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TMI Blog2018 (8) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was also not pointed out by the Ld. AO in the assessment done u/s 143(3) for the A.Y. 2011-12. The case was also supported by the decisions of the Hon'ble apex court which was not considered by the Ld. CIT (A). 4. Because under the facts and circumstances of the case the assessee has explained that the error was not intentional and was prevented by circumstances beyond his control. 5. That the appellant craves to add. amend, alter, modify or delete any or all of the grounds of appeal before oral the time of hearing." 2. The issue of validity or otherwise of the penalty imposed u/s 271(1)(c) of the I.T. Act, in facts and circumstances similar to those attending this appeal has been discussed by the Division Bench of the Agra ITAT, while disposing of ITA No. 118/Agra/2015, in the case of 'Sachin Arora vs. ITO' for A.Y. 2008-09 and other appeals. 3. Therein, it has been observed, inter alia, as follows: "2. Facts, for convenience, are being taken from ITA No. 118/Agra/2015, the assessee's appeal for A.Y. 2008-09 against the CIT(A)'s order confirming penalty of Rs. 98,000/- imposed on the assessee u/s 271(1)(c) of the IT Act. AIR information was received in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, the assessee had concealed the particulars of his income, or had furnished inaccurate particulars thereof. 7. In the assessment order (APB-149-150), dated 11.08.2010, the notice is stated to be issued qua concealed income. In the penalty order dated 25.02.2011, the expression used for levy of penalty is 'Chhipaye Gaye Tatthayon Ke Liye', which expression, and the parties are also ad idem on this, means 'concealment'. 8. According to the ld. Counsel for the assessee, the notice, not being specific about the charge against the assessee, is void. He has relied on the following decisions: (i) "CIT vs. Manjunath Cotton and Ginning Factory", 359 ITR 565 (Kar). (ii) "CIT vs. M/s Veerabhadrappa Sangappa & Co", ITA No. 5020/2009 (Kar). (iii) "CIT vs. SSA Emerrald Meadows", in ITA No. 380/2015 (Kar). (iv) "Dilip N. Shroff Vs. JCIT", 291 ITR 519 (SC). (v) "Ashok Pai vs. CIT", 292 ITR 11 (SC). (vi) "CIT vs. Reliance Petroproducts (P) Ltd.", 322 ITR 158 (SC). (vii) "Uma Shankar Agarwal vs. DCIT", ITA No. 1831 to 1835/Kol/2015. (viii) "Suvaprasanan Bhatacharya vs. ACIT", ITA No. 1303/Kol/2010. (Kol). (ix) "SLK Properties vs. ITO", ITA No. 140/PN/2014. (x) "ACIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of 'Manjunatha Cotton' (supra) and after distinguishing the cases relied on by the Revenue, namely, 'Mak Data (P) Ltd.' (supra), 'K.P. Madhusudhanan' (supra), 'Zoom Communication Pvt. Ltd.' (supra) & 'S.V. Angidi Chettiar' (supra). This is not disputed. Thus, no aid is available to the Department from these orders. 12. In "Mak Data (P) Ltd." (supra), the Hon'ble Supreme Court has held that the AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or to reduce it into writing. In the case before us, the assessee has not raised the issue of satisfaction and, therefore, reliance on "Mak Data" (supra) by the Department is misplaced. 13. In "Gujarat State Finance Services Ltd. Vs ACIT- Circle-IV, Ahmedabad", in ITA No. 2078/Ahd/2006, the ground raised by the assessee for adjudication was as under: "The learned Commissioner of Income-tax (Appeals) erred in not appreciating the fact that there was no satisfaction as regards concealment of income or furnishing of any inaccurate particulars while passing the assessment order. It is submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered by the assessee and the bonafides of such explanation. As such, again, this matter does not further the cause of the Department. 17. In the case of "CIT Vs. Societex" (supra), the Hon'ble Delhi High Court has explained the scope of the judgement in the case of 'Zoom Communications' (supra) observing that the same is premised on the footing that even if inadvertently particulars are not given, if the authority finds that the explanation given is not bona fide, penalty u/s. 271 would be warranted. 18. In "HCIL Kalindee Arsspl" (supra), penalty under section 271(l)(c) imposed on disallowance made under section 80IA, which was deleted by the ITAT on the ground that the claim raised under section 80IA, as was disallowed in quantum proceedings, was certified to be correct by the Chartered Accountant, who furnished the prescribed certificate in Form No.10CCB. The Hon'ble High Court held that mere filing of Form issued by the Chartered Accountant in order to comply with a statutory procedural requirement will not absolve the assessee of its liability, if the act of claiming deduction is not bonafide. On the other hand, in the case under consideration, the assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deleted on this ground. 24. Now, the question for consideration of the Hon'ble Bench is in view of the fact that whether for the reason that in the assessment order it is mentioned that penalty is initiated for a specific charge, the Notice accompanying the Assessment Order, issued under section 274, read with section 271(1)(c), by which initiation is formally and legally conveyed, which mentions both of the two charges, can penalty be sustained. And whether such a Penalty Notice can be said to defective, defect being minor in nature, curable under section 292BB of the Act and also whether the Notice as has been issued to the appellant is in accordance with the Act. 25. First of all, it needs due appreciation that for ascertaining the validity of satisfaction for initiation of penalty the mirror is the assessment order, and for a step thereafter for initiation of Penalty, the mirror is the Penalty Notice. Therefore, merely because, in the assessment order penalty has been initiated mentioning a specific charge and soon thereafter, in the accompanying Notice issued at the same time on the same day, assessee is called upon to furnish his explanation in respect of both the charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench that in the assessment order the AO has clerly specified that penalty is initiated for concealment of income and placing reliance upon the Hon'ble Bombay High Court in the case of 'CIT Vs Kaushlaya Devi' 216 ITR 660, submitted that mere mistake in the language used or mere non-striking off the inaccurate portion cannot by itself invalidate the Notice. 28. The argument tendered by the Revenue was not accepted by the ITAT who in Para-12 after due discussion of the Judgment delivered in the case of 'CIT Vs Kaushlaya Devi' (supra) has held that a combined reading of the decision rendered by Hon'ble Bombay High Court in the case of 'Smt B. Kaushlaya & Ors' (supra) and the decision rendered by the Hon'ble Supreme Court in the case of 'Dilip N. Shroff' (supra) would make it clear that there should be application of mind on the part of the AO at the time of issuing notice. 29. The illegality in the Notice cannot be saved by recourse to section 292BB of the Act, as was held by the ITAT, Mumbai Bench in the case of 'Dr. Sarita Milind Davare Vs ACIT' in ITA No. 2187/Mum/2014 wherein in Para-7 of the order this plea was taken by the revenue before the ITAT to counter the ratio of Manj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur corners of the said provision, penalty cannot be imposed." (Para-12). 36. In "Dilip N. Shroff Vs. JCIT", 291 ITR 519 (SC). Section 271(1)(c) of the Act is in two parts. Whereas the first part refers to concealment of income, the second part refers to furnishing of inaccurate particulars thereof. (Para-31) 'Concealment of income' and 'furnishing of inaccurate particulars' are different. Both concealment and furnishing inaccurate particulars refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. Although it may not be very accurate or apt but suppressio veri would amount to concealment, suggestio falsi would amount to furnishing of inaccurate particulars. (Para 67) 37. In "Ashok Pai vs. CIT", 292 ITR 11 (SC) has held; 'Concealment of income' and 'furnishing of inaccurate particulars' carry different connotations. Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. (Para 22). 38. In "CIT vs. Reliance Petroproducts (P) Ltd.", 322 ITR 158 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 4.3 and finding over the issue by the Hon'ble Bench are noted in Para 8 of the ITAT Order. Xerox copy of the ITAT order is enclosed. (APB-93-112). 41. In "SLK Properties vs. ITO", ITA No. 140/PN/2014 wherein vide Order dated 18.03.2016 after due consideration of the Judgment of MAK Data (P) Ltd. held penalty order to be unsustainable in law placing reliance to Judgment of 'Manjunath Cotton' (supra). The assessee raised Additional Ground before the ITAT. On merits submission of the assessee is noted in Para- 11 to 13 rebuttal thereon by the Revenue referring and relying upon Judgment of 'MAK Data' (supra) is noted in Para 17 & 17.1 and finding by the ITAT are noted in Para 19 to 24 of the Order. Xerox copy of the ITAT order is enclosed. (APB-113-127). 42. In "ACIT vs. Deepesh M. Panjwani" ITA No.6330/Mum/2012 & 5878/Mum/2012. (ITAT, Mum). while examining the validity of Penalty order in the light of objection raised by the assessee regarding the validity of Penalty Notice issued on the basis of both the charges vide Order dated 18.03.2016 placing reliance to the Judgments in the cases of 'Manjunath Cotton & Ginning Factory' (supra) held penalty to be unsustainable in law. Xer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 45. In "Meherjee Cassinath Holdings P. Ltd. vs. ACIT", ITA No.2555/Mum/2012. wherein vide Order dated 28.04.2017 the plea taken by the Revenue as noted in Para-7 of the ITAT Order, that irrespective of the Notice issued under section 271(1)(c ) mentioning both the charges, the Assessment Order in the case therein in Para-4 has recorded clearly that the penalty under section 271(1)(c) of the Act initiated for furnishing of inaccurate particulars of income. 46. In "Rajeev Kumar Gupta vs. CIT", 123 ITR 907, Allahabad, (HC). "Now, s. 274 requires that no order imposing a penalty shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. Reasonable opportunity postulates that the facts, on the basis of which the penalty is proposed to be imposed, should be intimated so that the assessee may have a chance of showing cause against the proposed penalty. 47. A notice which does not intimate the assessee of the particular facts on the basis of which the order is proposed to be passed would not comply with the requirements of s. 274. The Tribunal has upheld the Department's plea that the penalty order was not vitiated on account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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