USHABEN HITENDRAKUMAR GHADIYA ,RAIGAD vs. DCIT CENTRAL CIRCLE 1(1), MUMBAI

O R D E R Per Anikesh Banerjee (JM):

These are four appeals filed by difference assessees against the independent orders of the Learned Commissioner of Income-tax-47, Mumbai [in short, the “Ld. CIT(A)”] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment years 2014-15 and 2015-16, dated 30/09/2024 for AY 2014-15 and 27/09/2024 for AY 2015-16. The impugned orders emanated from the penalty orders under section 271(1)(c) of the Act by the Ld. Deputy Commissioner of Income-tax, Central Circle-1(1), Mumbai (in short, the “Ld. AO”) date of orders for AY 2014-15 dated 03/08/2023 and for AY 2015-16 dated 06/12/2023.

2. All the appeals carry identical facts and common issue. Therefore, for the sake of convenience, they were clubbed together, heard together, and are being disposed of by this common order. is taken as the lead case.

4 ITA 6060 to 6063/Mum /2024 Chhaganbhai Ghaiya & Others 4.3. The Hon'ble CIT(A) erred in not adjudicating the Ground No. 4 raised by the Appellant as reflected in Annexure B to Form 35, which is a violation of principle of natural justice.

4.4. Further, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the order passed by the Ld. AO without considering the fact that the Appellant had filed a WRIT petition before the Hon'ble Bombay High Court.

4.5. Therefore, the Appellant prays that the order u/s 250 of the Act is bad in law and the Ld. AO be directed to delete the penalty levied u/s 271(1)(c) of the Act.

5. Without prejudice to Grounds 1 to 3, Ground 4:

5.1. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding that the unsecured loans have remained unexplained without appreciating the fact that the Appellant had discharged his primary responsibility of explaining the nature and source of credits and had submitted detailed explanations with supporting documentary evidences to prove the genuineness and creditworthiness of the lenders.

5.2. He further failed to appreciate that the Appellant had submitted the correct details. However the addition has been confirmed under a deeming provision.

5.3. Therefore, the Appellant prays that the penalty levied u/s 271(1)(c) of the Act is bad in law and ought to be deleted.

The Appellant craves leave to add, amend or alter any ground/s of appeal on or before the final hearing.”

6 ITA 6060 to 6063/Mum /2024 Chhaganbhai Ghaiya & Others the Ld.AO, after seeking explanations from the assesse passed order under section 271(1)(c) of the Act, levying penalty of Rs.6,94,323/- being 100% of the tax sought to be evaded. The aggrieved assesse filed appeal before the Ld. CIT(A). The Ld.CIT(A) dismissed the appeal filed by the assessee. Further aggrieved, the assessee filed appeal before the Tribunal.

8 ITA 6060 to 6063/Mum /2024 Chhaganbhai Ghaiya & Others Court (Panaji Bench) in the case of Mohammed Farhan A Shaikh vs DCIT (2021) 434 ITR 1 (Bom [FB]). The relevant paragraphs are reproduced as below:- 180. One course of action before us is curing a defect in the notice by referring to the assessment order, which may or may not contain reasons for the penalty proceedings. The other course of action is the prevention of defect in the notice—and that prevention takes just a tick mark. Prudence demands prevention is better than cure. Answers: Question No. 1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(1)(c), does a mere defect in the notice—not striking off the irrelevant matter—vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, 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.