TaxTMI 
TaxTMI 
2018 (11) TMI 1596
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....is proposed to be levied as there is non-strike of the irrelevant limb in the notice. Ld. Counsel for the assessee further referring to the Assessment Order passed u/s. 144 of the Act dated 29.12.2008 submitted that, the Assessing Officer initiated penalty proceedings for concealment of income and also for furnishing inaccurate particulars of income, thus he submitted that the Assessing Officer is not clear as to for which limb the penalty is proposed to be levied. Further, referring to the Penalty Order Ld. Counsel for the assessee submitted that penalty was imposed for furnishing inaccurate particulars. Therefore, he submits that there is complete non-application of mind by the Assessing Officer in initiating the penalty proceedings and while imposing the penalty U/s. 271(1)(c) of the Act, therefore, the Penalty Order is bad in law. In support of his submissions, Ld. Counsel for the assessee relied on the following decisions: - (i) Meherjee Cassinath Holdings (P.) Ltd. v. ACIT in ITA.No. 2555/Mum/2012 dated 28.04.2017. (ii) Rekha Bhupendra Dalal v. DCIT in ITA.No. 3363/Mum 2016 dated 29.05.2017. (iii) Banggreen Holding (P.) Ltd. v. DCIT in ITA.Nos. 1999 & 2000/Mum/2014 da....
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....re proceedings suffer from non-compliance with principles of natural justice in as much as the Assessing Officer himself is not sure of the charge and the assessee is not made aware as to which of the two limbs of section u/s. 271(1)(c) of the Act he has to respond. While holding so the Coordinate Bench observed as under: - 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 inaccur....
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....ication of mind. It was also bound to comply with the principles of natural justice. (See Malabar Industrial Co. Ltd. v. CIT [2000] 2 SCC 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) ....
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....proceedings disappeared when it was held that there was no suppression of income. The Hon'ble Kerala High Court has struck down the penalty imposed in the case of N.N.Subramania Iyer Vs. Union of India (supra), when there is no indication in the notice 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....