RAJDEV STEEL (INDIA),MUMBAI vs. ITO, WARD-19(3)(1), MUMBAI

In this appeal, the assessee has raised the following grounds:-

The brief facts of the case as emanating from the record are: The assessee is engaged in the business of trading in the metals. For the year under consideration, the assessee filed its return of income on 30/09/2010 declaring total income at Rs. 71,726. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, pursuant to the receipt of information from DGIT (Investigation) Wing, Mumbai about having initially received information from the Sales Tax Department of Maharashtra regarding some dealers indulged in the practice of providing accommodation entries in the form of issuing bogus sales/purchase bills without supplying any goods but providing accommodation entries and the assessee being one of the beneficiaries of such bogus bills, the proceedings under section 147 of the Act were initiated and notice under section 148 of the Act was issued to the assessee. During the assessment proceedings, the notices sent under section 133(6) of the Act to the parties from whom the alleged purchases were made were returned unserved by the postal authorities. In the absence of details/information regarding the genuineness of the purchase made by the assessee, the Assessing Officer (“AO”) vide order dated 29/01/2016 passed under section 143(3) read with section 147 of the Act made an addition of Rs.6,63,580 being 12.5% of the total non-genuine purchases.

Subsequently, the penalty order dated 14/12/2021 was passed by the AO under section 271(1)(c) of the Act wherein a penalty of Rs.1,82,882, was levied. In the further appeal against the penalty order, the learned CIT(A), Page | 2

During the hearing, the learned Authorised Representative (“learned AR”) submitted that the penalty in the present case has been levied without specifying the head under which the same has been levied. The learned AR by referring to the penalty notices dated 29/01/2016 and 04/08/2021 issued under section 274 r/w section 271(1)(c) of the Act submitted that the AO has not specified whether the penalty has been levied for concealment of income or for furnishing inaccurate particulars of income.

On the other hand, the learned Departmental Representative (“learned DR”) vehemently relied upon the order passed by the lower authorities.

We have considered the rival submissions and perused the material available on record. In the present case, the AO initiated penalty proceedings under section 271(1)(c) of the Act and levied a penalty of Rs.1,82,882. From the perusal of the notices dated 29/01/2016 and 04/08/2021 issued under section 274 r/w section 271(1)(c) of the Act, forming part of the paper book on pages 6 and 7, we find that the AO did not strike–off any of the twin charges i.e., concealment of particulars of income or furnishing of inaccurate particulars of income. The case of the assessee is squarely covered by the decision of the Hon'ble Jurisdictional High Court in Mohd. Farhan A. Shaikh v/s CIT, [2021] 434 ITR 1 (Bom.), wherein the Larger Bench of the Hon’ble Court has held that the defect in notice by not striking off the irrelevant matter would vitiate the penalty proceedings. Accordingly, respectfully following the Page | 3

In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 27/07/2023