2018 (8) TMI 667

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....mstances of the case and on the basis of law laid down by Hon'ble Supreme Court in the case of Emerald Meadows 242 Taxmann 180 (SC) and Hon'ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory 359 ITR 0565 (Karnataka), Ld. A.O. grossly erred in initiating of proceedings U/s 271(1)(c) of the Act as Ld. A.O. did not strike off the inappropriate portion of the notice issued U/s 274 of the Act as it did not specify under which limb of section 271(1)(c) of the Act penalty proceedings have been initiated i.e. either for concealment of particular of income or for furnishing of inaccurate particulars of income. More over the said notice is in printed form where all the grounds mentioned in section 271 are mentioned is also unla....

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....s of income. Further, in the notice issued U/s 274 r.w.s. 271(1)(c), penalty proceedings U/s 271(1)(c) is initiated for concealment of income or furnishing of inaccurate particulars of income. It was submitted that in the absence of any specific charge against the assessee in the penalty notice, consequent penalty imposed by the AO is illegal and bad in law. In support, reliance was placed on the decision of Hon'ble Supreme Court in case of CIT vs. SSA's Emerald Meadows (2016) 242 Taxman 180 and Hon'ble Karnataka High Court in case of CIT vs. M/s Manjunatha Cotton & ginning Factory & Ors. 359 ITR 565. It was further submitted that a similar view issue has been dealt with by the Coordinate Bench of this Tribunal in case of Shri Chandmal Kuma....

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....of mind on the part of the AO. Further, we refer to the assessment order where, after discussing the issue relating to computation of capital gains, the AO held that by showing less capital gains, the assessee has furnished inaccurate particulars of income and penalty proceedings are being initiated separately and thereafter, towards the end of the assessment order, the AO states that penalty proceedings u/s 271(1)(c) read with section 274 have been initiated separately for concealment of income/furnishing of inaccurate particulars of income. This thus shows that the AO himself is unsure about the charge against the assessee during the course of assessment proceedings. Considering the observations of the AO in the assessment order alongside....

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.... Factory (supra) which has been followed in case of SSA Emerald Meadows (supra) and the SLP against the latter decision has since been dismissed by the Hon'ble Supreme Court. Further, we note that the Hon'ble Bombay High Court in case of Shri Samson Perinchery (in ITA No. 1154 and others dated 5.01.2017) and Karnataka High Court in its latest decision in case of S. Chandrashekhar (Supra) has reaffirmed the said legal proposition. 18. In light of above legal authorities where the factum of non-striking off of the irrelevant clause in the notice has been held as reflective of non-application of mind by the AO and in light of facts and circumstances of the present case and the above discussions, the penalty imposed under section 271(1)(c) i....