J. M CORPORATION,MUMBAI vs. ITO 25(3)(2), MUMBAI

The core issue raised in both the appeals relates to the penalty u/s 271(1)(c) of the Act. At the outset, Ld Counsel for the assessee brought my attention to the notice issued u/s 274 of the Act and mentioned that the Assessing Officer has not applied his mind. Further, bringing my attention to the assessment order, Ld Counsel for the assessee demonstrated that the Assessing Officer initiated the penalty proceedings by mentioning that „penalty proceedings u/s 271(1)(c) of the IT Act are separately initiated for concealing / furnishing inaccurate particulars of income‟. Explaining the above, Ld Counsel for the assessee demonstrated that the Assessing Officer has not categorically mentioned the appropriate limb of clause (c) of section 271(1) of the Act. Further, Ld Counsel for the assessee brought my attention to the penalty order mentioning that the penalty was levied for „concealment of income‟ which is not mentioned clearly at the time of initiating the penalty proceedings. Ld Counsel for the assessee also relied on the judgment of the Hon‟ble Karnataka High Court in the case of CIT vs. Manjunath Connon and Ginning Factory (359 ITR 565).

After hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the relevant material placed before us, I find, this is the case wherein the notice issued u/s 274 r.w.s 271(1)(c) of the Act, the Assessing Officer did not tick the correct limb of clause (c) of section 271(1) of the Act. That suggests non-application of mind by the AO at the time of initiation of penalty proceedings. Considering the same, this appeal is required to be dismissed relying on the judgment of the Hon‟ble jurisdictional High Court in the case of CIT vs. Shri Samson Perinchery in IT Appeal No.1154 of 2014 and others dated 5.1.2017 read with the judgment of the Hon‟ble Karnataka High Court in the case of CIT vs. Manjunath Connon and Ginning Factory (359 ITR 565), which is relevant for the proposition that “penalty proceedings does not survive when the AO failed to delete from the standard profarma of the relevant clauses, such failure leads to an inference as to non-application of mind”. Considering the above binding judgment on the issue / arguments of the Ld Counsel for the assessee, I find, the orders of the CIT (A) in both the appeals are required to be reversed. For the said reasons, penalty has to be deleted. Accordingly I order. Thus, grounds raised