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TMI Blog2018 (10) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... already filed on 31.10.2011 should be treated as filed in response to the notice u/s. 148 of the Act. The re-assessment was completed u/s.143 r.w.s. 147 of the Act on 07.03.2014 accepting the total income of Rs..12,07,78,820/- returned in the revised return. Simultaneously, penalty proceedings u/s.271(1)(c) were initiated on 07.03.2014 by issuing notice u/s. 274 r.w.s. 271 (1)(c) of the Act. Penalty Order dated 30.09.2014 passed u/s.271(1)(c) of the Act was served on the assessee on 31.10.2014. 3. On receiving the Penalty Order the assessee filed appeal before the Ld. CIT(A) contending that the show cause notice dated 15.09.2014 which was referred to by the Assessing Officer fixing the date of hearing on 29.09.2014 was never issued to the assessee and therefore the Assessing Officer has not given any proper and sufficient opportunity of being heard before imposing the penalty and thereby violated the principles of natural justice. It was also further contended before the Ld.CIT(A) that the re-assessment Order for the year in question was passed on 07.03.2014 and the penalty was initiated in the said order on the very same date. As per Provisions of Section 275(1)(c) the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the order is said to have been passed on 30.09.2014 and this order was served only on 31.10.2014, therefore, it is submitted that since the order was passed without issue of any notice to the assessee it is in violation of principles of natural justice and hence the Penalty Order passed is bad in law. 7. Ld. Counsel for the assessee further referring to the Page Nos. 15 & 16 of the Paper Book which is the notice issued u/s. 274 r.w.s. 271 of the Act submitted that the Assessing Officer failed to specify the charge for which the penalty is imposed. Ld. Counsel referring to the notice submitted that Assessing Officer did not specify in the notice as to whether the penalty is going to be levied for either concealment of income or for furnishing of inaccurate particulars of income. Ld. Counsel for the assessee submitted that in the absence of specific charge mentioned in the notice by striking off of irrelevant charge the initiation of penalty is bad in law. Ld. Counsel for the assessee referring to Penalty Order submitted that, Assessing Officer stated in the Penalty Order that the penalty proceedings were initiated for concealing the taxable income by furnishing inaccurate pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position with regards to the Issue under consideration is that to make an order effective and complete, the same should be issued so as. to be beyond the control of the authority concerned or modification and the must be done within the limitation period though the actual service may be after the limitation period. Moreover, when there is an unreasonable delay in service of an order in the absence of any explanation whatsoever it can safely be presumed that the order was not made on the date on which it purports to have been made and on the basis of such presumption it can be held that the order was passed after the expiry of limitation. 6.4. Reliance for this contention is placed on the following case laws: a) Judgement of Hon'ble Bombay High Court in case of Petlad Bulakhidas Mills Co. ltd v Raj Singh reported at 37 ITR 264 has held as under: "What we have to decide is what is the meaning to be attached to the word "order" used in-the expression "from the date of the order". If "order" means a unilateral arriving at a decision by the AAC without the person affected having any knowledge of that decision, then undoubtedly limitation would begin to run from the date whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by an order must have a knowledge or notice of it, otherwise, the legal rights to remedy Is lost to the party, even when he is not at fault" c) Judgement of the Hon'ble Kerala High Court m the case of Government Wood Works vs State of Kerala reported at 69STC 62 (Ker) wherein it has been held as under: "The order of any authority cannot be said to be passed unless it is in some way pronounced or published or the party affected has the means of knowing it. It is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. This should be done within the prescribed period, though the actual service of the order may be beyond that period.....'' d) Order of the Hon'ble ITAT, Kolkata Bench in the case of Shri Subrata Roy vs. ITO, ITA No. 240/Kol/2010 and 985/Kol/2010 wherein it was held as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of such presumption it can be held that the order was passed after the expiry of limitation. In such circumstances, taking into consideration all the facts, we hold that the assessment order was barred by limitation, Hence, we allow this jurisdictional issue in favour of assessee." 9. None of the above findings and observations of the Ld.CIT(A) have been rebutted with evidences by the Revenue and thus we do not see any valid reason to disturb the finding that the penalty order suffers from principles of natural justice and barred by limitation. The Revenue could not produce any evidence to show that the penalty order was in fact passed on 30.09.2014 and why it could not be served immediately after passing the order and why it took one month to serve the order. The conduct shows that the order was passed beyond limitation period but was dated 30.09.2014. 10. It is not in dispute that the assessee filed revised return voluntarily on 31.10.2011 and this return was regularized by issue of notice u/s. 148 of the Act on 25.03.2013. From the reasons recorded for reopening we observed that there is no material on record to suggest that there is a concealment of income by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case in favour of the appellant. It is noteworthy that, and I say this at the risk of repeating myself, the appellant came forward voluntarily & willingly to offer the impugned amount to tax. The notice which was issued under section 148 was much later and also the reason recorded shows in no uncertain manner that there was no information whatsoever, what to speak of credible Information which was in possession of the assessing officer while reopening the assessment It is noteworthy further that the initial assessment was also completed under scrutiny, wherein all the aspects of the return were looked at by the AO. 10.2 I can also faithfully and validly conclude that this reopening of assessment was merely to create a justification for initiating and imposing of penalty because even in the reopened proceedings, no credible satisfaction of any manner was recorded nor did the AO conduct any worthwhile enquiry even in penalty proceedings to "establish either the filing of inaccurate particulars or of concealment of income. In fact, by merging both the allegations together even in the penalty order the confused state of mind of the AO is reflected. The case, if any, had to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came a valid and justifiable defence for the appellant, Accordingly, it is held that the order is vitiated on fact and is bad in law. Penalty imposed is hereby directed to be deleted and the appeal of the assessee is allowed both on the aspect of limitation and merit." 11. None of the findings and observations of the Ld.CIT(A) have been rebutted with evidences by the Revenue and thus we do not see any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty. 12. In so far as the non-striking off of irrelevant charge in the notice in initiation penalty proceedings is concerned. An identical situation has been considered by the Coordinate Bench in Meherjee Cassinath Holdings v. ACIT (supra) as to whether the action of the Assessing Officer in initiating penalty proceedings u/s.271(1)(c) of the Act without striking off one of the limbs and without specifying the specific charge in the notice initiating penalty proceedings for inaccurate particulars of income in the Assessment Order and the Coordinate Bench considering the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Samson Perinchery [392 ITR 4] and also various decisions held that ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a standard proforma, without striking out the irrelevant clause. In other words, the notice refers to both the limbs of Sec. 271(1)(c) of the Act, namely concealment of the particulars of income as well as furnishing of inaccurate particulars of income. Quite clearly, non-striking-off of the irrelevant limb in the said notice does not convey to the assessee as to which of the two charges it has to respond. The aforesaid infirmity in the notice has been sought to be demonstrated as a reflection of non-application of mind by the Assessing Officer, and in support, reference has been made to the following specific discussion in the order of Hon'ble Supreme Court in the case of Dilip N. Shroff (supra):- "83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. Even before us, the learned Additional Solicitor General wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Hon'ble Bombay High Court in the case of Smt. Kaushalya & Others, 216 ITR 660 (Bom.) to canvass support for his plea that non-striking off of the irrelevant portion of notice would not invalidate the imposition of penalty u/s 271(1)(c) of the Act. We have carefully considered the said argument set-up by the ld. CIT-DR and find that a similar issue had come up before our coordinate Bench in the case of Dr. Sarita Milind Davare (supra). Our coordinate Bench, after considering the judgment of the Hon'ble Bombay High Court in the case of Smt. Kaushalya & Ors., (supra) as also the judgments of the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra) and Dharmendra Textile Processors, 306 ITR 277 (SC) deduced as under:- "12. A combined reading of the decision rendered by Hon'ble Bombay High Court in the case of Smt. B Kaushalya and Others (supra) and the decision rendered by 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. In the case of Lakhdir Lalji (supra), the AO issued notice u/s 274 for concealment of particulars of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the importance of non-striking off of irrelevant clause in the notice by the Assessing Officer. As noted earlier, in the assessment order dated 10.12.2010 the Assessing Officer records that the penalty proceedings u/s 271(1)(c) of the Act are to be initiated for furnishing of inaccurate particulars of income. However, in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act of even date, both the limbs of Sec. 271(1)(c) of the Act are reproduced in the proforma notice and the irrelevant clause has not been struck-off. Quite clearly, the observation of the Assessing Officer in the assessment order and non-striking off of the irrelevant clause in the notice clearly brings out the diffidence on the part of Assessing Officer and there is no clear and crystallised charge being conveyed to the assessee u/s 271(1)(c), which has to be met by him. As noted by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the quasi-criminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice, and in the present case, considering the observations of the Assessing Officer in the assessment order alongside his action of non-striking off of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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