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TMI Blog2018 (12) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... irected against the orders of Ld. Commissioner of Income Tax (Appeals)-I II (in short 'Ld.CIT(A)'], Indore dated 21.08.2017 which is arising out of the order u/s 271(1)(c) of the Income Tax Act 1961(In short the 'Act') dated 28.09.2016 framed by DCIT (Central)- 1, Indore. 2. The assessee has raised following grounds of appeal; Assessment Year 2008-09 "1. That the Ld. CIT(A) erred in upholding the action of the AO of levying penalty u/s 271(1)(c) of ₹ 10,00,000/- in respect of the additional income of ₹ 30,36,270/- declared by the appellant in the return of income filed in response to the notice issued u/s 153C. That on the facts and in the circumstances of the case and in law the penalty levied is uncalled for and bad in law and it is prayed that the penalty may very kindly be deleted. 2. That the Ld. CIT(A) erred in upholding the penalty levied u/s 271(1)(c) overlooking the fact that neither the requisite conditions as envisaged by law for the purpose of levying this penalty are present / fulfilled in this case nor the order imposing penalty u/s 271(l)(c) is a speaking order. 3. That the Learned CIT(A) erred in holding that the provisions of explanation 5A to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulfilled in this case nor the order imposing penalty u/s 271 (1)( c) is a speaking order. 3. That the Learned CIT(A) erred in holding that the provisions of explanation 5A to section 271 (1)( c) are applicable in this case. That on the facts and in the circumstances of the case the said observation is wrong and not in accordance with law. The Learned CIT(A) ought not to have confirmed the penalty. 4. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Assessment Year 2011-12 "1. That the Ld. CIT(A) erred in upholding the action of the AO of levying penalty u/s 271(1)(c) of ₹ 6,00,000/- in respect of the additional income of ₹ 19,35,910/- declared by the appellant in the return of income filed in response to the notice issued u/s 153C. That on the facts and in the circumstances of the case and in law the penalty levied is uncalled for and bad in law and it is prayed that the penalty may very kindly be deleted. 2. That the Ld. CIT(A) erred in upholding the penalty levied u/s 271(1)(c) overlooking the fact that neither the requisite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayed that the penalty may very kindly be deleted. 2. That the Ld. CIT(A) erred in upholding the penalty levied u/s 271(1)(c) overlooking the fact that neither the requisite conditions as envisaged by law for the purpose of levying this penalty are present / fulfilled in this case nor the order imposing penalty u/s 271 (1)( c) is a speaking order. 3. That the Learned CIT(A) erred in holding that the provisions of explanation 5A to section 271 (1)( c) are applicable in this case. That on the facts and in the circumstances of the case the said observation is wrong and not in accordance with law. The Learned CIT(A) ought not to have confirmed the penalty. 4. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. 3. As the issues raised in these six appeals are common these were heard together and being disposed off by this common order for the sake of convenience and brevity. 4. Briefly stated facts as culled out from the records are that the assessee is an individual and was a partner in a partnership firm M/s Bio-Medics, till September 2012 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and documentation as required by the Learned Assessing Officer (In short 'Ld. AO'). Concluding the assessment proceedings the assessment order dated 30.03.2016 under section 143(3) r.w.s. 153C was passed accepting the income returned u/s 153C r.w.s 139 without any variation. The assessee in order to buy peace of mind offered the entire gross receipts in the said bank account were offered as additional income in the return even though the said bank account reflected various payments in the nature of expenditure. It is also important to note that the undisclosed bank account was in the name of the partnership firm and the income was offered in the hands of the appellant. This additional income was offered to avoid any penal proceedings in this regard. Moreover, the said additional income was duly offered in the return filed in response to the notice issued u/s 153C for this year and relevant taxes were duly paid along with proper interest. Penalty proceedings were initiated in the assessment order in respect of additional income offered stating that the assessee has concealed its income and furnished inaccurate particulars. A notice u/s 274 was issued stating that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per books. 7. In support of this contention Ld. Counsel for the assessee referred and relied on following judgments wherein it has been consistently held that when the charge itself is not specific, penalty cannot be levied". (i) T Ashok Pai V /s CIT (2007) 292 ITR 11 (SC)). (ii) CIT and Anr. V/s Manjunath Cotton & Ginning Factory (2013) 359 ITR 565 (Karn.) (iii) Honourable Karnataka High Court in CIT V/s SSA'S Emerald Meadows ITA No. 380/2015 dated 23.11.2015. (iv) Mahabir Prasad Agrawal V/s ACIT Kolkatta in IT No. 738 & 739/Kol/2013 dated 15.01.2016. (v) Hon'ble Madhya Pradesh High Court in the case of Principal Commissioner of Income Tax v/s Kulwant Singh Bhatia dated 09.05.2018 (ITA 9 to 14 of 2018) (vi) Honourable ITAT Indore Bench in the case of Smt. Shruti Garg in IT A No. 988 to 1005/Ind/2016 vide order dated 28.06.2017. (vii) Keti Sangam Infrastructure (I) Ltd. And others ITA No 1343 & 601jIndj2016 dated 27.06.2018. (viii) Honourable ITAT, Indore Bench in the case of Gaurav Sharma v/s Assistant Commissioner of Income Tax in ITA No. 136 to 141/Ind/2017. 8. Ld. Counsel further submitted that similar view has been taken in the case of Principal CIT V/s Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. from Assessment Year 2008-09 to 2013-14. We are therefore reproducing below the notice dated 30.3.2016 issued u/s 274 r.w.s. 271(1)(c) of the Act for Assessment Year 2008-09 placed at Page-13 of the paper book:- To, Shri Bansidhar Somani, Prop. M/s Bio-Medics 74, S.R. Compound, Dewas Naka, Indore 452001 NOTICE UNDER SECTION 274 READWITH SECTION 271(1)(c) OF THE INCOME TAX ACT, 1961 Whereas in the course of proceedings before me for the A.Y. 2008-09 it appears to me that you :- have concealed the particulars of your income or furnished inaccurate particulars of such income. You are hereby requested to appear before me at 04.00 PM on 26.04.2016 and show cause why an order imposing penalty on you should not be made under section 271(1)(c) of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative, you may show cause in writing or before the said date which will be considered before any such order is made under section 271(1)(c). Sd/- (Amit Kumar Soni) Asstt. Commissioner of Income Tax (Central)-1 Indore 11. Perusal of the show cause notice clearly makes visible the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act of 1961 was bad-in-law as it did not specify which limb of Section 271(1)(c) of the Act of 1961, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars. The Tribunal while allowing the appeal of the assessee, had relied on the decision of the Division Bench of Karnataka High Court decision in the case of CIT Vs. Maniunatha Cotton Ginning Factory(supra)". 15. It is further pointed out that the SLP filed by the Deptt. before the Apex Court on 5.8.2016 in the matter of CIT Vs. SSA'S Emerald Meadows(supra) was dismissed. 16. Very recently the Hon'ble jurisdictional High Court in the case of Principal Commissioner of Income Tax v/s Kulwant Singh Bhatia dated 09.05.2018 (ITA 9 to 14 of 2018) has held that the penalty u/s 271(1)(c) of the Act of 1961 is not sustainable in law as the notice was not specific, observing as follows:- "on due consideration of the arguments of the Learned counsel for the appellant, so also considering the fact that the ground mentioned in show cause notice would not satisfy the requirement of law, as notice was not specific, we are of the view that Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the recent decision authored by us in the case of Shri Varad Mehta ITA. No.693/Ind/2016 adjudicating the similar legal issue challenging the validity of the penalty proceedings initiated u/s 271(1)(c) of the Act for the alleged technical error and non application of mind by the Ld.A.O in issuing notice u/s 274 of the Act we observed as follows:- "13. From perusal of the above show cause notice we find that the Ld.A.O has merely mentioned the section but the specific charge i.e. whether the penalty have been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income has not been mentioned. Now whether such type of notice which does not speak about the specific charge leveled against the assessee is valid and tenable in the eyes of law needs to be examined. 14. We find that similar issue came up before the jurisdictional High Court in the case of Shri Kulwant Singh Bhatia (supra) wherein the Hon'ble Court discussed the judgment of Hon'ble High Court in the case of CIT V/s Manjunatha Cotton Ginning Factory (supra) and CIT V/s SSA's Emeralad Meadows (supra) held that "on due consideration of the arguments of the Ld. counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the assessee on the legality of the penalty proceedings initiated u/s 271(1)(c) of the Act. Since the penalty u/s 271(1)(c) also has been dealt on the preliminary points other arguments of the assessee dealing with the merits of the levy of penalty are not been dealt with, as the same are rendered academic in nature and the appeal of the assessee for the Assessment Year 2008-09 is allowed". 21. We therefore in the given facts and circumstances of the case and respectfully following the above referred judgments of Hon'ble Apex Court, Hon'ble High jurisdictional Courts and other Hon'ble Courts and in view of the similarity of facts wherein the notice issued u/s 274 r.w.s 271(1)(c) of the Act is suffering from serious technical error and non application of mind by Ld.A.O who failed to level specific charge on the assessee at the time of initiating penalty proceedings due to which the principle of natural justice seems not to have been followed. We accordingly hold that the impugned penalty notice u/s 274 r.w.s. 271(1)(c) of the Act are invalid and untenable and thus deserves to be quashed. 22. We therefore allow the common legal ground raised by the assessee in the bunch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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