TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 1159
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....ce issued u/s 274 r.w.s. 271(1)(c) of the Act is not in accordance with law especially since he has grossly erred in not specifying the limb under which he intends to initiate penalty proceedings. 2. The appellant reserve the right or amend, alter or add to the grounds of appeal." 4. The brief facts of the case are that the assessment proceeding u/s 143(3) of the I. T. Act was completed on 30.12.2009 determining the total income to the tune of Rs. 46,67,940/- against the returned income of Rs. 39,81,041/- for the A.Y.2007-08. On verification, it was noticed that the assessee had a cash balance of Rs. 6,70,891-/- as on 31.03.2007 in her proprietary concern namely M/s. Shivalik Enterprises. The assessee was asked to explain the cash in hand by virtue of letter dated 16.10.2009. The assessee replied that cash was maintained to meet the business expenditure. There was a search action against her husband which took place on 16.03.2007. As per routine practice and CBI procedure, the bank accounts were freezed and therefore, the cash was kept aside for continuation of business. The assessee failed to furnish the documentary evidence in support of her claim. Since no explanation was giv....
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....me of argument, the Ld. Representative of the assessee has also placed reliance upon the finding of the Hon'ble ITAT in ITA. No. 2555/M/2012 titled as Meherjee Cassinath Holdings P. Ltd. Vs. ACIT, Circle-4(2). The relevant para is hereby reproduced below: "8. We have carefully considered the rival submissions. Sec. 271(1)(c) of the Act empowers the Assessing Officer to impose penalty to the extent specified if, in the course of any proceedings under the Act, he is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. In other words, what Sec. 271(1)(c) of the Act postulates is that the penalty can be levied on the existence of any of the two situations, namely, for concealing the particulars of income or for furnishing inaccurate particulars of income. Therefore, it is obvious from the phraseology of Sec. 271(1)(c) of the Act that the imposition of penalty is invited only when the conditions prescribed u/s 271(1)(c) of the Act exist. It is also a well accepted proposition that "concealment of the particulars of income‟ and "furnishing of inaccurate particulars of income‟ referred to in Sec. 271(1)(c) ....
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....ith the principles of natural justice. (See Malabar Industrial Co. Ltd. v. CIT [2000] 2 SCC 718]" 9. Factually speaking, the aforesaid plea of assessee is borne out of record and having regard to the parity of reasoning laid down by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the notice in the instant case does suffer from the vice of non-application of mind by the Assessing Officer. In fact, a similar proposition was also enunciated by the Hon'ble Karnataka High Court in the case of M/s. SSA‟s Emerald Meadows (supra) and against such a judgment, the Special Leave Petition filed by the Revenue has since been dismissed by the Hon'ble Supreme Court vide order dated 5.8.2016, a copy of which is also placed on record. 10. In fact, at the time of hearing, the ld. CIT-DR has not disputed the factual matrix, but sought to point out that there is due application of mind by the Assessing Officer which can be demonstrated from the discussion in the assessment order, wherein after discussing the reasons for the disallowance, he has recorded a satisfaction that penalty proceedings are initiated u/s 271(1)(c) of the Act for furnishing of inaccurate pa....
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....en it was held that there was no suppression of income. The Hon‟ble Kerala High Court has struck down the penalty imposed in the case of N. N. Subramania Iyer Vs. Union of India (supra), when there is no indication in the notice for what contravention the petitioner was called upon to show cause why a penalty should not be imposed. In the instant case, the AO did not specify the charge for which penalty proceedings were initiated and further he has issued a notice meant for calling the assessee to furnish the return of income. Hence, in the instant case, the assessing officer did not specify the charge for which the penalty proceedings were initiated and also issued an incorrect notice. Both the acts of the AO, in our view, clearly show that the AO did not apply his mind when he issued notice to the assessee and he was not sure as to what purpose the notice was issued. The Hon‟ble Bombay High Court has discussed about non-application of mind in the case of Kaushalya (supra) and observed as under:- "...The notice clearly demonstrated non-application of mind on the part of the Inspecting Assistant Commissioner. The vagueness and ambiguity in the notice had also prejudic....