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TMI Blog2019 (5) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty levied by A.O u/s 271(1)(c) of the Income Tax Act (hereinafter referred to as the Act ) for Assessment Year 2001-02. 2. At the outset itself, the learned AR drew our attention to the defective notice dated 06.03.2006 wherein the show cause notice reveals that the AO has not stricken down either of the limbs that is for which specific fault the assessee is being proceeded against for levy of penalty u/s 271(1)(c) of the Act i.e. to have concealed particulars of income or having furnished inaccurate particulars of income. Assailing the decision of the ld. CIT(A) in confirming penalty, the ld. AR cited several decisions including the decision of the Hon ble Jurisdictional High Court Hon ble Supreme Court (which we will discuss infra while adjudicating the issue) pleaded that the penalty be cancelled for defect of show-cause notice. 3. However, learned DR submitted written submission which is as under: 2. Briefly stated, facts of the case are that the assessee is a company having its registered office at Japan. The assessee was appointed by the Government of West Bengal under an agreement executed by the company with the Transport Department, Govt. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee with the Ld. AR for the assessee that the factual and legal matrix being the same as the other years that were set aside by the Hon'ble ITAT, the appeal ought to be dropped. 2. By the appellant's own admission if does not have any documents relating to the impugned A.Y. 2001-02 for which the Ld.AO has imposed the penalty. I am also not in agreement with the plea that the Ld.AO will need to adjudicate afresh, as there is no occasion to do so, and the order of assessment has been confirmed by the 1st Appellate Authority, and the assessee has not preferred appeal before the Hon'ble ITAT. Despite being allowed more than two years since the last hearing, the appellant has not been able to submit proof of agitating the quantum assessment before the Hon'ble ITAT. In fact the appellant has not responded to notice u/s 250 in the last two years even while they were served successfully on the representative assessee. Therefore, in my considered view, the assessment proceedings have reached finality, and there is no merit in the contention of the appellant that the Ld.AO will again have to reconsider what he had done in the assessment proceedings for the A.Y.2001-02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings u/s 271(1)(c) of the IT Act, 1961. Without prejudice to the above, it may be mentioned that Hon ble Jurisdictional High Court in the case of Dr. Shyamal Baran Mondal vs CIT (2011 244 CTR 631) held that Section 271 nowhere mandates that recording of satisfaction about concealment of assessee s income must be in specific terms and words; satisfaction of Assessing Officer must reflect from order either with expressed words recorded by the Assessing Officer himself or by overt act and action. 9. In this case, the satisfaction of the Assessing Officer was already there and due process of law was observed before imposition of penalty. Furthermore, the assessment has reached finality and the penalty order has also been upheld by the Ld. CIT(A). 10. Prayer: It is humbly requested that the order of the Ld. CIT(A) may kindly be sustained and the appeal be dismissed. 4. Heard both the parties and perused the records, especially the show-cause notice dt. 06.03.2016 issued by AO before levying Penalty u/s 271 (1)(c) of the Act. In order to buttress his contentions that the show-cause notice dt.06.03.2016 issued prior to levy of penalty u/s 271(1)(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec.271 does not mandate that the recording of satisfaction about concealment of income must be in specific terms and words and that satisfaction of AO must reflect from the order either with expressed words recorded by the AO or by his overt act and action. In our view this decision is on the question of recording satisfaction and not in the context of specific charge in the mandatory show cause notice u/s.274 of the Act. Therefore reference to this decision, in our view is not of any help to the plea of the Revenue before us. 8. The learned DR relied on three decisions of Mumbai ITAT viz., (i) Dhanraj Mills Pvt. Ltd. Vs. ACIT ITA No.3830 3833/Mum/2009 dated 21.3.2017; (ii) Earthmoving Equipment Service Corporation Vs. DCIT 22(2), Mumbai, (2017) 84 taxmann.com 51 (iii) Mahesh M.Gandhi Vs. ACIT Vs. ACIT ITA No.2976/Mum/2016 dated 27.2.2017. Reliance was placed on two decisions of the Hon ble Bombay High Court viz., (i) CIT Vs. Kaushalya 216 ITR 660(Bom) and (ii) M/S.Maharaj Garage Co. Vs. CIT dated 22.8.2017. This decision was referred to in the written note given by the learned DR. This is an unreported decision and a copy of the same was not furnished. However a gist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roup of Assessees before the Karnataka High Court in the case of Manjunatha Cotton Ginning (supra) was an Assessee by name M/s.Veerabhadrappa Sangappa Co., in ITA NO.5020 OF 2009 which was an appeal by the revenue. The Tribunal held that on perusal of the notice issued under Section 271(1)(c) of the Act, it is clear that it is a standard proforma used by the Assessing Authority. Before issuing the notice the inappropriate words and paragraphs were neither struck off nor deleted. The Assessing Authority was not sure as to whether she had proceeded on the basis that the assessee had either concealed its income or has furnished inaccurate details. The notice is not in compliance with the requirement of the particular section and therefore it is a vague notice, which is attributable to a patent non application of mind on the part of the Assessing authority. Further, it held that the Assessing Officer had made additions under Section 69 of the Act being undisclosed investment. In the appeal, the said finding was set-aside. But addition was sustained on a new ground, that is under valuation of closing stock. Since the Assessing Authority had initiated penalty proceedings based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing inaccurate particulars or concealing particulars of income, that will not vitiate the penalty proceedings. In the present case there is no whisper in the order of assessment on this aspect. We have pointed out this aspect in the earlier part of this order. Hence, this decision will not be of any assistance to the plea of the revenue before us. Even otherwise this decision does not follow the ratio laid down by the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning (supra) in as much as the ratio laid down in the said case was only with reference to show cause notice u/s.274 of the Act. The Hon ble Court did not lay down a proposition that the defect in the show cause notice will stand cured if the intention of the charge u/s.271(1) (c ) is discernible from a reading of the Assessment order in which the penalty was initiated. 14. From the aforesaid discussion it can be seen that the line of reasoning of the Hon ble Bombay High Court and the Hon ble Patna High Court is that issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. M ..... 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