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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 ..... imself has offered the additional income. The reasons for reopening clearly specify that the assessee has voluntarily accepted and offered the income for the Assessment year 2006-07 on account of not maintaining the records of closed bank account and this is said to be the reason to believe that the income escaped assessment which in our view is not correct. There is no enquiry at all, there is nothing on record to suggest that the income had escaped assessment and the assessee offered additional income voluntarily and the Department has not detected any concealed income of the assessee. No detection of any concealed income by the assessee and the assessment was reopened u/s.148 is only to regularize the revised return filed by the assessee who offered an additional income - No infirmity in the order passed by the Ld.CIT(A) in deleting the penalty. Non-striking off of irrelevant charge in the notice in initiation penalty proceedings - Held that:- Identical situation has been considered by the Coordinate Bench in Meherjee Cassinath Holdings v. ACIT [2017 (5) TMI 904 - ITAT MUMBAI] said that action of the Assessing Officer in non-striking off relevant clause in the notice shows th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 Officer was supposed to pass the Penalty Order on or before 30.09.2014. It was contended that neither the assessee has received any penalty show cause notice nor received any Penalty Order within the said prescribed time. 4. It was also contended before the Ld. CIT(A) that the disclosure was made by the assessee voluntarily and the reason for reopening the assessment is only to regularize the revised return filed by the assessee and there was no any detection of income by the Revenue and hence no penalty is leviable. Considering the submissions of the assessee the Ld.CIT(A) accepted the contentions of the assessee that the order was passed beyond the limitation and also accepted the contention of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 particulars. Therefore, he submitted that the charge is vague and the Assessing Officer is not clear as to for which charge i.e. whether it is for concealment of income or is it for furnishing inaccurate particulars, the penalty is levied and hence the order is bad in law. 8. We have heard the rival submissions perused the orders of the Authorities below. In so far as the contention of the assessee that the show cause notice dated 15.09.2014 was never served on the assessee and therefore penalty order suffers from principles of natural justice and barred by limitation is concerned the Ld.CIT(A) has given the following categorical findings: - 6.2 The appellant, to ascertain whether the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 when the AAC chooses to pass the order. In this view of the case, the AAC may make the order, put it in a drawer, forget about it, and if a year has passed after it the right of the assessee to go in revision would be barred. Now that seems to us to be an entirely untenable contention. If the legislature gave the right of revision to the assessee under s. 33A it was an effective right and if the Legislature provided a period of limitation that period must equally be an effective period. When we say effective what we mean is that the whole period must be permitted to the person affected by the order within which he can prefer the application for revision.' In our opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nown, 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: from the facts discussed above as well the case laws, it is obvious that this Bench allowed repeated opportunities to the revenue for producing evidences so that the fact regarding date of framing of assessment order could be verified, However, the Department could not produce any evidence which prove that the assessment order was ready as on 31,12,2008. Thus, we have no option but to accept the contention of assessee that the assessment order was not passed on 31.12.2008. No doubt the provisions of section 153 requires that assessment order shall not be passed after the expiry of two years from the end of the assessment year in which the income was fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 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 assessee, except the revised return where the assessee himself has offered the additional income. The reasons for reopening clearly specify that the assessee has voluntarily accepted and offered the income for the Assessment year 2006-07 on account of not maintaining the records of closed bank account and this is said to be the reason to believe that the income escaped assessment which in our view is not correct. There is no enquiry at all, there is nothing on record to suggest that the income had escaped assessment and the assessee offered additional income voluntarily and the Department has not detected any concealed income of the assessee. The Ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aithfully 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 be clearly of concealment and when there were no particulars filed by the assessee in the original ROI where could the question of. Inaccurate particulars have risen. Nonetheless this is merely a theoretical exposition which has absolutely no bearing on the case except to reveal the fact that the assessing officer had made absolutely no application of mind while initiating the penalty proceedings and there was no worthwhile satisfaction while recording the aspect of issuance of notice of penalty. The cryptic nature of the order further reveals that it is made complete haste, In a lackadaisical manner and with complete disregard to fact and law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 action of the Assessing Officer in non-striking off relevant clause in the notice shows that the charge being made against the assessee is not firm therefore proceedings suffer from non-compliance with principles of natural justice in as much as the Assessing Officer himself is not sure of the charge and the assessee is not made aware as to which of the two limbs of section u/s. 271(1)(c) of the Act he has to respond. While holding so the Coordinate Bench observed as under: - 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 specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 while placing the order of assessment laid emphasis that he had dealt with both the situations. 84. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 but levied penalty for furnishing inaccurate particulars of income. The Hon ble Gujarat High 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder 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 irrelevant clause in the notice shows that the charge being made against the assessee 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 nonapplica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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