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TMI Blog2024 (6) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... ses,10% of business promotion expenses, 10% of Conveyance and Travelling expenses, 20% of Communication expenses and 10% of Direct operational expenses - HELD THAT:- As we find that in the show cause notice issued u/s 274 r.w.s. 270A of the Act, AO had not bothered to mention the specific sub-clause under which the assessee s case falls. The provisions of section 270A(9) of the Act clearly define mis reporting of income and hence the ld. AO is duty bound to clearly mention in the show cause notice itself as to which of the sub-clauses in sub-section (9) get attracted in the facts of the present case. Hence it could be safely concluded that the show cause notice issued by the ld. AO is very vague. Entire disallowance of expenses has been made by the ld. AO in the quantum proceedings only on an estimated basis by making adhoc disallowances. Hence the assessee s case squarely falls under the exception provided in section 270A(6)(b) of the Act, wherein the assessee would be entitled for immunity from levy of penalty u/s 270A of the Act. AO must clearly mention in the show cause notice itself as to which of the sub-clauses in sub-section (9) get attracted to the facts of the instant cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld become fatal to the penalty proceedings ? This issue is no longer res integra in view of the Full Bench Decision of Hon ble Bombay High Court in the case of Mohd. Farhan A Shaikh vs DCIT reported in 434 ITR 1 (Bom)(FB) dated 11.3.2021. The relevant operative portion of the said judgement is reproduced hereunder:- Question No. 3: What is the effect of the Supreme Court's decision in Dilip N. Shroff Case (supra) on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off ? 187 In Dilip N. Shroff case (supra), for the Supreme Court, it is of some significance that in the standard Pro-forma 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 . Then, Dilip N. Shroff case (supra), on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. 188 . We may, in this context, respectfully observe that a contravention of a mandatory condition or requirement for a communication t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice placed on record dated 30.12.2017, it is evident that the ld. AO had not struck off the irrelevant portion thereon mentioning the specific offence committed by the assessee. The ratio laid down in the aforesaid decision of Hon ble High Court squarely applies to the facts of the instant case before us. Hence we direct the ld. AO to delete the penalty levied u/s 271(1)(c ) of the Act . Since the relief is granted for Ground No. 1 itself, there is no need to separately adjudicate the other grounds raised by the assessee. 5. In the result, the appeal of the assessee is allowed. ITA No. 1850/Del/2024 Asst Year 2017-18 6. The only issue to be decided in this appeal is as to whether the ld. NFAC was justified in confirming the levy of penalty u/s 270A of the Act in the facts and circumstances of the instant case. 7. We have heard the rival submissions and perused the materials available on record. The assessee is a Co-operative Society with the primary objective to create funds to be lent to members, to provide facilities for exercise of thrift and savings to members, managing loans, providing credit facilities to members. The return of income for the Asst Year 2017-18 was filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income, the assessee is either entitled for immunity or liable to pay penalty at a lesser rate as a percentage of tax payable. Whereas for misreporting, the assessee would be liable for penalty at the rate of 200% of tax payable on under reported income. However, this would come into operation only when the ld. AO clearly mentions in the show cause notice itself as to which of the sub-clauses in sub-section (9) get attracted to the facts of the instant case. This is conspicuously absent in the show cause notice. In any case, the issue in dispute is no longer res integra in view of the decision of the Hon ble Jurisdictional High Court in the case of Schneider Electric South East Asia (HQ) Pte Ltd vs ACIT in W.P.(C ) 5111/2022 C.M. Nos. 15165-15166/2022 dated 28.3.2022 wherein it was held as under:- 6. Having perused the impugned order dated 09 March, 2022, this Court is of the view that the Respondents' action of denying the benefit of immunity on the ground that the penalty was initiated under Section 270A of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the Respondents have failed to specify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no dispute that the assessee had indeed furnished the complete details of the disputed expenses with supporting evidences during the course of quantum assessment proceedings before the ld. AO. These details are enclosed in Pages 50 to 346 of the Paper Book. Hence the ratio laid down by the Hon ble Jurisdictional High Court in the case of Prem Brothers supra squarely applies to the facts of the instant case. 13. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation to cancel the levy of penalty u/s 270A of the Act in the facts and circumstances of the instant case as the penalty notice is very vague and hence becomes fatal to the proceedings. Accordingly the assessee would be entitled for relief on this technical aspect. Since relief is granted to the assessee on this technical issue, the other legal and factual grounds raised by the assessee need not be gone into and they are hereby left open. 14. In the result, the appeal of the assessee in ITA No. 1850/Del/2024 for Asst Year 2017-18 is allowed. 15. To sum up, both the appeals of the assessee are allowed. Order pronounced in the open court on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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