TaxTMI 
TaxTMI 
2020 (12) TMI 347
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....ication. 4. In the grounds of appeal, the grievance of the assessee is that the ld CIT(A) is not justified in confirming the penalty levied u/s.271(1)(c) of the I.T.Act, 1961. 5. At the outset, ld Authorised Representative of the assessee submitted that in the penalty order, the Assessing Officer has imposed penalty of Rs. 5,38,480/- after initiating penalty proceedings u/s.271(1)(c) for concealment of income and for furnishing inaccurate particulars of income in respect of the additions made amounting to Rs. 17,05,527/-. Ld Counsel for the assessee submitted that in this case, notice u/s 274 r.w.s. 271 was issued on 6.4.2014 and the inappropriate words in the said notice have not been struck off. Therefore, it is not understood as to under which limb of provisions of Section 271(1)(c) of the Act, the Assessing Officer has levied penalty. Since the said show cause notice issued u/s 274 did not specify the charge against the assessee as to whether it was for concealing the particulars of income or for furnishing inaccurate particulars of income, therefore, the penalty order passed under Section 271(1)(c) of the Act in pursuance to the said notice is bad in law. He referred to the ....
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....t in the case of Manjunatha Cotton & Ginning Factory(supra), wherein, it was held that notice u/s.274 of the Act specifically states as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. 9. We find that ITAT Delhi Bench in the case of Lodhi Property company ltd (supra) after analysing the various aspects on this, in paras 13,14,15 & 20 observed as under: "13. Ld. DR for the Revenue to repel the arguments addressed by the ld. AR for the assessee contended that assessee has never raised any such question of invalid notice during penalty proceedings nor before the ld. CIT (A) which has caused no prejudice to the assessee as the assessee has understood the purport and import of the notice under section 274 read with section 271 of the Act and relied upon the decision rendered by the Hon'ble Madras High Court in Sundaram Finance Ltd. vs. CIT (2018) 403 ITR 407 (Madras), in which SLP has also been dismissed by Hon'ble Supreme Court in the case cited as Sundaram Finance Ltd. vs. CIT (2018) 99 taxmann.com 152 (SC) and also relied upon the judgment of CIT vs. Smt. Kaushalya - 216 ITR 660 (Bombay)....
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....s set out by us in the preceding paragraphs." 15. However, we are of the considered view that in the instant case, not only the notice issued to the assessee under section 274 read with section 271(1)(c) is defective but AO has not even made himself satisfied at the time of making disallowance / addition in assessment order if the assessee has furnished inaccurate particulars of income or has concealed particulars of his income rather to be on the safer side he has invoked both the limbs of section 271(1) of the Act. Not only this, even at the time of passing the penalty order, AO was not clear enough if he was levying the penalty on account of furnishing of inaccurate particulars of income or for concealment of income as is apparent from para 8 of the penalty order. So, we are of the considered view that this is not merely a case of serving a defective notice under section 274 read with section 271(1) on the assessee rather it is a case of non-application of mind on the part of the AO to make himself satisfied as to under which limb of section 271(1)(c) of the Act, he is going to initiate/levy the penalty on the assessee.' 20. In view of what has been discussed above, the case o....
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....t. Apart from that, the assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put to prejudice. All violations will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. This was never the plea of the assessee either before the Assessing Officer or before the first Appellate Authority or before the Tribunal or before this Court when the Tax Case Appeals were filed and it was only after 10 years, when the appeals were listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under Section 274 r/w.Section 271of the Act. Therefore, principles of natural justice cannot be read in abstract and the assessee, being a limited company, having wide network in various financial services, should ....