SYMA TECHNOLOGY P.LTD,MUMBAI vs. DCIT 8(3), MUMBAI

ITA.No.4632/Mum/2014 Syrma Technology Private Limited Assessment Year-2011-12 The assessee, in the quantum assessment u/s 143(3), was saddled with certain additions aggregating to Rs.18,32,847/- against which the impugned penalty has been levied. 2. The Ld. Counsel for Assessee [AR], at the outset, drew our attention to additional grounds of appeal being filed by the assessee on 05/10/2017 and pleaded that since the same questions the validity of penalty proceedings and goes to the root of the matter and therefore, should be taken up first. After perusing the same, we find that the same are legal grounds and do not require appreciation of new facts and hence taken on record. The same reads as follows:-

The Ld. AR, taking us through quantum assessment order, show- cause notice and penalty order, contended that no specific charge has been mentioned by Ld. AO while levying penalty and therefore, the same being in violation of principle of natural justice, vitiates the penalty proceedings itself and hence liable to be quashed. Per Contra, Ld. Departmental Representative [DR] pleaded that the assessee was well aware of the charges for which he was being penalized which is quite evident from the fact that the assessee actively contested the penalty proceedings and never raised this issue before any of the lower authorities.

The Hon’ble Supreme Court in the judgment titled as Dilip N.Shroff Vs. JCIT (291 ITR 519) has observed that the concealment of income and furnishing of inaccurate particulars of income are different and carry different connotations. The Hon’ble Court further held that non-striking off of the relevant portions of standard show-cause notice reflects non- application of mind by AO and hence vitiates the penalty. We also note that the ratio of this judgment was very much relevant and valid despite ITA.No.4632/Mum/2014 Syrma Technology Private Limited Assessment Year-2011-12 the judgment of Apex Court in the case of CIT Vs. Dharmendra Textile Processor (306 ITR 277) in view of another judgment of Supreme Court in CIT Vs. Reliance Petro products Pvt. Ltd. [322 ITR 158] wherein it was observed that reasoning given in the case of Dilip N.Shroff could not be faulted except to the extent of observations regarding necessity of mens- rea for the purpose of Section 271(1)(C). Similar view has been expressed in the judgment of Hon’ble Karnataka High Court rendered in CIT Vs. Manjunatha Cotton & Ginning Factory [2013 359 ITR 565] which was later followed by the same court in CIT Vs. SSA’s Emerald Meadows [ITA NO. 380 OF 2015 23/11/2015] against which special leave petition [SLP] filed by the revenue before Apex Court in CC No.11485/2016 order dated 05/08/2016 was dismissed by the Hon’ble court, finding no merits in the case. Further, Hon’ble Bombay High Court has followed the ratio of same judgment in CIT Vs. Shri Samson Perinchery [ITA No. 1154 of 2014 order dated 05/01/2017] and further Tribunal, in catena of judgment and more particularly in Wadhwa Estate & Developers Vs. ACIT [ITA N0. 2158/Mum/2016 dated 24/02/2017] has taken the same view following the aforesaid judgments.

Upon consideration of factual matrix as noted by us in paragraph 4, we find that the three events, put together, reflects non-application of mind on the part of AO and the AO himself was not sure about the limb / exact charge for which the assessee was being penalized. Therefore, the penalty order stood vitiated for want of principles of natural justice and hence, liable to be quashed. Respectfully following the catena of judgments favoring assessee on the issue, we delete the impugned penalty and allow assessee’s appeal.