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TMI Blog2019 (3) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... the charge and the assessee is not made aware as to which of the two limbs of section 271(1)(c) he has to respond. We hold that the notice issued by the AO u/s. 274 r.w.s 271(1)(c) is on account of non-application of mind and therefore the penalty proceedings initiated are bad in law. Thus, we direct the Assessing Officer to delete the penalty levied U/s. 271(1)(c). - Decided in favour of assessee. - ITA NO.5289/MUM/2011 - - - Dated:- 15-3-2019 - Shri C.N. Prasad, Hon'ble Judicial Member And Shri N.K. Pradhan, Hon'ble Accountant Member For the Assessee : Shri Satish R. Mody For the Department : Shri A.B. Koli ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) 29, Mumbai dated 05.03.2007 for the Assessment Year 2001-02 in enhancing the penalty u/s. 271(1)(c) of the Act and directing the Assessing Officer to levy penalty on loss of ₹.4,04,27,000/-. 2. Ld. Counsel for the assessee submits that, in quantum proceedings the Assessing Officer rejected the Books of Accounts and estimated the income from purchases @10% on the ground that the purchase detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. (iii). M/s. Thirumalai Chemicals Ltd., v. DCIT in ITA.No. 1969 2059/Mum/2015 dated 21.12.2018. 5. Ld. Counsel for the assessee submits that the loss declared by the assessee which was not allowed by the Assessing Officer was never setoff in subsequent years and there is no intention to claim set off of any excess loss by the assessee. Ld. Counsel for the assessee submitted that since the assessee had no intention to set off the loss in any subsequent year it proves the bonafides of the assessee in claiming the loss. 6. Ld. DR vehemently supported the orders of the authorities below. Ld. DR submits that the income was estimated since no details were furnished by the assessee. Penalty was levied by the Assessing Officer as the assessee failed to furnish the details and the Ld.CIT(A) has rightly enhanced the penalty on the loss disallowed by the Assessing Officer. 7. We have heard the rival submissions, perused the orders of the authorities below. In so far as the contention of the assessee that initiation of penalty proceedings is bad in law as there is non-application of mind by the Assessing Officer in initiation penalty proceedings as the Assessing Officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Hon ble Bombay High Court held: 9. We will first take up the show-cause notice dated March 29, 1972, pertaining to the assessment years 1968-69 and 1969-70. The assessment orders were already made and the reasons for issuing the notice under section 274 read with section 271(1)(c) were recorded by the Income-tax Officer. The assessee fully knew in detail the exact charge of the Department against him. In this background, it could not be said that either there was non-application of mind by the Income-tax Officer or the so-called ambiguous wording in the notice impaired or prejudiced the right of the assessee to reasonable opportunity of being heard. After all, section 274 or any other provision in the Act or the Rules, does not either mandate the giving of notice or its issuance in a particular form. Penalty proceedings are quasi-criminal in nature. Section 274 contains the principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the principles of natural justice on the ground of absence of opportunity, it has to be established t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which had ceased to exist and was dissolved on 13.05.2016. It was stated that the said notice issued to a dead juristic person is invalid and void in the eyes of law. Also contentions were raised stating that section 292B was inapplicable. The Hon ble Delhi High Court held as under: 21. Our attention was drawn to Parashuram Pottery Works Co. Ltd. V. ITO, Circle I, Ward A, Rajkot, (1977) 106 ITR 1 (SC) which records that the Assessing Officer entrusted with the task of calculating and realizing tax should familiarize themselves with the relevant provisions and become well versed with the law on the subject. This is a salutary advice. Indeed, there have been lapses and faults resulting in the present litigation. Notice under Section 147/148 of the Act was issued at the end of the limitation period. Noticeably, Assessment Order for the assessment year 2013-2014 was passed on 31.03.20I6, one year earlier. Second lapse is also apparent. Despite correctly noting the background, notice under Section 147/148 of the Act was not addressed in the correct name and even the PAN Number mentioned was incorrect. Nevertheless, human errors and mistakes cannot and should not nullify proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision in the Income Tax Act, 1961 for a draft penalty order u/s 271(1)(c) of the Act. 9.2 It would be apposite to refer here to the decision in Dilip N. Shroff v. JCIT (2007) 210 CTR (SC) 228, wherein it has been held : 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. Commissioner of Income Tax, Kerala State, (2000) 2 SCC 718] In CIT vs. Samson Perincherry (ITA No. 953, 1097, 1154 1226 of 2014), the Hon ble Bombay High Court held: Therefore, the satisfaction of t ..... 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