TaxTMI 
TaxTMI 
2017 (7) TMI 105
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....u/s 54 of the Act. The assessment was completed on 17.11.2009 u/s 143(3) of the Act accepting the return of income. Subsequently, a search u/s 132 of the Act was conducted on 31.05.2008 in the premises of Shri Vinod Faria and Milan Dalal. On the basis of incriminating material found in the search, the assessment was reopened on 24.11.2010. No revised return was filed in response to the notice u/s 148 of the Act. The assessment was completed u/s 143(3) r.w.s. 147 of the Act on 28.12.2011. In the re-opening assessment the Assessing Officer (AO) disallowed the exemption claimed u/s 54F of the Act. Thus, the Capital Gain of Rs. 44,68,390/- was brought to tax. No further appeal was filed by assessee against the quantum assessment. The AO thereafter initiated the penalty proceeding u/s 271(1)(c) of the Act. The notice under section 274rws271(1) ( c) was issued on 18.12.2011. The assessee filed reply to the show-cause notice vide reply dated 21.02.2012. In the reply, the assessee contended that she agreed to purchase a flat in the building which was constructed at Borivali and builder has agreed to give possession within three years. It was only on account of the fact that the building wa....
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....ch was under construction. The AO levied the penalty on similar facts against Smt. Veena Milan Dalal. On appeal before the ld. CIT(A), the penalty was completed by ld. CIT(A)- 40 vide order dated 07.11.2014. However, the similar order was sustained against the assessee. In the alternative argument the ld. AR of the assessee argued that while issuing notice u/s 274 r.ws. 271(1)(c) of the Act. The AO not specified the specific charge whether the penalty is initiated for concealment of income or filing inaccurate particulars. The ld. AR of the assessee argued that non-striking of relevant clause shows a non-application of mind by AO. The ld. AR of the assessee further relied upon the decision of Hon'ble Bombay High Court in CIT v/s Hiralal Doshi (383 ITR 19(Bom.), CIT v/s Bennett Coleman & Co. Ltd. [2013] 33 taxmann.com 227 (Bom.), decision of Hon'ble Apex Court in CIT v/s Reliance Petroproducts (P.) Ltd. [(2010) 322 ITR 158 (SC)], Price Waterhouse Coopers (P.) Ltd. v/s. CIT - [(2012) 304 ITR 306 (SC)], DIT(IT) v/s. Asia Attractive Dividend Stock Fund- [2013) 35 taxmann.com 265 (Bom)], CIT v/s. Somany Evergreen Knits Ltd. [(2013) 352 ITR 592 (Bom)] and the decision of Mumbai Tribunal ....
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....nt clause shows a non-application of mind by AO. 5. We have further seen that in assessee's group case, a similar penalty was levied in case of Smt. Veena Milan Dalal (PAN: ACBPD4089R). However, the same was deleted by ld. CIT(A) vide order dated 07.11.2014 vide Appeal CIT(A)- 40/DCIT(OSD-II)/390/2013-14 (As per Paper Book page No. 18 to 31). 6. The ld. AR of the assessee besides the other decision relied upon the decision of co-ordinate bench in case of Meherjee Cassinath holdings Pvt. Ltd. v/s ACIT (supra) wherein the co-ordinate bench after considering the various decision and considering the similar argument as argued by ld. DR for the Revenue passed the following order: "8. We have carefully considered the rival submissions. Sec. 271(1)(c) of the Act empowers the Assessing Officer to impose penalty to the extent specified if, in the course of any proceedings under the Act, he is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. In other words, what Sec. 271(1)(c) of the Act postulates is that the penalty can be levied on the existence of any of the two situations, namely, for concealing the partic....
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....n done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing the order of assessment laid emphasis that he had dealt with both the situations. 84. The impugned order, therefore, suffers from non-application of mind. It was also bound to comply with the principles of natural justice. (See Malabar Industrial Co. Ltd. v. CIT [2000] 2 SCC 718]" 9. Factually speaking, the aforesaid plea of assessee is borne out of record and having regard to the parity of reasoning laid down by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the notice in the instant case does suffer from the vice of nonapplication of mind by the Assessing Officer. In fact, a similar proposition was also enunciated by the Hon'ble Karnataka High Court in the case of M/s. SSA's Emerald Meadows (supra) and against such a judgment, the Special Leave Petition filed by the Revenue has since been dismissed by the Hon'ble Supreme Court vide order dated 5.8.2016, a copy of which is also placed o....
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....of issuing notice. In the case of Lakhdir Lalji (supra), the AO issued notice u/s 274 for concealment of particulars of income but levied penalty for furnishing inaccurate particulars of income. The Hon'ble Gujarat High Court quashed the penalty since the basis for the penalty proceedings disappeared when it was held that there was no suppression of income. The Hon'ble Kerala High Court has struck down the penalty imposed in the case of N.N.Subramania Iyer Vs. Union of India (supra), when there is no indication in the notice for what contravention the petitioner was called upon to show cause why a penalty should not be imposed. In the instant case, the AO did not specify the charge for which penalty proceedings were initiated and further he has issued a notice meant for calling the assessee to furnish the return of income. Hence, in the instant case, the assessing officer did not specify the charge for which the penalty proceedings were initiated and also issued an incorrect notice. Both the acts of the AO, in our view, clearly show that the AO did not apply his mind when he issued notice to the assessee and he was not sure as to what purpose the notice was issued. The Hon&....