TaxTMI 
TaxTMI 
2020 (11) TMI 414
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..... b. No clear charge has been alleged by the AO on the penalty notice rendering the notice to be invalid. c. The charge on which penalty has been levied is different from the charge on which penalty was initiated. 3. The Appellant prays that the penalty order be held as void-ab-initio and be quashed accordingly. Without Prejudice to Ground - I Ground II: 1. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO in levying penalty in respect of disallowance on account of the payment of Fringe Benefit Tax ("FBT") amounting to Rs. 38,50,000/-. 2. He failed to appreciate and ought to have held that the Appellant has inadvertently claimed as the said amount was appearing in the Tax Audit Report under clause 21(I )(A) ( in relat ion to sect ion 43B) and therefore on being pointed dur ing Assessment proceedings the Appellant accepted the same being inadvertent error. 3. The Appellant prays that the said penalty deleted. Ground III: The appellant craves leave to add, to alter and to amend above grounds of appeal at the time of hearing." 2. Briefly stated, the assessee company which is engaged in the business of manufa....
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.... be imposed. However, the A.O not finding favour with the aforesaid claim of the assessee imposed a penalty of Rs. 12 lac under Sec. 271(1)(c) for concealment of income by the assessee. 5. Aggrieved, the assessee assailed the order passed by the A.O under Sec. 271(1)(c) before the CIT(A). However, the CIT(A) not finding favour with the claim of the assessee upheld the penalty imposed by the A.O under Sec. 271(1)(c) of the Act, and dismissed the appeal. 6. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee has assailed the penalty imposed by the A.O under Sec. 271(1)(c) both on the issue of the validity of jurisdiction assumed by the A.O for imposing the aforesaid penalty, and also the merits of the case. It was submitted by the ld. A.R that though the A.O in the assessment order had initiated penalty under Sec. 271(1)(c) for "furnishing of inaccurate particulars of income" by the assessee, but then, the same was thereafter imposed by him vide his order passed under Sec. 271(1)(c), dated 30.08.2016 for "concealment of income" by the assessee. In the backdrop of t....
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....(ii). that as the A.O had failed to strike off the irrelevant default in the 'SCN', therefore, the penalty imposed u/s 271(1)(c) was liable to be vacated. As the assessee has challenged the assumption of jurisdiction by the A.O for imposing the impugned penalty u/s 271(1)(c), we shall, therefore, first advert to and therein adjudicate the said aspect. On a perusal of the orders of the lower authorities, we find, that though the A.O in his assessment order had initiated penalty under Sec. 271(1)(c) for "furnishing of inaccurate particulars" but had thereafter imposed the same vide his order dated 30.08.2016 for "concealment of income" by the assessee. In sum and substance, though the A.O had initiated penalty for one default i.e "furnishing of inaccurate particulars of income" in the body of the assessment order, however, he had imposed the same for the other default i.e "concealment of income". Usage of the term "concealed income by way of furnishing of inaccurate particulars of income" by the A.O in his order u/s 271(1)(c), in our considered view can by no means be construed to take the imposition of penalty outside the realm of "concealment of income". As both of the two defaults....
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.... be sustained and is liable to struck down on the said count itself. 10. Alternatively, on a perusal of the order of the CIT(A), we find, that it is a matter of fact borne from the records that the A.O had failed to "strike off" the irrelevant default in the "SCN" issued to the assessee under Sec. 274 r.w.s 271(1)(c) of the Act. Pointing out the said serious infirmity the assessee had assailed the validity of the jurisdiction that was assumed by the A.O for saddling the assessee with penalty u/s 271(1)(c) of the Act. However, the CIT(A) justifying the penalty imposed by the A.O u/s 271(1)(c), on the ground, that the penalty was levied by the A.O for furnishing of inaccurate particulars which led to concealment of income by the assessee, had held, that the claim of the assessee that the A.O had erred in not striking off the irrelevant default in the "SCN" was misconceived. We have given a thoughtful consideration 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 'SCN' issued u/s 274 r.w.s 271(1)(c) failed to point out the default for which penalty wa....
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....he 'SCN' notice not only reflects the non-application of mind by the A.O, but, in fact, defeats the very purpose of giving a reasonable opportunity of being heard to the assessee as envisaged under Sec. 274(1) of the I.T Act. As observed by us hereinabove, the fine distinction between the said two defaults 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 being of the view that the non-striking off the irrelevant limb in the notice clearly reveals a nonapplication 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....
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....1(1)(c) does not specify the limb of Sec. 271(1)(c) for which the penalty proceedings 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 had after considering various judicial pronouncements concluded, that the failure t....