TaxTMI 
TaxTMI 
2023 (7) TMI 173
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....me on 31.10.2013 declaring a total income of Rs. 10,09,23,510/- which was subjected to scrutiny-assessment. While filing return of income, the assessee claimed deduction u/s 80-IC in respect of profit derived from its 2 units, namely Baddi Unit-I and Baddi Unit-II. Baddi Unit-I was running in 8th year of operation, hence the assessee claimed 30% deduction amounting to Rs. 90,82,426/- and Baddi Unit-II was running in 4th year of operation, hence the assessee claimed 100% deduction amounting to Rs. 1,98,79,823/-; total deduction aggregating to Rs. 2,89,62,249/-. Ld. AO observed that in claiming and computing the quantum of deduction, the assessee has not taken into account adjustment of brought forward losses as required by section 80-IC(7) read with section 80-IA(5). Therefore, the AO recomputed deduction after giving effect to brought forward losses and reduced the same to Rs. 46,88,290/-. Accordingly, the AO disallowed excess deduction of Rs. 2,42,73,959/- [Rs. 2,89,62,249/- claimed by assessee (-) Rs. 46,88,290/- computed by AO]; thereby computed total income at Rs. 12,51,97,469/-. 4. Simultaneously, the AO initiated penalty proceeding u/s 271(1)(c)qua the said addition vide sho....
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....erm specifying the clear charges against an assessee is required to be given by an Assessing Officer before imposing a penalty. It was submitted that by not striking off the inapplicable clause, the learned Assessing Officer has left the matter open for a complete guess work on the part of the appellant for presuming charges levelled against him and in such situation, it cannot be said that an effective opportunity of being heard was given to the appellant as contemplated under Section 274 of the Act of 1961. Thus, the penalty proceedings were initiated without specifying any particulars or specific charge against the assessee in either the assessment order or even the penalty notice. It is important to point out that no charge either of "concealment of income" or "furnishing of inaccurate particulars" was made in the assessment orders in all these cases. The perusal of the assessment order would show that it was stated that penalty proceedings are initiated under Section 271(1)(c) and under Section 271(AAA). 8. In the case of CIT V/s. Manjunatha Cotton Ginning Factory (supra), it was observed by the Karnataka High Court in para 59 that the practice of the Department sending a pr....
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....ecifically charges, there was no such mention. 9. Considering the aforesaid, the Tribunal has held that the penalty levied under Section 271(1)(c) of the Act of 1961 is not sustainable in law, as no specific charge was levied in penalty show-cause notices and allowed the appeal No. ITA (Appeal) 414/Ind/2012 and other five appeals. 11. On due consideration of the arguments of the learned counsel for the appellant, so also considering the fact that the ground mentioned in show-cause notice would not satisfy the requirement of law, as notice was not specific, we are of the view that the learned Tribunal has rightly relying on the decision of CIT V/s. Manjunatha Cotton Ginning Factory (supra) and CIT V/s. SSA'S Emerald Meadows (supra) rightly allowed the appeal of the assessee and set aside the order of penalty imposed by the authorities. No substantial question of law is arising in these appeals. ITA.No(s). 9/2018, 10/2018, 11/2018, 12/2018, 13/2018 and 14/2018, filed by the appellant have no merit and are hereby dismissed." Ld. AR submitted that in view of the decision of Hon'ble Jurisdictional High Court, the penalty order in present case cannot be sustained and must be set....
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....s or furnishing inaccurate particulars by assessee. Relying upon Price Water House Coopers (P) Ltd. Vs. CIT (2012) 25 taxmann.com 400 (SC) and Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158, Ld. AR submitted that the assessee should not be saddled with penalty in this case of bonafide and inadvertent error. 7. Per contra, Ld. DR defended the orders of lower-authorities and opposed the contentions raised by Ld. AR on following premises: (i) Firstly on legal objection, Ld. DR relied upon Sundaram Finance Ltd. Vs. ACIT (2018) 93 taxmann.com 250 (Madras HC). He submitted that in the said decision, the Hon'ble Madras High Court has accepted that the notice issued u/s 274 read with section 271(1)(c) is not vitiated for the reason that it does not specifically state the ground mentioned in section 271(1)(c) of the act, when the assessee clearly understood the purport and import of the notice issued u/s 271(1)(c). Ld. DR submitted that the SLP filed by assessee against the said decision of Hon'ble Madras High Court has also been dismissed by Hon'ble Supreme Court. (ii) Secondly on merit, Ld. DR submitted that the AO issued notice of scrutiny u/s 143(2) on 04.09.2014 but the asses....
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....particulars of income. 9. We have considered rival submissions of both sides and perused the material held on record. On a mindful consideration, we first take note of the decision of Hon'ble Jurisdictional High Court in Kulwant Singh Bhatia (supra). After reading the same carefully, we find that the said decision is directly applicable to assessee's case. As noted earlier, in the present case of assessee, while passing assessment-order the AO has simply mentioned that penalty proceeding u/s 271(1)(c) is being initiated separately but nowhere the AO has mentioned any charge of concealment of particulars or furnishing of inaccurate particulars. Then came the next stage of issuing show-cause notice in terms of section 274. On perusal of the show-cause notice, a copy of which is already scanned above, we nowhere find that the AO has specified the kind of default committed by assessee, whether it is concealment of income or furnishing of inaccurate particulars. Taking into account these serious fallacies on the part of AO, the Hon'ble jurisdictional has categorically held that penalty proceedings are not sustainable. The decision in Sundaram Finance Ltd. Vs. ACIT (2018) 93 taxmann.com....