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TMI Blog2024 (2) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... itiating penalty and the specific charge is not framed for initiating penalty and hence, the argument of Senior DR that the notice issued u/s. 274 or show-cause notice u/s. 274 of the Act is not a statutory notice but it is a printed format. We cannot agree with the argument of the ld. Senior DR AO has not at all applied his mind or he is in a confused state of mind for that the penalty u/s. 271(1)(c) of the Act for concealment of income or may be furnishing of inaccurate particulars of income because no case is made out for that. Hence, we delete the penalty in all these assessment years. Decided in favour of assessee. - Shri Mahavir Singh, Vice President And Shri Manoj Kumar Aggarwal, Accountant Member For the Appellant : Shri T.S. Lakshmi Venkataraman, CA For the Respondent : Shri P. Sajit Kumar, JCIT ORDER PER MAHAVIR SINGH, VICE PRESIDENT: 1. These appeals by the assessee are arising out of different orders of the Commissioner of Income Tax (Appeals)-20, Chennai in ITA Nos.139, 140, 141 142/CIT(A)/2023-24 of even date 25.09.2023. The assessments were framed by the Assistant Commissioner of Income Tax, Company Circle V(4), Chennai for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO levied penalty vide para 6 7 as under:- Aggrieved against the action of AO, assessee preferred appeal before the CIT(A). 5. Before CIT(A), the assessee challenged vide ground 4, for charge of penalty levied whether it is for concealment of particulars of income or for furnishing inaccurate particulars of income or for under reporting of income. The assessee before CIT(A) raised the following ground No.4:- 4. In the show cause notice dated 24.03.2022 Issued for initiating of penalty proceedings u/s 274 r.w.s.271(1)(C) of the Act, the AO has not indicated under which limb the penalty proceedings are being initiated, whether it is for concealment of particulars of income or for furnishing inaccurate particulars of such income. The relevant portions have not been struck off by the AO in the penalty notice. IT has been judicially settled by the jurisdictional Madras High Court in the case of Babuji Jacob Vs.ITO reported in 430 ITR page 259 that the penalty notice u/s 271(1)(C) is not legally valid when there is no specific mention in the notice whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. In view of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation with regard to concealment and furnishing of inaccurate particulars noticed by the AO during survey. Hence decision of Hon'ble Madras High court which was rendered on different set of facts can't be made applicable to facts of case. Therefore, on this part, I do not find any reason to allow these grounds of the appellant. Ground of Appeal No 4 is Dismissed. Aggrieved, now assessee is in appeal before the Tribunal. 6. Before us, the ld.counsel for the assessee filed copies of notices issued in all these four years i.e., notices u/s. 274 r.w.s. 271(1)(c) of the Act dated 24.03.2022, wherein the AO has mentioned as under:- Whereas in the course of proceedings before me for the Assessment year 2013-14, it appears to me that you have concealed the particulars of income or furnished inaccurate particulars of such income. Further, we noted from the very assessment order that the AO has initiated penalty proceedings u/s. 270A of the Act for under reporting of income. The ld.counsel for the assessee stated that the decision of Hon ble Madras High Court in the case of Babuji Jacob, supra fully covers this issue. 7. On the other hand, the ld.Senior DR ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of assessment or subsequent to passing the assessment order and before an appeal could be filed or subsequent to an order passed by the appellate authorities. c) Now coming to the issue of, as to how the requirement of assessee to be heard and the reasonable opportunity of being heard can be met u/s 274 by without an issuance of the notice, it can be answered as under: i) Since the law does not mandate specific requirement to issue a notice, the opportunity of being heard can be communicated orally across the table or through a telephonic call or through a letter and all these means adopted duly recorded through an order sheet entry for having given such opportunity. The reliance on issue of a notice under the law as a pre-requisite requirement for initiation and levy of penalty has not been legally warranted by the law itself. The only requirement under the law is the Department has to demonstrate that the assessee been heard and reasonable opportunity of being heard has been provided. Such demonstration could be through order sheet noting, or through other circumstantial evidences or could even be through issuance of letter/notice in a pre-printed format. ii) Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was initiated for concealment or furnishing the inaccurate particulars. Hence, declared that before initiation of penalty proceeding, proper satisfaction was not recorded. In the present case, the facts are totally different. The Assessing Officer has rightly recorded the satisfaction that the penalty proceedings are initiated on account of 'under reporting'. Under reporting is another terminology to denote concealment as is an accepted terminology under the Act. 7.2 The ld.Senior DR further submitted that decision of the jurisdictional High Court in the case of Sundaram Finance Ltd Vs. ACIT, reported in 403 ITR 407 clearly applies to the case of the assessee. As in this reported case, the appellant was fully aware of its deed and concealed its real income for nearly six years, as a loan transaction, till it was revealed by means of physical survey conducted by the Department in the year 2020. On Department exposing such concealment and consequent to reopening of the relevant AY's assessment, the appellant was compelled by circumstances to offer the same as its income in the return forced to be submitted in response to the notice issued u/s 148. Thus, all the while, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual position wherein the Court rejected the plea of the assessee, which was a limited company, when they raised an argument with regard to the validity of the notice for the first time before the High Court and considering the administrative set up of the said assessee and the fact that the assessee was never prejudiced on account of the alleged defect, the Court rejected the argument of the assessee. 33. In the case on hand, we find that at the first instance, while replying to the penalty show cause notice dated 30.3.2016, the assessee raised a specific plea that there was no concealment of income, that he had not furnished inaccurate particulars of income and that the notice was not proper. Therefore, the phraseology, which was adopted by the assessee, if read as a whole, would clearly show that he had objected to the issuance of the notice and as there was no basis for issuance of the notice under Section 271(1)(c) of the Act, both limbs in the said provision do not get attracted. Hence, the decision of this Court in the case of Sundaram Finance Ltd., cannot be applied. 8.1 In the present case also, the AO has not at all applied his mind or he is in a confused state o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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