ASHOK MOTILAL KATARIYA,,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME-TAX,,

The only issue is to be decided as to whether the CIT(A) justified in confirming the penalty imposed by the AO u/s. 271(1)(c) of the Act in the facts and circumstances of the case.

Heard both the parties and perused the material available on record. We note that the assessee is an individual derives income from salary, tipper hire charges, capital gain, dividend, interest and agricultural income. The assessee filed return of income declaring a total income of Rs.48,99,890/- along with agricultural income of Rs.58,780/- on 30-07- 2007. In consequence of a search and seizure action u/s. 132 of the Act, the assessee declared a total income of Rs.50,74,890/- along with the same agricultural income as declared in the original return of income. According to the AO, the assessee offered for tax a sum of Rs.1,75,000/- in addition to the income as offered in the original return of income and recorded satisfaction that the assessee concealed the income to the tune of Rs.1,75,000/- vide Para No. 4 of the assessment order and initiated penalty proceedings. In pursuance of the said satisfaction, the AO issued notice u/s. 274 r.w.s. 271(1)(c) of the Act which is at Page No. 59 of the paper book. The ld. AR contended that the AO did not mention the specific charge in the statutory notice and in the absence of such charge the penalty levied by the AO is bad under law and referred to the decision of Hon‟ble High Court of Bombay in the case of Mohd. Farhan A. Shaikh Vs. DCIT reported in 125 taxmann.com 253 (Bombay) which is at Page No. 7 of the paper book. The ld. DR relied on the order of CIT(A).

We note that the AO recorded satisfaction by mentioning that the assessee concealed income to the tune of Rs.1,75,000/- and on perusal of the notice at Page No. 59 which clearly discloses that the AO issued statutory notice without striking the irrelevant charge mentioned therein. The Full Bench of Hon‟ble High Court of Bombay in the case of Mohd. Farhan A. Shaikh (supra) held sending a printed form where all the grounds mentioned in Section 271 of the Act would not satisfy the requirement of law. The assessee should know the grounds which he has to meet the specifically and non-striking of irrelevant charge in the statutory notice is a defect and vitiate the penalty proceedings. In the present case, it is clear from the record the AO recorded that the assessee concealed the income and issued notice without striking off the irrelevant charge and imposed penalty u/s. 271(1)(c) of the Act. The CIT(A) confirmed the same. Therefore, in such circumstances the ratio laid down by the Full Bench of Hon‟ble High Court of Bombay in the case of Mohd. Farhan A. Shaikh (supra) is applicable in the present case. The impugned order passed by the CIT(A) is not justified. Thus, the penalty imposed by the AO and confirmed by the CIT(A) is cancelled and the ground raised by the assessee is allowed.

In the result, the appeal of assessee is allowed.