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TMI Blog2020 (11) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... ilip Shroff [ 2007 (5) TMI 198 - SUPREME COURT] and T. Ashok Pai [ 2007 (5) TMI 199 - SUPREME COURT] . As the two defaults viz. concealment of income and furnishing of inaccurate particulars of income as contemplated in Sec.271(1)(c) are separate and distinct defaults which operate in their exclusive and independent fields, we, therefore, are unable to subscribe to the view taken by the CIT(A) that the A.O had validly imposed penalty for furnishing of inaccurate particulars which led to concealment of income by the assessee in respect of the aforesaid solitary addition/disallowance made in the hands of the assessee. A.O in his SCN had failed to put the assessee to notice as regards the default for which it was called upon to explain as to why penalty u/s 271(1)(c) may not be imposed on it, in our considered view, would suffice to divest the A.O from valid assumption of jurisdiction for imposing penalty under the said statutory provision. As the two defaults viz. concealment of income and furnishing of inaccurate particulars of income as contemplated in Sec.271(1)(c) are separate and distinct defaults which operate in their exclusive and independent fields, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount was appearing in the Tax Audit Report under clause 21(I )(A) ( in relat ion to sect ion 43B) and therefore on being pointed dur ing Assessment proceedings the Appellant accepted the same being inadvertent error. 3. The Appellant prays that the said penalty deleted. Ground III : The appellant craves leave to add, to alter and to amend above grounds of appeal at the time of hearing. 2. Briefly stated, the assessee company which is engaged in the business of manufacturing and selling branded readymade garments and lifestyle accessories through a network of exclusive business outlets and large retails chains had e-filed its return of income for A.Y. 2013-14 on 29.09.2013, declaring a total income of Rs.nil (after claiming set off of current year business loss of ₹ 5,46,83,396/- and earlier year unabsorbed depreciation of ₹ 6,37,32,377/-). Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee company had inter alia debited an amount of ₹ 38,20,500/- on account of Fringe Benefit Tax (for short FBT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 271(1)(c) both on the issue of the validity of jurisdiction assumed by the A.O for imposing the aforesaid penalty, and also the merits of the case. It was submitted by the ld. A.R that though the A.O in the assessment order had initiated penalty under Sec. 271(1)(c) for furnishing of inaccurate particulars of income by the assessee, but then, the same was thereafter imposed by him vide his order passed under Sec. 271(1)(c), dated 30.08.2016 for concealment of income by the assessee. In the backdrop of the aforesaid facts, it was submitted by the ld. A.R that the A.O had gravely erred in law and the facts of the case in assuming jurisdiction for imposing penalty under Sec. 271(1)(c) in the hands of the assessee. Further, it was averred by the ld. A.R that as the A.O had failed to strike-off the irrelevant default in the body of the SCN , therefore, the penalty on the said count also was not sustainable in the eyes of law. On merits, it was submitted by the ld. A.R that as the assessee had inadvertently on account of a bonafide mistake claimed deduction of FBT of ₹ 38,20,500/-, which it had withdrawn in the course of the assessment proceedings, therefore, in the back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and substance, though the A.O had initiated penalty for one default i.e furnishing of inaccurate particulars of income in the body of the assessment order, however, he had imposed the same for the other default i.e concealment of income . Usage of the term concealed income by way of furnishing of inaccurate particulars of income by the A.O in his order u/s 271(1)(c), in our considered view can by no means be construed to take the imposition of penalty outside the realm of concealment of income . As both of the two defaults envisaged in Sec. 271(1)(c) i.e concealment of income and furnishing of inaccurate particulars of income are separate and distinct defaults which operate in their independent and exclusive fields, thus, it is beyond comprehension as to how the A.O could have initiated the said penalty for one default i.e furnishing of inaccurate particulars of income in the body of the assessment order, and thereafter, imposed the same for the other default i.e concealment of income . We find that the fine distinction between the said two defaults contemplated in Sec. 271(1)(c), viz. concealment of income and furnishing of inaccurate particulars of income had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for furnishing of inaccurate particulars which led to concealment of income by the assessee, had held, that the claim of the assessee that the A.O had erred in not striking off the irrelevant default in the SCN was misconceived. We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the view taken by the CIT(A). As observed by us hereinabove, it is a matter of fact borne from the records that the A.O had in the SCN issued u/s 274 r.w.s 271(1)(c) failed to point out the default for which penalty was sought to be imposed by him on the assessee company. In our considered view, as both of the two defaults envisaged in Sec. 271(1)(c) i.e concealment of income and furnishing of inaccurate particulars of income are separate and distinct defaults which operate in their independent and exclusive fields, it was, thus, obligatory on the part of the A.O to have clearly put the assessee to notice as regards the default for which it was called upon to explain as to why penalty under Sec. 271(1)(c) may not be imposed on it. We are unable to subscribe to the view taken by the CIT(A) that as the penalty was levied by the A.O for furnishing of inaccura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the view that the non-striking off the irrelevant limb in the notice clearly reveals a nonapplication of mind by the A.O had observed as under:- 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 has furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing reliance on 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. Vs. CIT (2000) 2 SCC 718]. We are of the considered view that now when as per the settled position of law the two defaults, viz. concealment of income and furnishing of inaccurate particulars of income are separate and distinct defaults, therefore, in case the A.O seeks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chery (ITA No. 1154 of 2014; Dt. 05.01.2017)(Bom) . Further, we find, that the issue that an indispensable obligation is cast upon the A.O to clearly put the assessee to notice of the charge under the aforesaid statutory provision i.e Sec. 271(1)(c) had been deliberated upon by a coordinate bench of the Tribunal, i.e. ITAT C Bench, Mumbai in the case of M/s Orbit Enterprises Vs. ITO-15(2)(2), Mumbai (ITA No. 1596 1597/Mum/2014, dated 01.09.2017) . The Tribunal in the aforementioned case had after considering various judicial pronouncements concluded, that the failure to specify the charge in the Show cause notice clearly reflects the non-application of mind by the A.O and would resultantly render the order passed by him under Sec. 271(1)(c) in the backdrop of the said serious infirmity as invalid and void ab initio . In the backdrop of our aforesaid deliberations, we are of the considered view that the failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on it in the SCN , had left the assessee guessing of the default for which it was being proceeded against. Apart from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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