MEERAN ABDUL ZAHID,BELLARY, KARNATAKA vs. ASSISTANT COMMISSIONER OF INCOME TAX, ACIT, CENTRAL CIRCLE, BALLARI, KARNATAKA

The common issue raised in all these appeals is against the levy of penalty u/s.271(1)(c) of the Act.

At the outset, ld. Counsel for the assessee referring to common legal issue raised in Ground No.3 submitted that the notice issued u/s.274 of the Act does not specify the limb of section 271(1)(c) of the Act under which the penalty has been initiated, i.e. whether for the concealment of particulars of income or furnishing of inaccurate particulars of income. Reference made to the show cause notices which are same for all the impugned assessment years and he stated that ld. Assessing Officer has not striked off the limb not applicable to the assessee. Further reference made to the plethora of decisions consistently holding that where specific charge has not been levelled against the assessee by the Assessing Officer in the show cause notice u/s.274 of the Act, then in such situation, the penalty proceedings have been held to be bad in law and void ab-initio. In support, Ld. Counsel for the assesee relied on the following case laws :

On the other hand, ld. DR supported the orders of ld.CIT(A).

We have heard the rival contentions and perused the record placed before us. The assessee has raised common legal issue challenging the levy of penalty u/s.271(1)(c) of the Act for the A.Yrs. 2005-06, 2007-08, 2008-09 and 2009-10 alleging that notice issued u/s.274 of the Act is invalid and bad in law. Notice u/s.274 of the Act issued by the Assessing Officer for A.Y. 2005-06 is scanned below :

It is admitted by both the sides that similar type of show cause notices have been issued for A.Yrs. 2007-08, 2008-09 and 2009-10. On perusal of the above show cause notice, it is evident that ld. Assessing Officer has mentioned both the charges that the assessee has concealed the particulars of income and/or furnished inaccurate particulars of income. We note that ld. Assessing Officer has not levied a specific charge as to whether the assessee has concealed the particulars of income or has furnished inaccurate particulars of income which is the requirement of law. Ld. Assessing Officer was required to strike off the charge which is not applicable to the assessee and in absence of such exercise it has been consistently held by Hon’ble Courts and various Coordinate Benches that such penalty proceedings are vitiated and bad in law. We take note of the decision of Coordinate Bench, Panaji in the case of ACIT Vs. M/s. Goa Dourado Promotions Pvt. Ltd. – ITA No.276/PAN/2017 order dated 01.01.2019 and the relevant finding of Tribunal reads as under :

We further find that similar view has also been taken by Hon’ble Bombay High Court in the Full Bench judgment in the case of Mohd. Farhan A. Shaikh Vs. DCIT reported in (2021) 434 ITR 1. Respectfully following the same parity of reasoning, we find that in absence of specific charge levelled against the assessee ld. Assessing Officer failed to assume proper jurisdiction for carrying out the penalty proceedings u/s.271(1)(c) of the Act and therefore the same are held to be invalid void ab initio. Findings of ld.CIT(A) for all the assessment years under appeal are reversed and the impugned penalty u/s.271(1)(c) of the Act levied is deleted. Common legal issue raised by the assessee for A.Yrs. 2005-06, 2007-08, 2008-09 and 2009-10 are allowed.

Since the assessee succeeds on the legal issue commonly raised in the assessment years under appeal, dealing with remaining grounds on merit would be merely academic in nature and are dismissed as Infructuous.

In the result, all the appeals of the assessee are allowed.