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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 ..... at NIL. Ld. Counsel for the assessee submits that as the books are rejected and income is estimated no penalty is leviable. Reliance is placed on the decision of the Coordinate Bench in the case of Mrs. Sonali A. Shah v. I.T.O in ITA.No. 5720/Mum/2013 dated 07.11.2016. 3. Ld. Counsel for the assessee further submitted that initiation of penalty proceedings is bad in law as the Assessing Officer has not specified the limb on which the penalty was proposed to be levied. Ld. Counsel for the assessee referring to the notice issued u/s. 274 r.w.s. 271 of the Act submitted that Assessing Officer is not clear as to the charge for which the penalty is initiated i.e. either for concealment of income or for furnishing inaccurate particulars of income. Referring to the said notice Ld. Counsel for the assessee submitted that the inappropriate limb in the notice was not strike off. Referring to the Assessment Order, the Ld. Counsel for the assessee submits that the penalty proceedings were initiated for concealment of income and furnishing of inaccurate particulars. Referring to the penalty order u/s. 271(1)(c) of the Act Ld. Counsel for the assessee submits that Assessing Officer recorded tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued u/s. 274 r.w.s. 271(1)(c) is not strike off, the penalty proceedings are bad in law. The case laws relied on by the assessee supports the contentions of the assessee. 8. We find that an identical situation has been considered by the Coordinate Bench in Meherjee Cassinath Holdings v. ACIT in ITA.No. 2555/MUM/2012 dated 28.04.2017 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 271(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king of the inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) (head note): 'Under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings.' In M/s Maharaj Garage & Co. (supra), the Hon'ble Bombay High Court at para 15 held: "The requirement of section 274 of the Income Tax Act for granting reasonable opportunity of being heard in the matter cannot be stretched to the extent of framing a specific charge of asking the assessee an explanation in respect of the quantum of penalty proposed to be imposed, as has been urged. The assessee was supplied with the findings recorded in the order of re-assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the assessee has filed inaccurate particulars or concealed the true facts. As stated hereinabove, in our humble opinion, the assessee has concealed the true facts thereby filed inaccurate particulars. Therefore, we do not find any error or infirmity in the findings of the Ld. CIT(A). The penalty u/s. 271(1)(c) is leviable on the facts of the case. The reliance on the decision of the Tribunal is clearly distinguishable on the facts. We, accordingly confirm the levy of penalty u/s. 271(1)(c) of the Act." In Ms. Laudres Austin (supra), the Tribunal held the following : "In the instant case also we hold that penalty proceedings were initiated properly as there is no defect in the recording of satisfaction by the AO as well there is no defect in the notice issued u/s 271 r.w.s. 274 of the 1961 Act. The decision of Hon'ble Bombay High Court in Samson Perincherry (supra) is concerning the issuance of penalty proceedings under one limb while levying of penalty under another limb of section 271(1)(c) which is no permissible as per ratio of this decision. The Hon'ble Supreme Court in SSA's Emerald Meadows (supra) while dismissing SLP recorded finding that the Hon'ble Lordships did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the assessee has no notice." Respectfully following the ratio laid down in Dilip N. Shroff (supra) and Samson Perincherry (supra), we hold that the penalty proceedings initiated by the AO is bad in law. We may herein observe that since the order of the AO has been held as bad in law on the preliminary ground, the other grounds raised by the revenue on merits before us having been rendered as academic, are thus not being dealt with." 10. Respectfully following the above said decision, we hold that the notice issued by the Assessing Officer U/s. 274 r.w.s 271(1)(c) of the Act 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) of the Act. 11. As we have held that the penalty be deleted on the preliminary point the other arguments raised by the Ld. Counsel for the assessee are not being dealt with as it becomes only academic. 12. In the result, appeal of the assessee is allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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