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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI AMARJIT SINGH & MS. KAVITHA RAJAGOPAL
Per Amarjit Singh (AM): The present appeal filed by the assessee is directed against the order u/s 250 of the Act passed by the ld. NFAC, Delhi, dated 21.09.2022 for A.Y. 2011-12. The assessee has raised the following grounds before us:
“1. The ld. CIT(A) erred in confirming the penalty u/s 271(1)(c) Rs.1,29,840. 2. The ld. CIT(A) erred in confirming the penalty u/s 271(1)(c) even though A.O issued penalty notice without striking off irrelevant limb.
The ld. A.O has erred in calculating penalty amount @ 30% at Rs.1,29,840/-.”
ITA No.2594/Mum/2022 A.Y.2011-12 2
Facts in brief is that assessment u/s 143(3) of the Act was completed on 18.03.2014 assessing the total income at Rs.49,52,690/- by making additions to the amount of Rs. 30,22,079/-. In the appeal the ld. CIT(A) and the ITAT confirmed disallowance of expenses viz. vacant land tax of Rs.1,14,662/- and property tax of Rs.3,05,530/-. During the course of penalty proceedings the assessee has submitted before the A.O that in the show cause notice issued u/s 274 r.w.s 271(1)(c) dated 18.03.2014, the Assessing Officer has not striked off non charging limb. However, A.O has not accepted the explanation of the assessee and levied penalty of Rs.1,29,840/-.
The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee and directed the A.O to correctly calculate the penalty levied u/s 271(1)(c) of the Act.
During the course of appellate proceedings before us the ld. Counsel has contended vehemently that the Assessing Officer has issued notice u/s 274 r.w.s 271(1)(c) dated 18.03.2014 without specifying whether the penalty is levied for concealment of income or furnishing inaccurate particulars of income. In this connection, the ld. Counsel has referred copy of notice u/s 274 r.w.s 271(1)(c) of the I.T. Act dated 18.03.2014 as per page no.35 of the appeal paper filed. The ld. Counsel has further contended that Hon’ble juri ictional High Court in the case of Mohd Farhan A Shaikh Vs. DCIT (2021) 434 ITR 1 (Bom) has held that if there is defect in notice of not striking off irrelevant matter, the penalty cannot be levied. On the other hand, the ld. Departmental Representative has supported the order of lower authorities.
ITA No.2594/Mum/2022 A.Y.2011-12 3
Heard both the sides and perused the material on record. The A.O has levied penalty of Rs.1,29,840/- on account of addition made by disallowing expenses in respect of Vacant Land Tax and property tax. With the assistance of ld. representative we have gone through the notice u/s 274 r.w.s 271(1)(c) dated 18.03.2014. The relevant part of the notice is reproduced as under:
“PAN ACXPM8278M Whereas in the course of proceeding before me for the assessment year 2011-12 it appear to me that you:- Have without reasonable cause failed to furnish me return f Income which you were required to furnish b a notice given under Sec. 22(1)/22(2)34 of the Indian Income Tax Act,1922 or which you were required to furnish under Section 139(1) or by a notice given under section 139(2)/148 of the Income Tax Act, 1961, ……………dated ……or have without reasonable cause failed to furnish it within the time allowed and the manner required by the said section 139(1) or by such notice. Have concealed the particulars of your Income or …………………furnish Inaccurate particulars of such income. You are hereby required to appear before me at 11.00 A.M. on 24.03.2014 and show cause why an order imposing a penalty on you should not be made under section 271(1)(c) of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under Section 271(1)(c).” On perusal of the aforesaid notice it is clear that Assessing Officer has not specified whether the penalty being levied on account of concealment of particulars of income or furnishing of inaccurate particulars of income. In this regard we have gone through the case of juri ictional High Court referred by ld. Counsel in the case of Mohd. Farhan A Shaikh. The relevant part of the head note is reproduced as under:
“Section 271(1)(c), read with section 274 of the Income-tax Act, 1961 - Penalty - For concealment of income (Recording of satisfaction) - Whether where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice-not striking off irrelevant matter would vitiate penalty proceedings - Held, yes - Whether since penalty proceedings culminate under a different statutory scheme
ITA No.2594/Mum/2022 A.Y.2011-12 4 that remains distinct from assessment proceedings, therefore, assessee must be informed of grounds of penalty proceedings only through statutory notice - Held, yes - Whether even if notice contains no caveat that inapplicable portion be deleted, it is in interest of fairness and justice that notice must be precise, it should give no room for ambiguity - Held, yes [Paras 181 and 188][In favour of assessee]” 7002/Mum/2019 dated 04.01.2022 wherein the coordinate bench in identical issue and similar facts has deleted the penalty after following the decision of Hon’ble Juri ictional High Court in the case of Mohd. Farhan A Shaikh supra. Respectfully following the decision of Hon’ble juri ictional High Court and the decision of coordinate bench as referred supra. We find that the issue on hand being squarely covered, therefore, we find merit in the submission of the assessee and direct the Assessing Officer to delete the penalty since notice issued u/s 274 r.w.s 271(1)(c) dated 18.03.2014 was bad in law. Since, we have deleted the penalty on account of invalid notice issued u/s 274 r.w.s 271(1)(c) dated 18.03.2014, therefore, other ground on merit are not required any adjudication.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 16.12.2022 (Kavitha Rajagopal) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 16.12.2022 Rohit: PS
ITA No.2594/Mum/2022 A.Y.2011-12 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant प्रत्यथी / The Respondent. 2. आयकर आयुक्त(अपील) / The CIT(A)- 3. 4. आयकर आयुक्त / CIT 5. विभागीय प्रविवनवध, आयकर अपीलीय अवधकरण DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //// आदेशानुसार/ BY ORDER,
उि/सहायक िंजीकार (Dy./Asstt.