TaxTMI 
TaxTMI 
2018 (8) TMI 1044
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....tal income of Rs. 20,31,730/-. Thereafter the case was selected for scrutiny and after serving statutory notices and seeking reply, order of assessment u/s 143(3) was passed by AO thereby making addition of Rs. 25,00,000/- on account of bogus share capital and levied penalty of Rs. 8,41,500 u/s 271(1)(c) of the Act. 3. Aggrieved by the order of the AO, assessee filed appeal before Ld. CIT(A) and the Ld. CIT(A) after considering the case of both the parties dismissed the appeal filed by the assessee and confirmed the order of levy of penalty. 4. Aggrieved by the order of Ld. CIT(A), assessee filed the present appeal before us on the grounds mentioned herein above. 5. The solitary ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the penalty u/s 271(1)(c) of the I.T. Act. 6. In addition to the ground challenging imposition of penalty, the assessee has also raised legal ground with regard to the notice issued u/s.274 and stated that the show-cause notice for penalty did not specify the ground on which penalty is initiated. 7. Learned AR submitted that as the notice u/s. 274 does not specify the charge against the assessee the same is inval....
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....ealment of particulars of income or for furnishing inaccurate particulars of income. These are two different acts. Concealment of income is an act of omission while furnishing of inaccurate particulars of income is an act of commission. The consequences of such acts, being penal in nature, an assessee has to be informed as to what exactly is the charge against him so that he may respond thereto." 9. In case of Mrs Indrani Pillai before the Hon'ble Mumbai Bench of the Income Tax Appellate Tribunal, the judgment of Hon'ble Bombay High Court in case of Maharaj Garage was relied on by the department and the same was distinguished. The copy of the judgment is at page 57-70 of the paper book and the relevant part is at page 68. It reads as follows: "The ratio laid down in the aforesaid decision squarely applies to the facts of the present case. As far as the judgment of the Hon'ble Jurisdictional High Court in Maharaj'Garage (supra) relied upon by the learned Departmental Representative, on a careful reading of the said judgment, we are of the view that it will have no application to the facts of the case. As could be seen, the basic issue arising out of the reference ....
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....e of Samson Perinchery and the series of the decision of the Tribunal wherein penalty was deleted on the plea that in the notice issued u/s.274 r.w.s.271 (1)(C), AO has not deleted the inappropriate words. 12. We have considered rival contentions and carefully gone through the orders of the authorities below and deliberated on the judicial pronouncements cited by lower authorities during the course of hearing before us. From the record we found that during the course of assessment proceedings itself, the assessee has agreed for addition with respect to the discrepancy pointed out by the AO. 13. For the addition so made, AO issued show-cause notice u/s.274 dated 29/12/2008 which is in the standard pre-printed form and both the limbs of concealment and inaccurate particulars have been retained. Copy of notice is placed on court file. In order levying penalty, the Assessing officer has levied penalty for both the limbs as can be seen from conclusion at page 7 of the penalty order. The learned CIT(A) has confirmed the penalty. 14. Even on the legal issue, we found that the two charges for initiating the penalty operate on two different footing and under the penal provision the charg....
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....how caused so that he could furnish his reply without any confusion and to the point. In the present case, neither the assessee nor anyone else could make out as to whether the notice u/s. 274 r.w.S. 271 of the Act was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet with the case of the Assessing Officer. There are a catena of judgments highlighting the necessity for identifying the charge for which the assessee is being visited and in all those decisions, Hon'ble Courts have repeatedly held that where the jurisdictional notice is vague, similar to the one in the present case, the consequent levy cannot be sustained. 17. In this connection, reliance is first placed upon the judgment of the Hon'ble Karnataka High Court In the case of CIT v. Manjunatha Cotton and Ginning Factory & Ors. and Veerabhadrappa Sangappa and Co. (359 ITR 565, 577, 601, 603- 604) in which the facts are similar. In those bunch of tax appeals, several assessee and several issues were involved. In so far as I.T.A. No. 5020 of 2009 was concerned, one of the substantial questions on which the appeal was filed by the revenue was:....
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....ld thus: 66. In view of the aforesaid law, we are of the view that the Tribunal was justified in holding that the entire proceedings are vitiated as the notice issued is not in accordance with law and accordingly justified in interfering with the order passed by the appellate authority as well as the assessing authority and in setting aside the same. Hence, we answer the substantial questions of law framed in this case in favour of the assessee and against the Revenue. " 21. The aforesaid judgment was unsuccessfully challenged by the revenue before the Supreme Court, as it was rejected vide Petition for Special Leave to Appeal (C) No. 13898/2014 dated 11.07.2016. 22. Reliance was next placed upon another judgment of the Hon'ble Karnataka High Court in the case CIT v. SSA'S Emerald Meadows (Income Tax Appeal No. 380 of 2015 decided on 23.11.2016). In this case also s similar situation arose in as much as the Hon'ble Court was required to adjudicate on the following substantial question: (1) Whether, omission of assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income ....
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....he case of Menjuneth Cotton and Ginning Factory (supra). 8. In view of the above, the question as framed do not give rise to any substantial question of law Thus, not entertained" 26. The Hon'ble Supreme Court in Dilip N. Shroff v/s JCIT, [2007] 291 ITR 519 (SC), has observed that while issuing the notice under section 274 r/w section 271, in the standard format, the Assessing Officer should delete the inappropriate words or paragraphs, otherwise, it may indicate that the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or had furnished inaccurate particulars of income. This, according to the Hon'ble Supreme Court, deprives the assessee of a fair opportunity to explain its stand, thereby, violates the principles of natural justice. As held by the Hon'ble Supreme Court in CIT v/s Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC), the aforesaid principle laid in Dilip N. Shroff (supra) still holds good in spite of the decision of the Hon'ble Supreme Court in UOI v/s Dharmendra Textile Processors (2008) 306 ITR 277 (SC). The Hon'ble Jurisdictional High Court in CIT v/s Smt. Kaush....