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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. LALIET KUMAR & DR. M. L. MEENA
This bunch of appeals is filed by the assessee against the order even dated 21.06.2021, passed by the CIT(A)-5, Ludhiana.
The assessee has raised the following common ground with of course varying amounts, in all the appeals as follows:
“1. That the Ld. CIT(A), Ludhiana has erred in confirming the penalty u/s 271 (1)(c) to the tune of Rs. 11,930/-, which is against the facts and circumstances of the case.
2. That the Ld. CIT(A) has erred in not accepting the submissions of the assessee that the notice as issued for levying the penalty did not specify the specific charge against the assessee and, as such, the levy of penalty, is void abinitio as per number of judgments cited before the Worthy CIT (A) at pages 3 to 6 of the order of Ld.CIT(A).
That on facts and circumstances, the levy of penalty is wholly unjustified.
That the Appellant craves leave to add or amend the grounds of appeal
before the appeal is finally heard or disposed off.”
3. The assessee has challenged the impugned orders, confirming levy of penalty u/s 271(1)(c) by the ld. CIT(A) where the printed penalty notices did not specify any charge or specific charge against the assessee as irrelevant portion in the notices were not striked off and contended that such a levy of penalty was void ab initio and requested to be deleted.
4. At the beginning, the counsel for the assessee stated that in the earlier assessment order passed u/s 143(3) r.w.s 153A of the Act, the AO, has stated that penalty proceedings u/s 271(1)(c) were being initiated for the concealment of income and in the later years for furnishing inaccurate particulars. The ld. Counsel argued that the penalty proceedings are distinct from the assessment proceedings, although the proceedings of the levy of penalty may emanates from the assessment order, however, being criminal in nature, it is independent and separate proceedings. He further submitted the notices issued u/s 274 r.w.s. 271 (1)(c) of the Act, for imposing penalties did not clearly states the specific charge by which the assessee has been covered. Again, he submitted that in the present case the AO has issued the common and blank printed format of notices for all the six independent year without striking of irrelevant portion, mentioning the specific charge or section in the notices and limb whether the assessee has concealed the income or furnished inaccurate particulars of income as discussed in the assessment order. Since the AO has not made the assessee’s aware/known about the specific charge which the assessee has to explain in an answer to the quarry of the AO, as the relevant limb are not struck off. In support he placed reliance on the land mark judgment of Hon’ble Karnataka High Court in the case of CIT vs. S.S.A Emerald Meadows besides relying on number of judgments on various High Courts and appellate Tribunals as relied before the ld. CIT(A). The ld. Counsel has referred to the decision of Hon’ble Bombay High Court 5. in the case of Moh. Farhan A. Shaikh vs. DCIT 2021 125 taxmann.com 253 (Bombay) where it was held that assessment order clearly records satisfaction for imposition of penalty on one or other, or both grounds mentioned. In section 271(1)(c), the mere defect in a notice that not striking of irrelevant matter would vitiate penalty proceedings.
The ld. DR placed reliance on the impugned orders.
Heard both the sides and perused the rival contention and material on record referred thereof. The Ld AR stated at the bar that the CIT(A), Ludhiana has erred in confirming the penalty u/s 271 (1)(c) to the tune of Rs. 11,930/- for assessment year 2007-8 and varying amount in the following years against the facts and circumstances of the case. He argued that the CIT(A) has not apprecitaed the submissions of the assessee that the notice as issued for levying the penalty did not specify the specific charge against the assessee and, as such, the levy of penalty, was void abinitio as per number of judgments cited before the Worthy CIT (A) at pages 3 to 6 of the order of Ld. CIT(A). From the record, we have noted an admited fact that the AO has issue a blank printed format notice without striking off irrelevant portion u/s 274 r.w.s. 271(1)(c) duly signed under its signature to the assessee. Copy of the notice in pdf, format for Assessment Year 2007-08 is reproduced hereunder:
I.T.A. Nos. 48 to 53/Asr/2021
The facts regarding the nature of additions, reason of penalty as per assessment order, additions sustained in appeal, penalty imposed on addition, penalty amount disputed as furnished by assessee is reproduced hereunder:
Smt. Ravneet Kaur Penalty Chart.
SUSTAINED PENALTY NATURE OF REASON OF PENALTY ADDITION IN IMPOSED ON PENALTY A.Y. ADDITION ADDITION (as pr A.Order) APPEAL ADDITION AMOUNT 2007-08 (i) 2,68,578 66,478 66,478 11,930 Deposits in Indian Bank Concealment of Income (As per last line of Para 3.7(v) page no 5. of A.order u/s 143(3) 2008-09 (>) 7,03,400 4,37,400 4,37,400 1,23,735 Deposits in Indian Bank Concealment of Income (As per last line of Para 3.7(v) page no 5. of A.order u/s 143(3) 2009-10 (i) 8,55,448 2,95,458 2,95,458 48,289 Deposits in Indian Bank Concealment of Income (As per last line of Para 3.7(v) page no 5. of A.order u/s 143(3) 2010-11 (i) 14,77,371 4,80,376 4,80,376 1,25,766 Deposits in Indian Bank Concealment of Income (As per last para of 3.7(v) page no 5. of A.order u/s 143(3) 2011-12 (i) 27,26,868 16,38,652 16,38,652 4,64,158 Deposits in Indian Bank Concealment of Income (As per last para of 3.7(v) page no 5. of A.order u/s 143(3) 2012-13 Deposits in (>) Indian Bank 16,30,733 Concealment of Income 2,31,531 2,31,531 71,542 A/c (As per last line of Para 3.7(v) page no 5. of A.order u/s 143(3)
It is seen that the additions pertain to bank deposits and deduction claimed u/s 80C. The ld. CIT(A) had observed that the AO records satisfaction for imposition of penalty was for concealment of income, however, he omitted to strike off the irrelevant part of the blank printed format notice u/s 274 r.w.s.
271(1)(c) and thus without striking off the irrelevant portion in the notice contemplates in vitiating the penalty proceedings in view of the full bench Judgement of Hon’ble Bombay High Court in the case of “Moh. Farhan A. Shaikh”, (Supra), where that CIT v. Kaushalya (Smt ) (1995] 216 ITR 660 (Bom)(HC) and Ventura Textiles Ltd. v. CIT [2020] 426 ITR 478 (Bom)(HC) were distinguished by following hon’ble Apex Court judgement in Dilip N. Shroff v. JCIT [2007] 291 ITR 519 (SC).
Thus, a mandatory condition is required regarding communication to the assessee and that ought to be a valid communication even if a notice contains no matter but that the inapplicable portion shall be deleted. It is in the interest of fairness and justice that the notice must be précised and at the case, no room for ambiguity. Therefore, Hon’ble Apex Court in case of Dilip N. Shroff v. Jt. CIT 161 Taxman 218/291 ITR 519 (SC), approves a written ritualistic practice of issuing omnibus show cause notice that practice certainly betrays non application of mind and therefore, the information of mandatory procedure leading to penal consequences assumes or implies prejudice para 181. Consequently, it is held that Dilip N. Shroff (supra) address as betrayed non application of mind and disposed of the practice, to be or, of issuing notices and informed without deleting or striking of any applicable portion of that generic notice, para 191. In the case of Moh. Farhan A. Shaikh (supra), the Hon’ble Bombay High 11. Court has dealt with the issue of levy of penalty u/s 271(1)(c) r.w.s. 274 of the Act., vide its judgment dated 11.03.2021 considering all the previous judgments of Apex Court and High Courts, and it was held that the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.
Considering the admitted fact that the AO has issued blank printed format notices, without striking off irrelevant portion u/s 274 r.w.s. 271(1)(c) duly signed under its signature. We understand that the AO while issuing Notice under section 271(1)(c) of the Income-tax Act, 1961 is under statutory obligation that the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. These notices primarily suffered from ambiguity and the vice of vagueness, thus, vitiated the penalty proceeding.
In ITA no. to 53 /Asr/2021, the facts are exactly similar and identical to the facts in the case of ITA no. I.T.A. Nos. 48/Asr/2021 in mutatis mutandis in respect of printed format notice without striking off the irrelevant portion make it vague and ambiguous u/s 274 r.w.s. 271(1)(c) of the Act and vitiates the penalty proceedings.
Respectfully following the Hon’ble Bombay High Court in Moh. Farhan A. 14. Shaikh (supra), and in the interest of all fairness and justice, we hereby delete the penalty levied u/s 271(1)(c) of the Act, in respect of all the six assessment years under appeal.
In the result, the bunch of appeals of the assessee is allowed.