TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 41
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.... were not available with him and therefore, the Bench has directed the DR to produce the assessment record, specially the penalty notices issued. He stated that now the original notices received by the assessee are being produced before the Bench and therefore, the matter can be proceeded with. He produced the original notices dated 25th May, 2017 as well as 3rd November, 2017 issued by the Assessing Officer. The notices were shown to the learned DR and he stated that if the Bench deems fit, the matter can be proceeded with because the only purpose for calling of the record was to see the original notices which have now been produced by the assessee. In view of the above, we proceeded to hear both the parties. 4. The learned counsel for the assessee stated that for the year under consideration, the assessee filed the original return declaring loss of Rs. 476,35,92,302/-. By filing the revised return, the loss was reduced to Rs. 354,34,84,148/-. That during the course of assessment proceedings, the Assessing Officer asked the assessee to justify the advance written off to TAIDIA Conconation Ltd. amounting to Rs. 5 crores. It was explained that the advance was given during the co....
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....ing Officer. That the penalty under Section 271(1)(c) has been levied on the ground that the assessee has shown inaccurate particulars of income to the tune of Rs. 5 crores. However, in the penalty order, the Assessing Officer has not at all specified that which particular furnished by the assessee was inaccurate. In the above factual background, the argument of the learned counsel was twofold - (i) that the penalty under Section 271(1)(c) is invalid because no satisfaction was recorded by the Assessing Officer in the assessment order and in the penalty notice, there was no specific charge. In support of this contention, he relied upon the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory and Others - [2013] 359 ITR 565 (Karn) and the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Virgo Marketing (P) Ltd. - [2008] 172 Taxman 83 (Delhi). He further relied upon the decision of ITAT, Delhi Bench in the following cases :- a. Dr. Sita Bhagi Vs. ACIT - ITA No.1286/Del/2017, order dated 4th April, 2019. b. TA Steels Pvt.Ltd. Vs. ITO - ITA No.3108/Del/2015, order dated 6th May, 2019. c. Sanraj Engineering P....
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....ated *have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1,2,3,4 and 5. You are requested to appear before me at 11:30 AM/PM on 23.06.2017" 8. From the above, it is evident that the notice was absolutely vague. There is no specific charge for initiation of penalty proceedings which the assessee could explain. The penalty notice mentions the failure of the assessee to comply with the notice under Section 142(1)/143(2). It also mentions about the concealment of particulars of income or furnishing of inaccurate particulars of income in terms of Explanation 1,2,3,4 and 5. The subsequent notice dated 3rd November, 2017 is only a reminder with reference to the first notice. In the assessment order, the Assessing Officer has discussed the addition in paragraph 4 of the order, which reads as under:- "4. The contention of the assessee has been examined. From perusal of the profit and loss account of the assessee company, it was noticed that the assessee company has only dividend income which has been received from the investment made in equity shares and mutual funds. Assessee company did not execute any work/p....
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....s or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 12. In the case of the assessee, though the Assessing Officer has levied the penalty for furnishing inaccurate particulars of income but he has not specified which particular furnished by the assessee was incorrect, erroneous or false. In fact, in the assessment order, when the Assessing Officer has discussed the addition, there is no mention about furnishing of inaccurate particulars. He simply disallowed the claim made by the assessee. Hon'ble Apex Court in the above case has clearly mentioned that merely because a claim made in the return of income is not accepted cannot amount to furnishing of inaccurate particulars. 13. Learned DR has relied upon the decision of Hon'ble Jurisdictional High Court in the case of Zoom Communication P.Ltd. (supra), wherein their Lordships held as under :- "In the case of Reliance Petroproducts P.Ltd. [2010] 322 ITR 158....
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....of this nature, actuated by a mala fide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have. We find that the assessee before us did not explain either to the income-tax authorities or to the Income-tax Appellate Tribunal as to in what circumstances and on account of whose mistake, the amounts claimed as deductions in this case were not added, while computing the income of the assessee-company. We cannot lose sight of the fact that the assessee is a company which must be having professional assistance in computation of its income, and its accounts are compulsorily subjected to audit. In the absence of any details from the assessee, we fail to appreciate how such deductions could have been left out while computing the income of the assessee-company and how it could also have escaped the attention of the auditors of the company." 14. Thus, after considering the decision in the case of Reliance Petroproducts Pvt.Ltd. (supra), it was stated by the Hon'ble Jurisdictional High Court that mer....