TaxTMI 
TaxTMI 
2017 (10) TMI 1675
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....ommissioner of Income Tax-Valsad Circle, Valsad (in short "the AO") under section 271(1)(c) of Income Tax Act, 1961 (in short 'the Act'). 2. Ground no. 1 states that on the facts and in the circumstances of the case, the Id. CIT (A) has erred in confirming the action of the AO in levying penalty of Rs. 1,32,190 u/s. 271(1)(c) on the additions of difference in valuation of stock and disallowance of computer expenses. 3. Briefly stated facts are that the assessee has filed return of income on 29.09.2010 declaring total income of Rs. 5,23,82,860, which was assessed on 01.03.2013 under section 143 (3) at Rs. 5,28,03,875 by making addition of Rs. 3,31,437 on account of difference in valuation of stock and Rs. 57,46....
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.... Rs. 3,38,905. 4. Being, aggrieved, the assessee filed an appeal before the le. CIT (A). However, Ld. CIT (A) observed that the facts as evident from assessment order that these additions were made on the basis of valuation adopted by applying FIFO method and expenses pertaining to next year were claimed wrongly hence, the assessee had furnished inaccurate particulars of income. Therefore, the CIT (A) had confirmed the levy of penalty. 5. Being aggrieved, the assessee has filed this appeal before the Tribunal. The learned counsel for the assessee explained that difference in valuation of stock was arrived at due to the FIFO method applied by the AO as against the average cost weighted method being followed over the years, by the ....
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....atter-open for a complete guess work on the part of the appellant for presuming charges leveled 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. 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. On this proposition the Id. Counsel for the assessee relied in the case of CIT v. Manjunatha Cotton Ginning Factory [2013] 359 ITR 565 (Kar)/263 CTR 153/ 93 DTR 111 (Karn) [2012] 82 CCH 282 Kar HC, Meharjee Cassinath Holdings Pvt. Ltd. v. ACIT Circle 4(2) in ITA No. 2555/ Mum/2012 order dtd. 28.04.....
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....facts, perused the material on record, and gone through the assessment order and penalty order and case laws relied by the parties. A perusal of the penalty order reveals that the AO has rejected the contentions of the assessee on the basis that the addition made on account of difference in valuation closing stock and wrong claim of expenses is amounts to 'furnishing of inaccurate particulars of income. However, such difference on account of method of valuation does not lead that there was conscious or intention to conceal the income or furnishing of inaccurate particulars of income, when the assessee has offering income to the tune of Rs. 5.23 Crores. Therefore, we cannot assume that the assessee would indulge in furnishing of inaccur....
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....settled proposition that where the charge for levying penalty is not specific, the notice issued under section 271(1)(c) is bad in law as it does not specify by which limb of section 271(1)(c) of the Act under which it has been initiated. When the notice does not specify the charge for levy of penalty, it has been held that the penalty cannot be levied. 8. Further reliance in the case of CIT v. Manjunatha Cotton Ginning Factory [2013] 359 ITR 565 (Kar)/263 CTR 153/ 93 DTR 111(Karn)[2012] 82 CCH 282 Kar HC, wherein, it was observed in para 59 as under: "the practice of the Department sending a printed form where all the ground mentioned in Section 271 are mentioned would not satisfy the requirement of law when the consequences of the asse....
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....ws [2016] 73 taxmann.com 248 (SC). We may also draw support from the recent decision of coordinated bench Mumbai Tribunal in the case of Meharjee Cassinath Holdings Pvt. Ltd. v. ACIT Circle 4(2) in L.T.A. No. 2555/ Mum/2012 order dtd. 28.04.2017 has also held that the notice issued u/s. 274 by the AO is untenable as it suffers from the vires of non-application of mind. In this case though the AO recorded in the assessment order that penalty proceeding under section 271(1)(c) are to be initiated for furnishing of inaccurate particulars of income, however, in the notice u/s. 274 both the limbs of section 271(1)(c) were reproduced in the Performa notice and the relevant clauses were not struck off. Whereas in the case of the assessee no s....