TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 483
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....r consideration, wherein it confirmed the order passed by SEBI. The assessee claimed following expenses as deduction:- Sr. No. Expenditure Head(s) Amount (Rs.) 1 Operating & other business expenses 54,59,287 2 Depreciation 1,22,049 3 Share trading loss 98,417 Total 56,79,753 4. In the assessment proceedings, the Assessing Officer disallowed the said claim by holding that the assessee is not entitled to carry on its business and hence no expenditure is allowable. Thereafter the Assessing Officer initiated penalty proceedings and held that the assessee had furnished inaccurate particulars of income to the extent of Rs. 56,79,753/- and accordingly levied penalty of Rs. 19,11,800/- u/s. 271(1)(c) of the Act. The learned CIT(A) also confirmed the same and hence the assessee has filed this appeal before us. 5. Learned AR submitted that the assessee has incurred expenditure only to defend its case before various forums and further it has incurred expenditure to explore new business activities. He further submitted that the assessee has been prohibited from carrying on share trading activities for a period of 14 years and it cannot be construed that the assessee has....
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....y a notice given under section 22(1)/22(2)/34 of the Indian Income-tax Act, 1922 or which you were required to furnish under Section 139( 1) or by a notice under Section 139(2)/148 of the Incometax Act, 1961, No._____ dated_____ or have without reasonable cause failed to furnish it within the time allowed and the manner required by the said Section 139( 1)or by such notice. "have without reasonable cause failed to comply with a notice under Section 22(4)/23(2) of the Indian Income tax Act. 1922 or under Section 142(1)/143(2) of the Indian Income-tax Act,1961.No.__________dated _____________. You are hereby requested to appear before me at 11.30 A.M. on 10.01.2012 and show cause why an order imposing a penalty on you should not be made under Section 271 of the Income-tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative, you may show cause in writing on or before the said date which will be considered before any such order is made under Section 271(1)(c )." A careful perusal of the notice would show that the contents of the notice are primarily meant to ask the assessee to furnish a return of inc....
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....ould vitiate the penalty proceedings. We notice that the Hon'ble Bombay High Court has also expressed identical view in the case of Smt. Kaushalya and Others (supra), on which the revenue has placed heavy reliance. In that case also, it was contended that the AO has not indicated the appropriate charge for which the penalty proceedings were initiated. The Hon'ble Bombay High Court has expressed the following view:- "The issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and non one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT Vs. Mithila Motors (P) Ltd (1984)(149 ITR 751)(Patna) (head note): "Under section 274 of the Income tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is suff....
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....otice was issued even before the assessment order was made. The assessee had no knowledge of the exact charge of the Department against him. In the notice, not only there is use of the word "or" between the two groups of charges but there is use of the word "deliberately". The word "deliberately" did not exist in section 271(1)(c) when the notice was issued. It is worthwhile recalling that the said word was omitted by the Finance Act, 1964, with effect from April 1, 1964, and the Explanation was added. The notice clearly demonstrated nonapplication of mind on the part of the Inspecting Assistant Commissioner. The vagueness and ambiguity in the notice had also prejudiced the right of reasonable opportunity of the assessee since he did not know what exact charges he had to face. In this background, quashing of the penalty proceedings for the assessment year 1967-68 seems to be fully justified." 12. A combined reading of the decision rendered by Hon'ble Bombay High Court in the case of Smt. B Kaushalya and Others (supra) and the decision rendered by Hon'ble Supreme Court in the case of Dilip N Shroff (supra) would make it clear that there should be application of mind on the part of....