TaxTMI 
TaxTMI 
2017 (12) TMI 518
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.... is found to be excess/ not acceptable and restricted to the extent of provision for bad and doubtful debt debited to Profit and Loss account by any stretch of imagination does not tantamount to concealment of income or furnishing incorrect particulars of income. When the claim for bad and doubtful debt is restricted U/s.36 (I) (Vii)to the extent of provision made in the books of account as per the IT Act,19M, intspective of the same only on the fractional ground that for few n4ral branches advances not found to be eligible for claim u/ s. 36(l)(viia), is brought to the notice of Learned A.D. by appellant himself during the course of assessment and the said claim was made, on the basis of data, information then available to bank from the branches is not amounts to concealment of income or furnishing incorrect particulars. Learned CIT(A)-2 failed to appreciate the same. Learned CIT(A)-2 Thane confirming the penalty order u/s. 271(1)(c) and levy of penalty is for away from real facts baseless ignoring law, against weight of evidence, against principle and natural justice and bad in law therefore, penalty order deserved to be quashed in tom, 2. Learned C1TA)-2 failed to apprecia....
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.... alter, delete and very any or all grounds of appeal as and when the occasion arises." 3. The brief facts of the case are that the assessment of the assessee completed on 29.12.2011 assessing total income to the tune of Rs. 46,56,16,220/- u/s 143(3) of the Act. During the assessment proceeding it was observed that the assessee claimed deduction of Rs. 3,77,18,617/- on account of (seven and one-half percent of the total income) first limb of the provision u/s 36(1)(viia) of the Act and an amount of Rs. 27,72,40,100/- on account of secondly (10% of the aggregate advances) was made by rural bank to the tune of Rs. 27,72,40,100/-. On examination it was found that the assessee was claiming excess deduction of Rs. 25,49,58,717/- therefore, the claim was restricted to the extent of Rs. 6,00,00,000/-. Thereafter, the penalty to the tune of Rs. 7,92,59,259/- was levied the CIT(A) has confirmed the order therefore, the assessee has filed the present appeal before us. 4. We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. The Ld. Representative of the assessee has argued that in the similar circumstances for the A.Y.2008-09 the Hon'ble ITAT....
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....oldings P. Ltd. (supra), ( in which one of us is coauthored) In the said decision, the Co-ordinate Bench of this Tribunal made the following observations: "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 particulars of income or for furnishing inaccurate particulars of income. Therefore, it is obvious from the phraseology of Sec. 271(1)(c) of the Act that the imposition of penalty is invited only when the conditions prescribed u/s 271(1)(c) of the Act exist. It is also a well accepted proposition that 'concealment of the particulars of income' and 'furnishing of inaccurate particulars of income' referred to in Sec. 271(1)(c) of the Act denote different connotations. In fact, this distinction has been appreciated even at....
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....CC 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 non-application 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 on record. 10. In fact, at the time of hearing, the ld. CIT-DR has not disputed the factual matrix, but sought to point out that there is due application of mind by the Assessing Officer which can be demonstrated from the discussion in the assessment order, wherein after discussing the reasons for the disallowance, he has recorded a satisfaction that penalty proceedings are initiated u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income. In our considered opinion, the attempt of the ld. CIT-DR to demonstr....
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....tice 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'ble Bombay High Court has discussed about non-application of mind in the case of Kaushalya (supra) and observed as under:- "....The notice clearly demonstrated non-application 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 charge he had to face. In this back ground, quashing of the penalty proceedings for the assessment year 1967-68 seems to be fully justified." ....
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.... in view of the aforesaid discussion, in our view, the notice issued by the Assessing Officer u/s 274 r.w.s. 271(1)(c) of the Act dated 10.12.2010 is untenable as it suffers from the vice of non- application of mind having regard to the ratio of the judgment of the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra) as well as the judgment of the Hon'ble Bombay High Court in the case of Shri Samson Perinchery (supra). Thus, on this count itself the penalty imposed u/s 271(1)(c) of the Act is liable to be deleted." 7. The ld. DR for the Revenue relied upon the decision of Co-ordinate Bench in Dhaval K. Jain (supra) and the decision of jurisdictional High Court in CIT v/s Smt. Kaushalya & Ors. (supra) may refer that the Hon'ble jurisdictional High Court in a recent decision of similar ground as raised by assessee in the present appeal in case of CIT vs. Samson Perinchary (supra) held that the failure on the part of AO to specify in the notice u/s 274 whether the penalty is being initiated for furnishing of inaccurate particulars of income or for concealment of income (is fatal). The Hon'ble Court further held that none-mentioning of charge reflects non-application....