RAVI GOENKA,MUMBAI vs. ACIT 13(2), MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

The assessee has raised the following grounds: - 2. “1 The Ld. CIT(A) has erred in law and on the facts of the case in sustaining the penalty although the relevant clause whether there is concealment of income/furnishing of inaccurate particulars has not been deleted.

ITA. No.4253/M/2018 A.Y. 2008-09

.”

3. The brief facts of the case are that the assessee filed his return of income on 24.09.2008 declaring total income to the tune of Rs.42,14,766/-. The return was processed u/s 143(1) of the Act. Thereafter, the case of the assessee was reopened on the basis of the information received from the DIT (I & CI), Delhi in which it was conveyed that the assessee was a beneficiary of accommodation entries given by M/s. Mahasagar Group which was engaged in fraudulent billing activities and was giving accommodation entries in order to enable the clients to declare speculation profit/loss, short term capital gain, Long Term Capital Gain, Profit/loss on account of commodity trading, introduce share application money in the form of Gifts. The assessee was having transaction amounting to Rs.6,81,500/ with the above group. Therefore, the case of the assessee was reopened u/s 148 of the Act. Thereafter, notices u/s 143(2) & 142(1) of the Act were also issued and served. The assessee had shown the Short Term Capital Gain of Rs.19,92,993/- which included one transaction for the purchase and sale of Jai Corporation Ltd shares detailed are as under: - a. Purchase through Alliance Intermediaries & Network Pvt. Ltd. Rs. 3,41,314/- b. Sale through OTCEI Securities Ltd. Rs.21,35,962/- c. Resulting a gain of Rs.17,94,648/- A.Y. 2008-09 The assessee realized the mistake that he was misled by the intermediary, offered the income under the head “Income from other Sources”. The assessee took the benefit in sum of Rs.17,94,648/- by showing the Short Term Capital Gain. The short term capital gain in sum of Rs.17,94,648/- and the commission @ 5% i.e. 89,732/- were declined and the said amount was treated as income of the assessee. The total income of the assessee was assessed to the tune of Rs.43,04,500/- and accordingly the penalty proceeding was initiated by issuance of notice. After the reply of the assessee, the penalty in sum of Rs.5,65,314/- was levied. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the order, therefore, the assessee has filed the present appeal before us.

5. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. At the very outset, the Ld. Representative of the assessee has argued that the penalty notice nowhere speaks about specific limb to levy the penalty because the particular charge was not tick off in the notice, therefore, in the said circumstances, the penalty is not justifiable hence the order of the CIT(A) confirming the penalty levied by the AO is wrong against law and facts and is liable to be set aside. In support of these contentions the Ld. Representative of the assessee has placed reliance upon the law settled in ITA. No.1154/M/2014 in the case of CIT-11 Vs. Samson Perinchery and the order of the ITAT, Mumbai ITA. No.4253/M/2018 A.Y. 2008-09 Bench in vide order dated 28.04.2017 titled as Meherjee Cassinath Holdings P. Ltd. Vs. ACIT, Circle-4(2). However, on the other hand, the Ld. Representative of the Department has refuted the said contentions. The copy of notice dated 27.02.2014 is on the file in which the Assessing Officer nowhere specify any limb to levy the penalty because none of the charge was tick off in the notice. It is not in dispute that the penalty u/s 271(c) of the Act is leviable on account of the concealment of particular of income and on account of furnishing the inaccurate particulars of income. Both have different connotations. In this regard, the Hon’ble Supreme Court has appreciated the distinction between both the limb in the case Dilip N. Shroff 161 taxman 218 (SC). As per the record, the assessment order speaks about levying the penalty on account of furnishing the inaccurate particulars of income but the notice nowhere specify any limb to levy the penalty. The notice is not justifiable in view of the law settled by the Bombay High Court in the case of CIT-11 Vs. Samson Perinchery. At the time of argument, the Ld. Representative of the assessee has also placed reliance upon the finding of the Hon’ble ITAT in ITA. No. 2555/M/2012 titled as Meherjee Cassinath Holdings P. Ltd. Vs. ACIT, Circle-4(2). The relevant para is hereby reproduced below: - “8. We have carefully considered the rival submissions. Sec. 271(1)(c) of the Act empowers the Assessing Officer to impose penalty to the extent specified if, in the course of any proceedings under the Act, he is satisfied that any person has concealed the ITA. No.4253/M/2018 A.Y. 2008-09 particulars of his income or furnished inaccurate particulars of such income. In other words, what Sec. 271(1)(c) of the Act postulates is that the penalty can be levied on the existence of any of the two situations, namely, for concealing the particulars of income or for furnishing inaccurate particulars of income. Therefore, it is obvious from the phraseology of Sec. 271(1)(c) of the Act that the imposition of penalty is invited only when the conditions prescribed u/s 271(1)(c) of the Act exist. It is also a well accepted proposition that „concealment of the particulars of income‟ and „furnishing of inaccurate particulars of income‟ referred to in Sec. 271(1)(c) of the Act denote different connotations. In fact, this distinction has been appreciated even at the level of Hon'ble Supreme Court not only in the case of Dilip N. Shroff (supra) but also in the case of T.Ashok Pai, 292 ITR 11 (SC). Therefore, if the two expressions, namely „concealment of the particulars of income‟ and „furnishing of inaccurate particulars of income‟ have different connotations, it is imperative for the assessee to be made aware as to which of the two is being put against him for the purpose of levy of penalty u/s 271(1)(c) of the Act, so that the assessee can defend accordingly. It is in this background that one has to appreciate the preliminary plea of assessee, which is based on the manner in which the notice u/s 274 r.w.s. 271(1)(c) of the Act dated 10.12.2010 has been issued to the assessee-company. A copy of the said notice has been placed on record and the learned representative canvassed that the same has been issued by the Assessing Officer in a standard proforma, without striking out the irrelevant clause. In other words, the notice refers to both the limbs of Sec. 271(1)(c) of the Act, namely concealment of the particulars of income as well as furnishing of inaccurate particulars of income. Quite clearly, non-striking-off of the irrelevant limb in the said notice does not convey to the assessee as to which of the two charges it has to respond. The aforesaid infirmity in the notice has been sought to be demonstrated as a reflection of non-application of mind by the Assessing Officer, and in support, reference has been made to the following specific discussion in the order of Hon'ble Supreme Court in the case of Dilip N. Shroff (supra):- “83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs A.Y. 2008-09 were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing the order of assessment laid emphasis that he had dealt with both the situations.

ITA. No.4253/M/2018 A.Y. 2008-09 Further, it is also noticeable that such proposition has been considered by the Hon'ble Bombay High Court also in the case of Shri Samson Perinchery, 953, 1097 & 1126 of 2014 dated 5.1.2017 (supra) and the decision of the Tribunal holding levy of penalty in such circumstances being bad, has been approved.