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TMI Blog2018 (7) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... humble prayer is made to condone the delay of 35 days in filing of appeal being caused under bonafide reasons and compelling circumstances beyond the control of appellant. 2. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the penalty levied of ₹ 7,50,000/- u/s 271(1)(c) of the I.T. Act, 1961 without considering the facts of the case. 3. The appellants crave leave to alter, amend and or add any other ground of appeal. 3. The brief facts of the case are that the assessment of the assessee was completed u/s 143(3) of the Act on 28.11.2011 by determining total income to the tune of ₹ 27,17,100/- as against the returned income to the tune of ₹ 5,30,973/-. The case was selected for scrutiny on the basis of this fact the assessee made the investment in immovable property to the tune of ₹ 1,23,46,000/-. On notice, the assessee furnished the purchase agreement dated 30.04.2008 in which it came into notice that the assessee along with five share-holders purchased the said property in a sum of ₹ 68,00,000/-. The 1/6th share of the assessee to the tune of ₹ 11,33,333/- was also disclosed. The assessee rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of concealment of income by virtue of order dated 19.04.2012 which is not justifiable in accordance with law. In support of this contention the Ld. Representative of the assessee has placed reliance upon the law settled in ITA No. 2555/M/2012 titled as Meherjee Cassinath Holdings P. Ltd. Vs. ACIT, Circle-4(2). The relevant para is hereby reproduced below: - 8. We have carefully considered the rival submissions. Sec. 271(1)(c) of the Act empowers the Assessing Officer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The impugned order, therefore, suffers from non- application of mind. It was also bound to comply with the principles of natural justice. (See Malabar Industrial Co. Ltd. v. CIT [2000] 2 SCC 718] 9. Factually speaking, the aforesaid plea of assessee is borne out of record and having regard to the parity of reasoning laid down by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the notice in the instant case does suffer from the vice 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 satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court quashed the penalty since the basis for the penalty proceedings disappeared when it was held that there was no suppression of income. The Hon ble Kerala High Court has struck down the penalty imposed in the case of N.N.Subramania Iyer Vs. Union of India (supra), when there is no indication in the notice for what contravention the petitioner was called upon to show cause why a penalty should not be imposed. In the instant case, the AO did not specify the charge for which penalty proceedings were initiated and further he has issued a notice meant for calling the assessee 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 Assis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qua Sec. 271(1)(c) of the Act is not firm and, therefore, the proceedings suffer from non- compliance with principles of natural justice inasmuch as the Assessing Officer is himself unsure and assessee is not made aware as to which of the two limbs of Sec. 271(1)(c) of the Act he has to respond. 14. Therefore, in view of the aforesaid discussion, in our view, the notice issued by the Assessing Officer u/s 274 r.w.s. 271(1)(c) of the Act dated 10.12.2010 is untenable as it suffers from the vice of non-application of mind having regard to the ratio of the judgment of the Hon'ble Supreme 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. We hold so. Since the penalty has been deleted on the preliminary point, the other arguments raised by the appellant are not being dealt with. 5. In view of the said circumstances, we are of the view that the order passed by the CIT(A) confirmation the penalty is not justifiable, therefore, we set aside the same and delete the penalty. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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