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TMI Blog2021 (11) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the additions made by the AO had been confirmed in the appellate proceedings. The reliance is also placed on Hon'ble Supreme Court in the case of Union of India Vs Dharmendra Textile Processors (2008) 306 ITR 277/174 Taxman 571 and Hon'ble High court of Madras Order in the case of Sundaram Finance Ltd. Vs Assistant Commissioner of Income Tax Co. Circle -VI(4), Chennai, 93 taxmann.com 250 (Madras) (2018)403 ITR 407 where it had been held that mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities and that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under section 274 r/w section 271 of the I.T. Act. 2. The appellant craves leave to add or amend any one or more of the grounds of appeals, as stated above, as and when need to doing so arises with the prior permission of the Court." 2. At the time of hearing Learned D. R. vehemently argued that the CIT(A) has erred in deleting the penalty overlooking the fact that the additions on which the penalty has been levied has been upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order dt. 26.06.2020, ITAT, Lucknow Bench. x) Off late the decision of Hon'ble ITAT Delhi Bench in the case of Addl.CIT, Spl. Range I vs. Airports Authority of India, ITA No. 369/Del/2018 Order dt. 13.08.2021 Learned counsel for the assessee submitted that relying upon the decision of Hon'ble Supreme Court in the case of CIT vs. SSA's Emerald Meadows [2016] 73 Taxmann.com 248 and also of the decision of Hon'ble Karnataka High Court in the case of CIT and Another vs. Manjunath Cotton & Ginning Factory [2013] 359 ITR 565 (Kar), I.T.A.T. Lucknow Bench in various cases have held that that in absence of specific charge in the notice issued u/s 274 read with section 271(1)(c), the penalty cannot be levied. Learned counsel for the assessee submitted that the decision of Dharmendra Textile Processors, relied on by Learned D. R., is not applicable as that case was under Central Excise wherein the duty payable had not been paid and there was issue with respect to mens rea and the issue of validity of notice and the proceeding based thereon was not in question and it was submitted that the decision of Dharmendra Textile Processors has been considered by Hon'ble Apex Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is crystal clear that the charge is not specific for which penalty is levied under section 271(1)(c) of the Act, whether for concealment of income or for furnishing of inaccurate particulars of income. The notice has specified both charges i.e. concealment of income and furnishing of inaccurate particulars of income and has not specified the charge for which action has been taken against assessee. The non specific nature of notice indicates non application of mind by Assessing Officer. It is a settled position of law that if notice under section 274 read with 271(1)(c) is not specific about the charge or limb under which penalty is being levied under section 271(1)(c) of the Act, then any penalty levied on the basis of such notice is bad in law and liable to be deleted. 6. The law mandates that the authority, who is proposing to impose penalty, shall be certain as to what basis penalty is being levied and notice must reflect that specific reason so that assessee, to whom such notice is given, can well prepare himself regarding defence, which he likes to take to support his case. This is even enshrined in the principles of natural justice and as has been upheld by Hon'ble A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are "quasi-criminal" proceedings and ought to comply with the principles of natural justice. The non-striking of the irrelevant portion in the show-cause notice means that the Assessing Officer is not firm about the charge against the assessee and the assessee is not made aware as to which of the two limbs of s. 271(1)(c) he has to respond. (4) In Chandra Prakash Bubna vs. Income Tax Officer, Ward 27(3), Kolkata (ITAT Kolkata Bench) [2015] 64 taxmann.com 155 wherein it was held that when the Assessing Officer levied penalty without bringing out any specific charge for which penalty had been imposed, penalty was liable to be deleted. 7. The reliance placed by Learned D. R. on the case of Dharmendra Textile Processors is misplaced as in that case the penalty was imposed under the Central Excise Act for non payment of duty and Hon'ble court nowhere considered the issue of validity of notice u/s 271(1)(c) of the Act. The Agra Bench of the Tribunal in the case of Sachin Arora (supra) has considered this case law and has dealt with similar arguments of the Department from para 37 to 39, which for the sake of completeness are reproduced below: 37. In "Dilip N. Shroff Vs. JCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the reliance placed by Learned D. R. on this case law will not help the Revenue. Similarly the reliance placed by Learned D. R. on the case of Sundram Finance of Hon'ble Madras High Court will not help the Revenue as the Lucknow Bench in the case of Risha Tour and Travels (supra) has also dealt with this case law and after considering the case law has decided the issue in favour of the assessee by holding as under: "4. The ld. D.R., on the other hand, placing reliance on the orders of the authorities below, submitted that even assuming that there was defect in the notice, it had caused no prejudice to ITA No.606/LKW/2018 Page 3 of 8 the assessee and the assessee clearly understood what was the purport and import of the notice issued under section 274 read with section 271 of the Act. For this proposition, he placed reliance on the judgment of the Hon'ble Madras High Court, delivered on 11/4/2018, in 'M/s Sundaram Finance Ltd. vs. ACIT' in T.C. (Appeal) Nos.876 and 877 of 2008 and submitted that the ld. CIT(A) has rightly upheld the penalty levied under section 271(1)(c) of the Act and dismissed the appeal of the assessee. 5. Heard. The show-cause notice in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. In 'CIT and Another vs. Manjunath Cotton & Ginning Factory', [2013] 359 ITR 565 (Karn.), it has been held by the Hon'ble High Court that notice under section 274 read with section 271(1)(c) of the Act should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income. Sending printed form, where all the grounds mentioned would not satisfy the requirement of law. The assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Penalty proceedings are distinct from assessment proceedings, though it emanates from the assessment proceedings; still it is separate and independent proceedings all together. 9. In 'Meherjee Cassinath Holdings Pvt. Ltd vs. ACIT (ITAT Mumbai)', ITA No. 2555/MUM/2012, order dated 28/04/2017, the observation of the Bench was that penalty proceedings under section 271(1)(c) of the Act are "quasi-criminal" proceedings and ought to comply with the principles of natural justice. The nons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices, should definitely be precluded from raising such a plea at this belated stage." 12. It is seen that the Hon'ble Madras High Court in 'M/s Sundaram Finance Ltd. vs. ACIT' (supra) nowhere disagreed with the view taken by the Hon'ble Karnataka High Court in 'CIT and Another vs. Manjunath Cotton & Ginning Factory' (supra). Rather, the matter was decided on the facts of the case, holding, inter alia, that the case of the Revenue against the assessee was that of concealment of income as well as that of furnishing of inaccurate particulars of income. Therefore, 'Sundaram Finance' (supra) is of no aid to the Revenue. 13. Moreover, in the present case, as against that in 'M/s Sundaram Finance Ltd. vs. ACIT' (supra), this issue had been raised by the assessee before the ld. CIT(A), and it has also been raised before us, contending that prejudice has been caused to the assessee and the charge against the assessee in the assessment order as well as in the penalty notice is nebulous and the assessee has remained unable to understand the purport and import of the notice issued under section 274 read with 271 of the Act. Therefore, the principles of natural justice hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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