TaxTMI 
TaxTMI 
2017 (11) TMI 1059
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....law as the notice under section 274 read with section 271 was issued in standard proforma without striking the relevant clause and without specifically stating whether the penalty was initiated for concealment of particulars of income or for furnishing inaccurate particulars thereof. 3. The learned Commissioner of Income Tax (Appeals) further erred in not following the order of the Hon'ble Supreme Court in the case of Veerbhadrappa Sangappa & Co (TS- 381-SC-2016) arising out of judgement passed by the High Court of Karnataka in the case of CIT vs Manjunatha Cotton & Ginning Factory & Others (359 ITR 565). 2. Brief facts of the case are that a search and seizure action under section 132 was carried out at the residence and business premises of M/s Flemingo/Bermaco Group on 30.10.2009 by the DDIT(Inv), Unit-II(3), Mumbai. The assessee is one of the Directors of the said group companies. Consequently, notice under section 153A was issued to the assessee. The assessment was completed under section 153A r.w.s. 143(3) on 08.06.2012. The Assessing Officer while passing assessment order made the addition of Rs. 33,00,000/- on account of unexplained investment. On appeal bef....
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.... 4 CIT vs. Samson Perinchery (ITA No. 1154, 953, 1097/M/2014) 5 Dalip N. Shroff vs. JCIT (291 ITR 519) (SC) 6 Sarita Milind Davare vs. ACIT (ITA No. 2187 & 1789/M/2014). 4. On the other hand, the ld. DR for the Revenue supported the order of authorities below. It was argued that various Courts have held that penalty can be levied on the additions on estimate basis. The ld. DR for the Revenue relied on the decision of Hon'ble Bombay High Court in Kaushalya & Ors. (216 ITR 660), the decisions of Tribunal in Dhaval K. Jain vs. ITO in ITA No. 996/M/2014 and in Earthmoving Equipment Services Corporation vs. DCIT (ITA No. 6617/M/2014). 5. We have considered the rival submission of the parties and have gone through the order of authorities below. We have perused the copy of notice dated 10.12.2011 issued by AO under section 274 r.w.s. 271(1)(c). The perusal of the notice reveals that the AO has not strike out the irrelevant portion of the notice. Further, we have also perused the Assessment Order passed under section 153A rws 143(3) dated 08.06.2012. The perusal of Assessment Order reveals that the AO has not specified under which limb of section 271(1((c), the pen....
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....iculars of income as well as furnishing of inaccurate particulars of income. Quite clearly, non-striking-off of the irrelevant limb in the said notice does not convey to the assessee as to which of the two charges it has to respond. The aforesaid infirmity in the notice has been sought to be demonstrated as a reflection of non-application of mind by the Assessing Officer, and in support, reference has been made to the following specific discussion in the order of Hon'ble Supreme Court in the case of Dilip N. Shroff (supra):- "83. It is of some significance that in the standard proforma 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. 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 m....
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....refully considered the said argument set-up by the ld. CIT-DR and find that a similar issue had come up before our coordinate Bench in the case of Dr. Sarita Milind Davare (supra). Our coordinate Bench, after considering the judgment of the Hon'ble Bombay High Court in the case of Smt. Kaushalya & Ors., (supra) as also the judgments of the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra) and Dharmendra Textile Processors, 306 ITR 277 (SC) deduced as under :- "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 the AO at the time 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 ....
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....(c) of the Act are to be initiated for furnishing of inaccurate particulars of income. However, in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act of even date, both the limbs of Sec. 271(1)(c) of the Act are reproduced in the proforma notice and the irrelevant clause has not been struck-off. Quite clearly, the observation of the Assessing Officer in the assessment order and non-striking off of the irrelevant clause in the notice clearly brings out the diffidence on the part of Assessing Officer and there is no clear and crystallised charge being conveyed to the assessee u/s 271(1)(c), which has to be met by him. As noted by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the quasi-criminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice, and in the present case, considering the observations of the Assessing Officer in the assessment order alongside his action of non-striking off of the irrelevant clause in the notice shows that the charge being made against the assessee qua Sec. 271(1)(c) of the Act is not firm and, therefore, the proceedings suffer from non-compliance with principles of natural justice inasmu....