officer has not struck off the inappropriate words in the show cause notice, the penalty order is invalid. For such proposition, he relied upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to ₹ 41,71,036. It also appears, though, the assessee challenged the aforesaid disallowance before the learned Commissioner (Appeals), however, subsequently the appeal was withdrawn. Thus, the assessee accepted the disallowance made by the Assessing Officer. Subsequently, the learned Commissioner in exercise of power conferred under section 263 of the Act revised the assessment order passed under section 143(3) of the Act by directing the Assessing Officer to assess the rental income as income from house property. Thus, in the process the original assessment order, wherein, part of expenditure was disallowed stood revised under section 263 of the Act. In pursuance to the aforesaid revision order passed under section 263 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 271(1)(c) of the Act is legally unsustainable. 7. Even otherwise also, though, the Assessing Officer has imposed penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income, however, in the show cause notice dated 7th December 2011 issued under section 274 r/w 271(1)(c) of the Act the Assessing Officer has not struck off the inappropriate words to indicated the specific limb of section 271(1)(c) of the Act violated by the assessee to attract imposition of penalty. That being the case, impugned penalty order passed under section 271(1)(c) of the Act cannot be sustained in view of plethora of judicial precedents on this issue, including the decision of the Hon'ble Karnataka High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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