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TMI Blog2022 (2) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same. Resultantly, the penalty imposed by the A.O under Sec.271(1)(c) is quashed in terms of our aforesaid observations. - Decided in favour of assessee. - I.T.A. No. 460/ASR/2017 - - - Dated:- 21-2-2022 - SHRI. RAVISH SOOD, JUDICIAL MEMBER AND DR. M. L. MEENA, ACCOUNTANT MEMBER Assessee by : Shri. J.S Bhasin, Adv Revenue by : Shri. Trilochan Singh PS Khalsa DR ORDER PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax(Appeals)-1, Jalandhar dated 13.03.2017, which in turn arises from the order passed by the AO u/s 271(1)(c) of the Income-Tax Act, 1961 (for short Act ), dated 28.12.2012 for Assessment Year 2001-02. The assessee has assailed the impugned order on the following grounds before us: 1. That the Ld. CIT(A) has grossly misdirected herself in facts and on law, to hold that the order under appeal was not barred by time, in terms of proviso to section 275(1)(a) of the Income-tax Act, 1961. 2. That when the ld. A.O had not specified the charge and vaguely initiated penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which penalty proceedings were initiated by the Assessing Officer was discernible from the body of the assessment order. In order to buttress his claim that the assessee was not put to notice by the A.O as regards the specific default for which the impugned penalty u/s 271(1)(c) was sought to be imposed on it, the Ld. AR took us through the copy of the Show Cause notice (for short SCN ) issued u/s 274 r.w.s 271 of the Act, dated 19.02.2004. It was submitted by the Ld. AR, that a perusal of the aforesaid SCN , dated 19.02.2004 did not reveal the default for which the assessee firm was called upon to explain as to why penalty may not be imposed on it us 271(1)(c) of the Act. It was the claim of the Ld. AR, that as the Assessing Officer in the SCN , dated 19.02.2014 had ticked both the defaults, viz concealment of particulars of income or furnishing of inaccurate particulars of such income , thus, it was not discernible as to for what default the penalty was sought to be imposed by him under Sec. 271(1)(c) of the Act. Backed by the aforesaid facts, it was submitted by the ld. A.R, that as the A.O had failed to put the assessee to notice as regards the default for which pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was obligatory on the part of the A.O to have clearly put the assessee to notice, as regards the specific default, for which it was being called upon to explain that as to why penalty under Sec. 271(1)(c) may not be imposed on it. As observed by us hereinabove, a perusal of both the assessment order, as well as the SCN issued under Sec. 274 r.w. Sec. 271(1)(c), dated 19.02.2004 clearly reveals that there was no application of mind on the part of the A.O while initiating the penalty proceedings. In our considered view, the very purpose of affording a reasonable opportunity of being heard to the assessee as per the mandate of Sec. 274(1) of the Act, would not only be frustrated, but would be rendered as redundant if an assessee is not conveyed in clear terms the specific default for which penalty under the said statutory provision was sought to be imposed on him. In fact, the indispensable obligation cast upon the A.O to put the assessee to notice as regards the specific charge contemplated under the aforesaid statutory provision, viz. concealment of income or furnishing of inaccurate particulars of income is not merely an idle formality, but a statutory obligation, which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance 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, it was incumbent on the part of the A.O to have clearly specified the default for which the assessee was sought to be proceeded against in the SCN , which we find he had failed to do in the case before us. In fact, as observed by us hereinabove, the specific default for which the impugned penalty proceedings u/s 271(1)(c) had been initiated in the case of the assessee is also not discernible from the assessment order wherein the impugned penalty proceedings had allegedly been initiated. The aforesaid failure on the part of the A.O, in our considered view, cannot be dubbed as merely a technical default, as the same had clearly divested the assessee firm of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be imposed on it, i.e, neither by making a specific mention of the same at the time of initiating the penalty proceedings in the body of the assessment order, nor by striking off the irrelevant default in the SCN , dated 19.02.2014, had undoubtedly left the assessee guessing of the default for which it was being proceeded against. Accordingly, in the backdrop of our aforesaid observations, we are of a strong conviction that as the A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which it was being proceeded against, therefore, the penalty under Sec. 271(1)(c) of ₹ 6,00,284/- imposed by him in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same. Resultantly, the penalty of ₹ 6,00,284/- imposed by the A.O under Sec.271(1)(c) is quashed in terms of our aforesaid observations. 13. As the penalty imposed on the assessee firm under Sec. 271(1)(c) of the Act had been quashed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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