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TMI Blog2022 (8) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the AO is directed to delete the penalty u/s 271(1)(c). We do not intent to comment on the merits of the case as the penalty has been deleted on the basis of notice itself. Therefore, Ground filed by the Revenue are dismissed. - Shri Mahavir Singh, Vice President And Dr. Dipak P. Ripote, Accountant Member For the Department : Mr. P. Sajit Kumar, JCIT. For the Assessee : None. ORDER PER DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER: This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-11, Chennai, dated 22.08.2019 pertaining to assessment year 2009-10, emanating from the order of AO passed u/s. 271(1)(c) of Income Tax Act, 1961, dated 29.03.2019. 2. The Revenue has raised the following grounds of appeal: 1. The order of the learned CIT (A) is contrary to law and facts and circumstances of the case. 2. The ld. CIT (A) has erred in deleting the penalty levied u/s. 271(1)(c) by stating that the penalty levied u/s. 271(l)(c) of the Act without striking of the relevant portion in the notice issued u/s 274, by which the appellant was not put to notice whether the penalty was initiated for concealment of particulars of income or for fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty proceeding u/s 271(1)(c) of the Act for concealing the long term Capital gain. On an appeal, CIT(A)'s reduced the long-term capital gain escaping assessment to Rs. 6.39 crores. Both the assessee and the Department accepted the CIT(A)'s order and thus the assessment becoming final. Accordingly, the penalty proceeding initiated was concluded by the Assessing officer by imposition of penalty u/s 271(1)(c) of Rs. 1,92 (approx.) being 100% of tax which had escaped assessment consequent to non-declaration of income u/s 139 as well as u/s 148 of the Act by the assessee. On an appeal against levy of penalty, the CIT(A)'s struck-down the levy of penalty both on account of non-compliance to the procedural law as well as on merit. CIT(A)'s held that the notice of penalty issued u/s 274 of the Act suffered from an irregularity on account of the following: a. Notice issued did not contain strike off between ''and/or' with respect to two limbs on which penalty could be levied b. Assessment order passed had only mentioned penalty proceeding u/s. 271(1)(c) is initiated separately for concealment of income or for providing inaccurate particulars of income' On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. In-spite of having full knowledge of all the facts, the assessee opted not to declare voluntarily the transaction in its return to be furnished under the normal provisions u/s 139 or even after issuance of a notice u/s. 148 at a much later date of conclusion of the transaction and enjoyment of the proceeds therefrom. Thus assessee knew very well that it had furnished both inaccurate particulars of income as well as concealed the capital gain it received from such transaction well before even assessment was concluded. Hence, the assessee is precluded from pleading that principles of natural justice were violated on account of not being able to submit an effective reply on account of confusion created by way of the defective notice which did not strike out 'and/or' portion of the communication. The CIT(A)'s failed to appreciate this specific fact of the assessee's case and had mechanically, based on a judgement pronounced by the Division Bench of the Karnataka High court in the case of Manjunatha Cotton mills (359 ITR 565), held the notice issued is bad in law and holding the Penalty proceedings initiated is null and void. CIT (A) 's failed to take in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officer dated 2903-2019 may be restored. 4.2 We have studied the case records. It is observed that the Hon ble Madras High Court in the case of Babuji Jacob v. ITO reported in [2021] 124 taxmann.com 363 [Madras], has held as under: 8. A show cause notice was issued to the assessee proposing to initiate proceedings under Section 271(1)(c) of the Act vide notice dated 30.3.2016. A copy of the said notice dated 30.3.2016 has been furnished in the typed set of papers and we find that the said notice does not specifically state as to whether the assessee is guilty of concealing particulars of his income or has furnished inaccurate particulars of income. 9. It is the submission of the learned Senior Standing Counsel appearing for the Revenue that both limbs are attracted in the notice. 10. This issue will be considered by us in the latter part of this judgment. 11. On receipt of the said notice dated 30.3.2016, the assessee submitted a reply dated 11.4.2016 pointing out that there was no bona fide, that there was no cause for imposing penalty, that he had furnished correct particulars and that the allegation made against him was erroneous. 12. The Assessing Officer, by order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the learned counsel for the Revenue on the decision in Mak Data (P.) Ltd. (supra) to urge that the penalty contemplated by section 271 (1) (c) of the said Act was in the nature of civil liability and mens rea was not essential therein. The decision in Dilip N. Shroff (supra) having been held as not laying down good law in Dharmendra Textile Processors Ltd. (supra), it was submitted that the show cause notice issued in the present proceedings was liable to be upheld. It may be noted that all the decisions relied upon by the learned counsel for the Revenue were considered by the Full Bench while answering the issues referred to it on reference. The Full Bench having considered these decisions and having answered the question as regards defect in the notice under section 271(1)(c) of the said Act resulting in vitiating the penalty proceedings, we find ourselves bound by the answers given by the Full Bench. It would not be permissible for us to disregard this aspect and take a different view of the matter. Accordingly, substantial question of law no. III is answered by holding that since the show cause notice dated 12-2-2008 does not indicate whether there was concealment of part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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