2017 (5) TMI 969

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....lty order on legal grounds as well as on merits. Since, the legal grounds goes to the root of the matter, we take up the same first. 2. Briefly stated the assessee, being resident individual engaged in development of land by construction of residential/commercial premises, was assessed for impugned AY u/s 143(3) at Rs. 28,20,17,740/- after certain adjustments / disallowances as against returned income of Rs. 18,95,66,240/-. One of the disallowances pertained to disallowances u/s. 40(a)(ia) amounting to Rs. 1,81,29,209 for non-deduction of tax at source on certain contractual payments. Another adjustment was related with assessee's claim towards set-off of unabsorbed brought forward business losses for AY 2001-02 and 2003-04 amounting to Rs....

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....to reduce the tax liability. Aggrieved, the assessee is in appeal before us and assailed the penalty on legal grounds as well on merits of the case. 5. The Ld. Counsel for Assessee [AR], while drawing our attention to documents placed in the paper book, first of all contended that since the assessee's quantum appeal qua disallowance u/s 40(a)(ia) has been allowed by the Tribunal, penalty to that extent do not survive. Upon perusal of the documents, we concur with the same and at the outset hold that since quantum disallowance has been deleted by the Tribunal, penalty in respect thereof do not survive. 6. Proceeding further, the Ld. AR stated that initially the business losses for AY 2001-01 stood at Rs. 535.36 Lacs, however, the same got ....

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....71(1)(C) and has also concealed the particulars of income within the meaning of Explanation 1 to the said section.............' Whereas in contrast, show cause notice u/s 274 read with section 271(1)(C) mentions the charges as 'have concealed the particulars of your income or furnished inaccurate particulars of such income.' Finally, the penalty has been imposed by Ld. AO in the penalty order by stating that 'in view of the above facts, I am satisfied that the assessee has filed inaccurate particulars of Income and hence concealed the income.' Therefore, the same reflects non-application of mind on the part of AO and the AO himself was not sure about the limb / exact charge for which the assessee was being penalized. Therefore, the penalty ....

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.... the ratio of same judgment in CIT Vs. Shri Samson Perinchery [ITA No. 1154 of 2014 order dated 05/01/2017] and further Tribunal, in catena of judgment and more particularly in Wadhwa Estate & Developers Vs. ACIT [ITA N0. 2158/Mum/2016 dated 24/02/2017] has taken the same view following the aforesaid judgments. Therefore, the penalty, being devoid of jurisdiction, was liable to be quashed. 9. Per contra, the Ld. Departmental representative placed reliance on Section 292B to contend that mere defect in the notice do not vitiates the penalty proceedings and no prejudice was caused to the assessee by non-striking off of relevant words. The assessee very well knew the grounds for which he was being penalized and the Ld. AO with due application....