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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 ..... ts 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 Rs. 27,17,100/- as against the returned income to the tune of Rs. 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 Rs. 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 Rs. 68,00,000/-. The 1/6th share of the assessee to the tune of Rs. 11,33,333/- was also disclosed. The assessee received an amount of Rs. 12,00,000/- from NRI. The assessee failed to establish the identity, creditworthiness and genuineness of the claim, therefore, the said amount was treated as income of the assessee and brought to tax. The assessee vide assessment order dated 28.11.2011 initiated the penalty on account of furnishing the inaccurate particulars. Thereafter, the penalty notice was given and after reply of the assessee, the penalty to the tune of Rs. 7,50,000/- was levied. Aggrieved by this order, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 inaccurate particulars of income' have different connotations, it is imperative f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposition 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 matrix in the present case conforms to the proposition laid down by the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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