TaxTMI 
TaxTMI 
2020 (10) TMI 932
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....ollowing grounds of appeal before us: "1. The ld. CIT(A) has erred in law and on the facts of the case in confirming the penalty levied by the Assessing Officer which is made on the basis of defective notice as the Assessing Officer has not specified under which limb penalty is being initiated. 2. The Ld CIT (A) has erred in law and on the facts of the case in confirming the action of assessing officer levying penalty of Rs. 6,72,836/ - under section 271(1)(c) of the Income Tax Act. The action is unjustified and unwarranted. 3. Your Petitioners crave leave to add, amend, alter and / or withdraw any or all the aforesaid ground of appeal." 2. Briefly stated, the assessee company had filed its return of income for A.Y. 2012-13 on 12.09.2012, declaring its total income at Rs. 7,79,085/-. The return of income filed by the assessee company was initially processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. During the course of the assessment proceedings it was observed by the A.O that the assessee had claimed to have received rent of Rs. 37,20,000/- from letti....
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....was paid during the year under consideration. Apart from that, the assessee had taken another loan of Rs. 51,00,000/- on 31.09.2009 on the same property by way of a loan against property from ICICI Bank, on which interest of Rs. 8,27,253/- was paid. The assessee had claimed deduction of an aggregate interest expenditure of Rs. 18,24,287/- [Rs. 9,97,034/- (+) Rs. 8,27,253/-] while computing its income under the head 'house property'. Observing, that the assessee had not utilised the funds borrowed for acquisition of the property in question, the A.O called upon the assessee to put forth an explanation as to why the aforesaid interest expenditure of Rs. 18,24,287/- may not be disallowed. In reply, it was admitted by the assessee that the claim for deduction of the interest expenditure was though not allowable under Sec. 24 of the Act, however, the same was on account of a bonafide mistake claimed by the assessee in its return of income. Accordingly, the assessee requested that the interest expenditure of Rs. 18,24,287/- so claimed by it while computing its income from house property may be disallowed. In the backdrop of the aforesaid facts, the A.O disallowed the assessee's claim ....
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....d erred in failing to appreciate that the failure on the part of the A.O to strike off the irrelevant default in the body of the 'Show cause' notice ('SCN'), had therein divested the assessee of knowing as to for what default the impugned penalty was sought to be imposed in its hands; and (ii) that the CIT(A) was in error in upholding the penalty imposed by the A.O under Sec. 271(1)(c), failing to appreciate that no such penalty in the backdrop of the merits of the case was liable to be imposed. 6. As the assessee has assailed the validity of the jurisdiction assumed by the A.O for imposing penalty under Sec. 271(1)(c) of the Act, we shall, thus, first deal with the same. The ld. Authorized Representative (for short 'A.R') for the assessee took us through the 'SCN' issued under Sec. 274 r.w.s 271(1)(c), dated 10.11.2014. The ld. A.R taking us through the aforesaid 'SCN', dated 10.11.2014 submitted, that the A.O had failed to strike off the irrelevant default in the body of the said notice, as a result whereof the assessee had remained divested of an opportunity to defend its case in the absence of being put to notice as to for what default the impugned penalty was sought to be i....
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..... Admittedly, the A.O while culminating the assessment had initiated the penalty proceedings under Sec. 271(1)(c) for "concealment of income and also furnishing inaccurate particulars of income", and thereafter, had imposed the penalty vide his order dated 21.05.2015 for concealment of income/filing inaccurate particulars of income: 9. We have given a thoughtful consideration to the issue before us and are unable to persuade ourselves to subscribe to the view taken by the CIT(A). As observed by us hereinabove, it is a matter of fact borne from the records that the A.O had in the aforesaid 'SCN' dated 10.11.2014 failed to point out the default for which penalty was sought to be imposed by him on the assessee company. As observed by us hereinabove, the A.O in the 'SCN', dated 10.11.2014 had called upon the assessee to show cause as to why penalty u/s 271(1)(c) may not be imposed on it for having concealed particulars of its income or furnishing of inaccurate particulars of such income. In our considered view, as both of the two defaults envisaged in Sec. 271(1)(c) i.e 'concealment of income' and 'furnishing of inaccurate particulars of income' are separate and distinct defaults wh....
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....aults contemplated in Sec. 271(1)(c) viz. 'concealment of income' and 'furnishing of inaccurate particulars of income' had been appreciated at length by the Hon'ble Supreme Court in its judgments passed in the case of Dilip & Shroff Vs. Jt. CIT (2007) 210 CTR (SC) 228 and T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC). The Hon'ble Apex Court in its aforesaid judgments had observed that the two expressions, viz. 'concealment of particulars of income' and 'furnishing of inaccurate particulars of income' have different connotation. The Hon'ble Apex Court being of the view that the non-striking off the irrelevant limb in the notice clearly reveals a non-application of mind by the A.O had observed as under:- "83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he has furnished inaccurate particulars. Even before us, the learned Additional Solicitor Genera....
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....ings had been initiated, i.e. whether for 'concealment of particulars of income' or 'furnishing of inaccurate particulars', the same has to be held as bad in law. The 'Special Leave Petition' (for short 'SLP') filed by the revenue against the aforesaid order of the Hon'ble High Court of Karnataka had been dismissed by the Hon'ble Supreme Court in CIT Vs. SSA's Emerald Meadows (2016) 73 taxmann.com 248 (SC). Apart from that, we find that a similar view had been taken by the Hon'ble High Court of Bombay in the case of CIT Vs. Samson Perinchery (ITA No. 1154 of 2014; Dt. 05.01.2017)(Bom). Further, we find, that the issue that an indispensable obligation is cast upon the A.O to clearly put the assessee to notice of the charge under the aforesaid statutory provision i.e Sec. 271(1)(c), had been deliberated upon by a coordinate bench of the Tribunal, i.e. ITAT "C" Bench, Mumbai in the case of M/s Orbit Enterprises Vs. ITO-15(2)(2), Mumbai (ITA No. 1596 & 1597/Mum/2014, dated 01.09.2017). The Tribunal in the aforementioned case after considering various judicial pronouncements, had concluded, that the failure to specify the charge in the 'Show cause' notice clearly reflects the non-applic....