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

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ITA 3819/MUM/2016Status: DisposedITAT Mumbai29 March 2017AY 2003-043 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO's failure to clearly specify the limb of Section 271(1)(c) in the notice issued under Section 274 indicates a non-application of mind. Consequently, the penalty proceedings are not sustainable.

What were the facts?

The assessee filed appeals for AY 2003-04 and 2004-05 concerning penalty under Section 271(1)(c). The assessee argued that the Assessing Officer (AO) did not apply his mind while initiating penalty proceedings, as the notice under Section 274 did not clearly specify the limb of Section 271(1)(c) for which penalty was being levied.

What were the issues?

Whether penalty under Section 271(1)(c) is valid when the notice under Section 274 does not clearly specify the limb of concealment or furnishing inaccurate particulars, indicating a non-application of mind by the AO.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO

For Appellant: Shri Rishabh Shah
Hearing: 22.03.2017Pronounced: 29.03.2017

अऩीराथी की ओय से / Appellant by : Shri Rishabh Shah प्रत्मथी की ओय से/ Respondent by : Ms. Beena Santosh, DR सुनवाई की तायीख / Date of Hearing : 22.03.2017 घोषणा की तायीख /Date of Pronouncement : 29.03.2017 आदेश / O R D E R PER D. KARUNAKARA RAO, AM: There are two appeals under consideration. Both these appeals are filed by the assessee for the assessment years 2003-04 and 2004-05. Since, the issues raised in these appeals are identical / inter-connected, therefore, for the sake of convenience, they are clubbed, heard together and disposed of in this consolidated order. Appeal wise adjudication is given in the following paras of this order.

2.

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).

3.

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

by the assessee in both the appeals are allowed.

4. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 29th March, 2017. Sd/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक 29.03.2017 व.नन.स./ OKK , Sr. PS आदेश की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1.

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