TaxTMI 
TaxTMI 
2020 (6) TMI 305
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....Thousand Eight Hundred and Sixty only) on account of disallowance of Rs. 62,47,460/- (Rupees Sixty Two Lakhs Forty Seven Thousand Four Hundred and Sixty only) which was allowable as a deduction under the provisions of Section 37 of the Act? B. Whether on the facts and in the circumstances of the case and in law the Tribunal erred in not applying the ratio laid down by the Apex Court in the case of CIT Vs. Reliance Petroproducts Private Limited reported in 322 ITR 158(SC), which was squarely applicable to the facts of the present case? C. Whether on the facts and in the circumstances of the case and in law the Tribunal grossly erred in upholding the levy of penalty under Section 271(1)(c) of the Act without appreciating / considering that: (i) the appellant had not been found to have concealed particulars or furnished inaccurate particulars of its claims; (ii) the aforesaid claim could be allowed under Section 37 of the Act as incurred wholly and exclusively for the purposes of business; (iii) no income has been concealed / avoided as inter alia the settlement with JCT took place in assessment year 2003-2004, when the claim was made by the appellant under the provisions o....
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....y the assessee was lessened by the aforesaid amount and by two other amounts, rounding it off to Rs. 3,53,48,680.00. Taking the view that assessee had furnished inaccurate particulars of income, Assessing Officer ordered that penalty proceedings under Section 271(1)(c) of the Act be initiated separately. 7. Following the same the Assessing Officer issued notice under Section 274 read with Section 271 of the Act on the same day i.e., on 28.02.2006 to the assessee to show cause as to why an order imposing penalty should not be made under Section 271 of the Act. It may however be mentioned that in the pertinent portion of the notice the Assessing Officer did not strike off the inapplicable portion. The pertinent portion reads as under:- "Whereas in the course of proceeding before me for the assessment year 2003-04 it appears to me that you:- * * * * * * * * * * * * * * * * * * have concealed the particulars of your income or ..... furnished inaccurate particulars of such income. * * * * * * " 8. It appears that assessee had challenged the disallowance of bad debt along with other disallowances in the assessment order by filing appeal before the Commissioner of Income Tax....
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....ally a debt and also not an expenditure allowable under Section 37(1) of the Act. Therefore, the finding recorded by the CIT (A) that the assessee had wilfully submitted inaccurate particulars of income which had resulted into concealment was affirmed. 12. Hence this appeal by the assessee. 13. Ms Sathe, learned counsel for the appellant submits at the outset that the notice issued to the petitioner under Section 274 read with Section 271 of the Act proposing to impose penalty was in printed format but the inapplicable portion therein was not struck off. Consequently, whether penalty was sought to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of such income was not indicated in the notice. This is a fundamental error which goes to the root of the matter and has vitiated the impugned order of penalty. However she admits that this point was neither pleaded nor argued before any of the lower authorities including the Tribunal. This point has been raised for the first time in appeal before the High Court. But she contends that this being a pure question of law touching upon jurisdiction, it can be raised even for the first time in the Hi....
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....ed; the charge against the assessee must be already indicated. Failure to do so would reflect non-application of mind, thus vitiating the penalty proceedings and the consequential order of penalty. 13.3. In addition to the above, learned counsel for the appellant submits that assessee had made a bona-fide claim of deduction and had furnished all the necessary particulars. In the assessment proceedings, the Assessing Officer may not have agreed to such a claim and may have disallowed the same. Mere disallowance of a claim made bonafidely would not amount to concealment of particulars of income or furnishing inaccurate particulars of such income to warrant imposition of penalty under Section 271(1)(c) of the Act. To support such a contention, she has placed reliance on CIT Vs. Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC) and on a few other cases. 13.4. Summing up, learned counsel for the appellant submits that the questions proposed are substantial questions of law which arise from the impugned order of the Tribunal. Those may be answered in favour of the assessee and against the Revenue. 14. Per contra, Mr. Sharma, learned standing counsel, Revenue supports the impugned ord....
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....nvoke the second limb then the notice has also to be appropriately marked. If there is no striking off of the inapplicable portion in the notice which is in printed format, it would lead to an inference as to nonapplication of mind. In such a case, penalty would not be sustainable. 18. Supreme Court in Ashok Pai Vs. CIT, 292 ITR 11 observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act carry different connotations. 19. Having discussed the above, let us address the submissions advanced by learned counsel for the parties. 20. In so far the first contention of learned counsel for the appellant is concerned i.e., raising a question of law for the first time before the High Court though not raised before the lower authorities, our attention is drawn to a decision of the Supreme Court in Jhabua Power Limited (supra) relied upon by learned counsel for the appellant. In that case two questions were raised by the Revenue for the first time before the Supreme Court. The two questions related to bar of limitation for imposing penalty under Section 275(1) of the Act. Supreme Court took the view that the two questions were requ....
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....es & Properties (P) Ltd. (supra), this Court has taken the view that an appeal under Section 260-A of the Act can be entertained by the High Court on the issue of jurisdiction even if the same was not raised before the Tribunal. 21. Let us now advert to the fourth question i.e. Question number D framed / proposed by the appellant. Through this question, appellant is contending that the Tribunal ought to have held that the order of penalty passed under Section 271(1) (c) of the Act was bad in law in view of the fact that at the time of initiation of penalty proceedings as well as at the time of imposition of penalty, Assessing Officer was not clear as to which limb of Section 271 (1)(c) of the Act was attracted. At the time of hearing, learned counsel for the appellant had argued that in the show-cause notice the inapplicable portion was not struck off; thus it was not indicated in the notice whether the penalty was sought to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income, which has vitiated the impugned order of penalty. However, she fairly submits that this point was not urged before the lower authorities including the Tribu....
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....dismissed the appeal of the Revenue. 21.4. Revenue preferred Special Leave Petition (SLP) before the Supreme Court against the decision of the Karnataka High Court in SSA's Emerald Meadows (supra). In (2016) 242 Taxmann 180, Supreme Court dismissed the SLP. 21.5. Though the decision of the Karnataka High Court in SSA's Emerald Meadows (supra) which relied upon Manjunath Cotton & Ginning Factory (supra) was not interfered with by the Supreme Court by dismissing the SLP, the fact remains that dismissal of SLP would not lead to merger of the High Court's order with the order of the Supreme Court. 21.6. This Court in Samson Pernchery (supra) was examining the question as to justification of the Tribunal in deleting the penalty levied under Section 271(1)(c) of the Act. In that case, Tribunal had deleted the penalty imposed by the Assessing Officer because initiation of penalty proceedings was for furnishing inaccurate particulars of income whereas the order imposing penalty was for concealment of income. Further Tribunal noted that the notice issued under Section 274 of the Act was in a standard proforma without having striked out irrelevant clauses therein. Revenue cont....
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....ed on the same day when the assessment order was passed i.e., on 28.02.2006. The said notice was in printed form. Though at the bottom of the notice it was mentioned 'delete inappropriate words and paragraphs', unfortunately, the Assessing Officer omitted to strike off the inapplicable portion in the notice i.e., whether the penalty was sought to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of such income. Such omission certainly reflects a mechanical approach and non-application of mind on the part of the Assessing Officer. 24. However, the moot question is whether the assessee had notice as to why penalty was sought to be imposed on it? 25. This brings us to the basic question as to what is a notice or what do we mean by notice. Concise Oxford English Dictionary, Indian Edition, explains notice to mean the fact of observing or paying attention to something; advanced notification or warning; a displayed sheet or placard giving news or information. It means to become aware of. In other words, to put someone on notice would mean warn someone of something about or likely to occur. Black's Law Dictionary, Eighth Edition, de....
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....271(1)(c) of the Act, either concealment of particulars of income or furnishing inaccurate particulars of such income are the sine qua non. In the instant case, as we have seen, penalty proceedings under Section 271(1)(c) of the Act were initiated on the ground that assessee had furnished inaccurate particulars of income. 28. In the assessment proceeding, assessee filed its return of income on 28.11.2003 declaring total loss at Rs. 4,66,68,740.00. Assessee disclosed that it had debited Rs. 62,47,460.00 under the head 'selling and distribution expenses' and claimed it as bad debt in the books of account. As per the explanation given by the assessee it was exporting fabrics through M/s. JCT Ltd., a recognized export house for which assessee had an ongoing account with M/s. JCT Ltd. M/s. JCT Ltd. raised quality claims from time to time and was pressing the assessee for settlement. As the assessee was in need of funds, it could not settle the claims. It was only during the assessment year under consideration that assessee had the requisite funds and paid to M/s. JCT Ltd. Rs. 62,47,460.00 as full and final settlement, confirmation of which from M/s. JCT Ltd. was submitted. Asse....
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....round that while the charge against the assessee was of furnishing inaccurate particulars of income whereas the penalty was imposed additionally for concealment of income, the order of penalty as upheld by the lower appellate authorities could be justifiably interfered with, still we would like to examine whether there was furnishing of inaccurate particulars of income by the assessee in the first place because that was the core charge against the assessee. 33. In Reliance Petroproducts Pvt. Ltd. (supra), Supreme Court examined meaning of the words 'particulars' and 'inaccurate'. As per Law Lexicon, the word 'particulars' means 'detail or details; the details of a claim or the separate items of an account'. Therefore, it was held that the word 'particulars' used in Section 271(1)(c) of the Act would embrace the meaning of the details of the claim made. Referring to Webster's Dictionary where the word 'inaccurate' has been defined as 'not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statment, copy or transcript', Supreme Court held that the two words i.e., 'inaccurate' and ....