AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 839
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....9;s submission that the mistake was an unintentional mistake which was also not pointed out by the Ld. AO in the assessment done u/s 143(3) for the A.Y. 2011-12. The case was also supported by the decisions of the Hon'ble apex court which was not considered by the Ld. CIT (A). 4. Because under the facts and circumstances of the case the assessee has explained that the error was not intentional and was prevented by circumstances beyond his control. 5. That the appellant craves to add. amend, alter, modify or delete any or all of the grounds of appeal before oral the time of hearing." 2. The issue of validity or otherwise of the penalty imposed u/s 271(1)(c) of the I.T. Act, in facts and circumstances similar to those attending this appeal has been discussed by the Division Bench of the Agra ITAT, while disposing of ITA No. 118/Agra/2015, in the case of 'Sachin Arora vs. ITO' for A.Y. 2008-09 and other appeals. 3. Therein, it has been observed, inter alia, as follows: "2. Facts, for convenience, are being taken from ITA No. 118/Agra/2015, the assessee's appeal for A.Y. 2008-09 against the CIT(A)'s order confirming penalty of Rs. 98,000/- imposed o....
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....red before any such order Is made under section 271(l)(c). Sd/- (Yuvraj Malik) Income Tax Officer-3(4) Mathura." 6. So, as per the notice, the assessee had concealed the particulars of his income, or had furnished inaccurate particulars thereof. 7. In the assessment order (APB-149-150), dated 11.08.2010, the notice is stated to be issued qua concealed income. In the penalty order dated 25.02.2011, the expression used for levy of penalty is 'Chhipaye Gaye Tatthayon Ke Liye', which expression, and the parties are also ad idem on this, means 'concealment'. 8. According to the ld. Counsel for the assessee, the notice, not being specific about the charge against the assessee, is void. He has relied on the following decisions: (i) "CIT vs. Manjunath Cotton and Ginning Factory", 359 ITR 565 (Kar). (ii) "CIT vs. M/s Veerabhadrappa Sangappa & Co", ITA No. 5020/2009 (Kar). (iii) "CIT vs. SSA Emerrald Meadows", in ITA No. 380/2015 (Kar). (iv) "Dilip N. Shroff Vs. JCIT", 291 ITR 519 (SC). (v) "Ashok Pai vs. CIT", 292 ITR 11 (SC). (vi) "CIT vs. Reliance Petroproducts (P) Ltd.", 322 ITR 158 (SC). ....
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....ts dissolution". In the present case, however, the assessee is an individual and has raised no such plea as was raised therein. 11. Regarding 'Sanjay Kumar' & 'Ajay Kumar' (supra), as per the assessee, in both the referred cases, the ITAT, Agra Bench had quashed the penalty orders in ITA Nos. 53 & 54/Agra/2015 vide consolidated order dated 19.05.2017, following the judgment of 'Manjunatha Cotton' (supra) and after distinguishing the cases relied on by the Revenue, namely, 'Mak Data (P) Ltd.' (supra), 'K.P. Madhusudhanan' (supra), 'Zoom Communication Pvt. Ltd.' (supra) & 'S.V. Angidi Chettiar' (supra). This is not disputed. Thus, no aid is available to the Department from these orders. 12. In "Mak Data (P) Ltd." (supra), the Hon'ble Supreme Court has held that the AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or to reduce it into writing. In the case before us, the assessee has not raised the issue of satisfaction and, therefore, reliance on "Mak Data" (supra) by the Department is misplaced. 13. In "Gujara....
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....which must be having professional assistance in computation of its income, and its accounts were compulsorily subjected to audit. It was observed that in the absence of any details from the assessee, such deductions could not have been left out while computing the income of the assessee Company and it could also not have escaped the attention of the auditors of the Company. Thus, this case pertains to the explanation tendered by the assessee and the bonafides of such explanation. As such, again, this matter does not further the cause of the Department. 17. In the case of "CIT Vs. Societex" (supra), the Hon'ble Delhi High Court has explained the scope of the judgement in the case of 'Zoom Communications' (supra) observing that the same is premised on the footing that even if inadvertently particulars are not given, if the authority finds that the explanation given is not bona fide, penalty u/s. 271 would be warranted. 18. In "HCIL Kalindee Arsspl" (supra), penalty under section 271(l)(c) imposed on disallowance made under section 80IA, which was deleted by the ITAT on the ground that the claim raised under section 80IA, as was disallowed in quantum proceedings,....
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....the penalty was finally levied on the same ground. 23. Further the ITAT found, that mere non marking of the relevant clause in the Notice is a curable defect, and the action of the revenue is rescued by the provisions of section 292BB of the Act, which cures minor defects in the various notices issued provided such notice in substance and effect was in conformity with the intent and purpose of the Act. Thus, the Bench in Para-6 concluded that penalty cannot be deleted on this ground. 24. Now, the question for consideration of the Hon'ble Bench is in view of the fact that whether for the reason that in the assessment order it is mentioned that penalty is initiated for a specific charge, the Notice accompanying the Assessment Order, issued under section 274, read with section 271(1)(c), by which initiation is formally and legally conveyed, which mentions both of the two charges, can penalty be sustained. And whether such a Penalty Notice can be said to defective, defect being minor in nature, curable under section 292BB of the Act and also whether the Notice as has been issued to the appellant is in accordance with the Act. 25. First of all, it needs due ap....
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....271(1)(c) which has to be met by him. Therefore, considering the observation of the AO in the assessment order alongside his action of non striking off the irrelevant clause in the notice renders the notice non complying with the principles of natural justice and thus deleted the penalty. 27. Again similar issue came up for consideration before the Mumbai Bench in the case of 'Dr. Sarita Milind Davare Vs ACIT' in ITA No. 2187/Mum/2014 wherein the DR vide Para-7, submitted before the Bench that in the assessment order the AO has clerly specified that penalty is initiated for concealment of income and placing reliance upon the Hon'ble Bombay High Court in the case of 'CIT Vs Kaushlaya Devi' 216 ITR 660, submitted that mere mistake in the language used or mere non-striking off the inaccurate portion cannot by itself invalidate the Notice. 28. The argument tendered by the Revenue was not accepted by the ITAT who in Para-12 after due discussion of the Judgment delivered in the case of 'CIT Vs Kaushlaya Devi' (supra) has held that a combined reading of the decision rendered by Hon'ble Bombay High Court in the case of 'Smt B. Kaushlaya & Ors' (supra) and the dec....
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....e of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. [Para 63]. 34. In "CIT vs. M/s Veerabhadrappa Sangappa & Co", ITA No. 5020/2009 (SC). 35. In "CIT vs. SSA Emerrald Meadows", in ITA No. 380/2015 (Kar) has held that: "It is to be kept in mind that section 271(1)(c) is a penal provision and such a provision has to be strictly constructed. Unless the case falls within the four corners of the said provision, penalty cannot be imposed." (Para-12). 36. In "Dilip N. Shroff Vs. JCIT", 291 ITR 519 (SC). Section 271(1)(c) of the Act is in two parts. Whereas the first part refers to concealment of income, the second part refers to furnishing of inaccurate particulars thereof. (Para-31) 'Concealment of income' and 'furnishing of inaccurate particulars' are different. Both concealment and furnishing inaccurate particulars refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. Altho....
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....rately discussed in Para-9 to 10 of the said Order. Xerox copy of the Hon'ble ITAT order is enclosed. (APB-79-92) 40. In "Suvaprasanan Bhatacharya vs. ACIT", ITA No. 1303/Kol/2010. (Kol) vide Order dated 06-11-2015 deleted penalty levied under section 271(1)(c) on the ground of "No Satisfaction" recorded in the assessment order and Notice being issued on both the charges without specifying the exact charge. Submission raised by the assessee is duly noted in Para- 4 , Revenue's submission refereeing and relying on MAK Data is noted in Para 4.2, rebuttal of the assessee is noted in Para 4.3 and finding over the issue by the Hon'ble Bench are noted in Para 8 of the ITAT Order. Xerox copy of the ITAT order is enclosed. (APB-93-112). 41. In "SLK Properties vs. ITO", ITA No. 140/PN/2014 wherein vide Order dated 18.03.2016 after due consideration of the Judgment of MAK Data (P) Ltd. held penalty order to be unsustainable in law placing reliance to Judgment of 'Manjunath Cotton' (supra). The assessee raised Additional Ground before the ITAT. On merits submission of the assessee is noted in Para- 11 to 13 rebuttal thereon by the Revenue referring and relying upon Judgment ....
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....on of the Revenue as noted in Para-7 of the Hon'ble ITAT order that, assessee was given an opportunity as required u/s 274; she has availed that opportunity by participating; deficiency if any is made good relying on section 292B/292BB; AO has specified in the assessment order that he is initiating penalty for concealing the income and placed reliance to Hon'ble Mumbai High Court in the case of CIT Vs. Smt. Kaushalya and others (216 ITR 660) and submitted that the Hon'ble Bombay High Court has held that mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. 45. In "Meherjee Cassinath Holdings P. Ltd. vs. ACIT", ITA No.2555/Mum/2012. wherein vide Order dated 28.04.2017 the plea taken by the Revenue as noted in Para-7 of the ITAT Order, that irrespective of the Notice issued under section 271(1)(c ) mentioning both the charges, the Assessment Order in the case therein in Para-4 has recorded clearly that the penalty under section 271(1)(c) of the Act initiated for furnishing of inaccurate particulars of income. 46. In "Rajeev Kumar Gupta vs. CIT", 123 ITR 907, Allahabad, (HC). "Now, s. 274 requires tha....