TaxTMI 
TaxTMI 
2021 (3) TMI 398
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....71(1)(c) ; Rs. 6.02,767/- a. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating that the show cause notice u/s. 274 r. w. s. 271(1)(c) of the Act dated 23.12.2016 issued by the Ld. AO was bad in law, having been issued without specifying the precise charge for imposition of penalty. b. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating that the penalty order is bad in law inasmuch as the penalty was imposed by the Ld. AO for concealment of particulars of income, whereas the charge made out against the appellant in the relevant assessment order was for furnishing inaccurate particulars of income with a view to concealment of income. c. On the facts and in the circumstances of the case, and also in law, the Ld. CIT(A) erred in confirming the levy of penalty, without appreciating that the appellant had offered satisfactory explanation which was substantiated by the documentary evidence placed on record, and that therefore, there was no basis for imposition of the penalty under section 271(1)(c) of the Act." Your appellant, therefore, prays that ....
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.... assessee's paper book (for short 'APB'). Apart from that, it was submitted by the ld. A.R that even in the assessment order the impugned penalty proceedings were stated to have been initiated by the A.O without clearing pointing out the default and by merely stating that the same were initiated for furnishing inaccurate particulars and concealment of income. It was submitted by the ld. A.R that involving identical facts the A.O had imposed penalty in the case of a related party of the assessee, viz. Smt Divya Shailesh Bhadaliya. It was submitted by the ld. A.R that as the A.O in the case of the aforesaid related party had also failed to point out the default for which the penalty was sought to be imposed, the Tribunal, vide its order passed in ITA No. 7273/Mum/2018, dated 20.02.2019 had vacated the penalty (copy placed on record). The ld. A.R took us through the order passed by the Tribunal in the case of the aforesaid related party, viz. Smt Divya Shailesh Bhadaliya (supra), which revealed that the penalty was quashed by the Tribunal inter alia for the reason that pursuant to the failure on the part of the A.O to point out the specific charge for which penalty under Sec. 271(1)(c....
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....to why penalty under the said statutory provision may not be imposed on him. As observed by us hereinabove, a perusal of the 'Show cause' notice issued in the present case by the A.O under Sec. 274 r.w. Sec. 271(1)(c), dated 23.12.2016 clearly reveals that there was no application of mind on the part of the A.O while issuing the same. We are of a strong conviction that the very purpose of affording a reasonable opportunity of being heard to the assessee as per the mandate of Sec. 274(1) would not only be frustrated but would be rendered redundant if an assessee is not conveyed in clear terms the specific default for which penalty under the said statutory provision was sought to be imposed on him. In our considered view, the indispensable requirement on the part of the A.O to put the assessee to notice as regards the specific charge contemplated under the aforesaid statutory provision viz. 'concealment of income' or 'furnishing of inaccurate particulars of income' is not merely an idle formality but is a statutory obligation cast upon him, which we find had not been discharged in the present case as per the mandate of law. 10. We would now test the validity of the aforesaid 'Show....
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....und to comply with the principles of natural justice [See Malabar Industrial Co. Ltd. Vs. CIT (2000) 2 SCC 718]. We are of the considered view that now when as per the settled position of law the two defaults viz. 'concealment of income' and 'furnishing of inaccurate particulars of income' are separate and distinct defaults therefore, it was incumbent on the part of the A.O to have clearly specified his said intention in the 'Show cause' notice, which we find he had failed to do in the case before us. The aforesaid failure on the part of the assessee cannot be characterised as merely a technical default as the same had clearly divested the assessee of his statutory right of an opportunity of being heard and defend his case. 11. Coming back to the validity of the 'SCN', dated 23.12.2016 issued by the A.O without pointing out the default for which the penalty was sought to be imposed, we shall hereinafter deliberate on the same in the backdrop of the various judicial pronouncements. We find that the Hon'ble High Court of Karnataka in the case of CIT Vs. SSA's Emerald Meadows (73 taxmann.com 241)(Kar) following its earlier order in the case of CIT Vs. Manjunatha Cotton and Ginni....