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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI G.S.PANNU, AM & SHRI RAVISH SOOD, JM &
आदेश / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER:
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-19, Mumbai, dated 18.12.2013 which in itself arises from the order passed by the A.O under 271(1)(c) of the Income tax Act, 1961 (for short ‘Act’), dated 24.06.2011 for AY 2008-09.
P a g e | Late Smt. Abida Mohmmad Rakhangi Vs. ITO-18(2)(4) 2. Briefly stated, the facts of the case are that the assessee had filed her return of income for A.Y 2008-09 on 27.10.2008, declaring total income of Rs.2,63,196/-. The case of the assessee was thereafter taken up for scrutiny assessment under Sec. 143(2). During the course of the assessment proceedings, it was observed by the A.O that the AIR information received by him revealed that the assessee was maintaining a bank account with Kokan Mercantile Cooperative Bank Limited. It was noticed by the A.O that the said bank account was not disclosed by the assessee in her return of income. The details of the said bank account were called for by the A.O from the bank under Sec.133(6) of the Act. The bank in its reply placed on record a copy of the account opening form and bank statement of account No. 4699 of the assessee. The assessee on being called upon to explain the account transactions in the said bank account, however failed to put forth an explanation as regards the same. Rather, the assessee during the course of the assessment proceedings submitted a copy of a letter from BMC bank and KMC bank regarding deposits, cash summary and bank summary. Still further, the assessee vide her letter dated 16.12.2010 furnished with the A.O the details of the interest income of Rs.3,68,880/- which was earned by her during the year under consideration and offered the same for tax, as under:
Year of Deposit Dep. No. Dep. Amount Maturity Amount Interest which was not incorporated 2004-05 (KMC) FCR/29786 250000 292424 42424 2004-05(KMC) FCR/47146 200000 251490 51490 2004-05 (KMC) FCR/47142 200000 246617 46617 2004-05 (KMC) FCR/47143 200000 246617 46617 2004-05 (KMC) FCR/47144 200000 246617 46617 2004-05 (KMC) FCR/47145 200000 246617 46617 2006-07 (BMC) FCR5507/64197 500000 544398 44398 2006-07 (BMC) FCR 3815/10427 500000 544100 44100 Total 368880
The A.O further gathered on the basis of the information furnished by Kokan Mercantile Cooperative Bank limited that the assessee apart from the aforementioned deposits was also holding one more FDR with the said bank, as under:
P a g e | Late Smt. Abida Mohmmad Rakhangi Vs. ITO-18(2)(4) Year of Deposit Dep. No. Dep. Amount Maturity Amount 27.07.2007 FCR/49943 2,69,284 2,72,088 The A.O observing that the source of the investment made by the assessee in the aforementioned FDR was also not disclosed in her return of income, thus treated the maturity amount of Rs.2,72,088/- as her undisclosed income for the year under consideration. Apart from above, it was further gathered by the A.O that as per the bank statement of Kokan Mercantile Cooperative Bank Ltd the assessee was also in receipt of interest income to the tune of Rs.37/-, hence the same was also added by the A.O to the total income of the assessee. On the basis of the aforesaid deliberations the A.O made an addition of Rs.6,41,005/- [Rs.2,72,088/-(+)Rs.3,68,880/- (+)Rs.37/-] as the undisclosed income of the assessee under Sec. 68 of the Act. The assessee accepted the additions made by the A.O and did not carry the matter any further in appeal, which thus attained finality. The A.O while framing the assessment also initiated penalty proceedings under Sec. 271(1)(c) of the Act. .
The A.O after the culmination of the assessment proceedings, being of the view that there was a dishonest intention on the part of the assessee to conceal her income or furnish inaccurate particulars of income, thus imposed a penalty of Rs.1,98,070/- under Sec.271(1)(c) of the Act.
Aggrieved, the assessee assailed the penalty imposed by the A.O under Sec. 271(1)(c) before the CIT(A). The CIT(A) not being persuaded to subscribe to the contentions advanced by the assessee that no such penalty was liable to be imposed on her, dismissed the appeal.
The assessee being aggrieved with the order of the CIT(A) sustaining the penalty imposed by the A.O under Sec. 271(1)(c), had carried the matter in appeal before us. The ld. Authorized Representative (for short ‘A.R’) took us through the facts of the case. It was submitted by the ld. A.R that the assessee, since deceased, being an illiterate lady of 75 years of age had inadvertently omitted to furnish the details of the aforesaid bank accounts and the corresponding income in her return of income for the year under P a g e | Late Smt. Abida Mohmmad Rakhangi Vs. ITO-18(2)(4) consideration. The ld. A.R in order to drive home his contention that in the backdrop of the facts of the case no penalty under Sec.271(1)(c) was liable to be imposed on the assessee relied on a host of judicial pronouncements. The ld. A.R placed heavy reliance on the order of a coordinate bench of the Tribunal passed in the case of S. Badri Vs. ITO (2016) 47 CCH 133 (Chennai). The ld. A.R further submitted that even otherwise the A.O had wrongly assumed jurisdiction and imposed penalty under Sec. 271(1)(c) in the hands of the assessee. The ld. A.R taking us through the copy of the ‘Show cause’ notice (for short ‘SCN’) issued by the A.O under Sec. 274 r.w.s 271 of the Act, dated 27.12.2010 submitted that as the A.O had failed to strike off the irrelevant default in the notice and resultantly failed to point out the default for which the assessee was being called upon to show cause as to why the penalty under Sec. 271(1)(c) may not be on her, had thus erroneously assumed jurisdiction and proceeded with and imposed penalty under Sec.271(1)(c) in the hands of the assessee. It was the contention of the ld. A.R that as the assessee was never put to notice as regards the default for which the penalty was sought to the imposed on her, hence she remained divested of any opportunity to explain that no such penalty was liable to be imposed on her. 6. Per contra, the ld. Departmental Representative (for short ‘D.R’) relied on the orders of the lower authorities. It was submitted by the ld. D.R that the A.O had rightly assumed jurisdiction and had validly imposed penalty under Sec. 271(1)(c) keeping in view the merits of the case, which thereafter was rightly upheld by the CIT(A). The ld. D.R in order to support his contention that the penalty which was validly imposed in the hands of the assessee could not be struck down on the technical ground that the A.O had failed to strike off the irrelevant default, relied on the following judicial pronouncements: (i) M/s Airen Metals Pvt. Ltd. Vs. ACIT, Circle-4, Jaipur (ITA NO. 820/Jp/2016; dt. 29.09.2017) (ii) Earthmoving Equipment Service Corporation Vs. DCIT (ITA No. 6617/Mum/2014; dt. 02.05.2017)
P a g e | Late Smt. Abida Mohmmad Rakhangi Vs. ITO-18(2)(4) (iii). Sansui Steel Pvt. Ltd. Vs. ITO-7(2)(2) (ITA No. 1403/Mum/2015; dt. 30/11/2017) The ld. D.R further relied on the judgment of the Hon’ble High Court of Delhi in the case of CIT Vs. Zoom Communication Pvt. Ltd. (2010) 191 Taxman 179 (Del) to fortify his contention that in the backdrop of the facts of the case penalty was validly imposed by the A.O.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have perused the ‘SCN’, dated 27.12.2010, which was issued by the A.O under Sec.274 r.w.s. 271 of the Act. A perusal of the ‘SCN’ reveals that as the A.O had failed to strike off the irrelevant default, hence the assessee was not put to notice as regards the default for which she was called upon to explain as to why penalty under Sec.271(1)(c) may not be imposed on her. We are of the considered view that the non striking off the irrelevant charge in the ‘Show cause’ notice not only reflects the non application of mind by the A.O, but the same seriously defeats the very purpose of giving reasonable opportunity of hearing to the assessee as contemplated under Sec.
We find that the distinction between the said two defaults had been appreciated at length by the Hon’ble Supreme Court in its judgments passed in the case of Dilip & Shroff Vs. Jt. CIT (2007) 210 CTR (SC) 228 and T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC). The Hon’ble Apex Court in the aforementioned judgments had concluded that the two expressions namely ‘Concealment of particulars of income’ and ‘furnishing of inaccurate of particulars’ of income have different connotation. We further find that the High Court of Karnataka in the case of CIT Vs. SSA’s Emerald Meadows (73 taxmann.com 241)(Kar), following its earlier order in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar), has held that where the notice issued by the A.O under Sec. 274 r.w Sec. 271(1)(c) does not specify the limb of Sec. 271(1)(c) for which the penalty proceedings had been initiated, i.e whether for ‘concealment of particulars of income’ or ‘furnishing of inaccurate particulars’, the same has to held as bad in law. The ‘Special Leave Petition’