TaxTMI 
TaxTMI 
2020 (1) TMI 45
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....cumstances of the case and in law, learned CIT(A) erred in upholding the penalty levied unlawfully u/s 271(1)(c) of the Act where there the addition made in quantum proceedings is itself based on estimates and without any clarity as to actual existence of stated income which is nowhere established in extant case accordingly penalty so sustained is plainly without authority of law accordingly same deserves to be quashed. Prayer: To quash the penalty u/s 271(1)(c) by Ld AO as confirmed by Ld CIT(A); That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal." ITA No. 3937/Del/2019 "This relates to captioned matter in which we wish to file revised grounds of appeal for forthcoming hearing (17/12/2019) Levy of Penalty u/s 271(1)(c) Rs. 15,46,000 1. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the penalty levied unlawfully u/s 271(1)(c) of the Act in violation of mandatory jurisdictional conditions stipulated under the Act and penalty so sustained is plainly without authority of law accordingly same d....
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....me as well as furnished inaccurate particulars of income in respect of addition of Rs. 81,27,391/-. The Assessing Officer imposed penalty of Rs. 25,12,000/- vide order dated 27.06.2017. 4. The Ld. AR submitted that the notice dated 13.12.2016 and 08.05.2017 has not at all given any particular limb of Section 271(1)(c) of the Income Tax Act for issuing the show cause notice for imposing the penalty. The Ld. AR further submitted that there is no satisfaction given by the Assessing Officer in the assessment order dated 13.12.2016 as to whether the imposition of penalty is on the basis of filing of inaccurate particulars of income or concealment of income. Thus, inception of the penalty order itself is bad in law and hence penalty is not sustainable being void ab initio. The Ld. AR relied upon the decision of the Hon'ble Supreme Court in case of CIT vs. SSA's Emerald Meadows (2016) 73 Taxman.com 248 (SC) and CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar). The Ld AR further submitted that the Hon'ble Delhi High Court in case of Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd. (ITA No.475/2019 vide order dated 02.08.2019) held that notice issued by the Asse....
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....ld that where notice did not show nature of default, it was a question of fact. The assessee had understood purport and import of notice, and hence, no prejudice was caused to the assessee. The Hon'ble Madras High Court has considered the decision of the Karnataka High Court in case of CIT vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565. The Ld. DR also relied upon the following decisions: i. CIT vs. Smt Kaushalya (1994) 75 Taxman 549 (Bombay)/(1995) 216 ITR 660 (Bombay). ii. Trimurti Engineering Works vs. ITO (2012) taxmann.com 363 (Delhi)/(2012) 138 ITD 189 (Delhi)/(2012) 150 TTJ 195 (Delhi) iii. Commissioner of Income Tax vs. S. V. Angidi Chettiar (1962) 44 ITR 739 (SC) iv. CIT vs. Mithila Motors (P.) Ltd. 149 ITR 751 6. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that in assessment order while initiating the penalty u/s 271(1)(c) of the Act, no satisfaction was recorded as to whether both the limbs of 271(1)(c) of the Act has been invoked that all concealment of income and furnishing of inaccurate particulars. Merely stating that 271(1)(c) of the Act penalty has to be initiated does not a....
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....the Act is quashed." Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) of the Act has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) of the Act is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon'ble Karnataka High Court in the case of SSA'S Emerald Meadows (supra) where the SLP filed by the Revenue has been dismissed is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon'ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. (supra) will be applicable in the present case. The Hon'ble Delhi High Court held as under: "21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision ....