TRISHUL ENTERPRISES,NAVI MUMBAI vs. DCIT CEN CIR 1, THANE

We have heard the Ld. AR for assessee and the Ld. DR for the Revenue and perused the material available on record. The Ld. AR of the assessee argued that while initiating penalty in the assessment order the AO has not clearly specified as to whether the penalty is initiated on account of concealment of income or for furnishing inaccurate particular. During the course of his submission the Ld. AR of the assessee filed the copy of notice dated 30-12- 2009 issued u/s 274 r.w.s. 271(1)(c). The ld AR made stress that the AO has not clearly strike out if the penalty was initiated for concealment of income or for furnishing inaccurate particular and relied on the decision of Hon’ble Gujarat High Court in CIT v/s Whitecourt India Limited 2013(38) taxmann.com 15 (Gujarat). On the other hand the Ld. DR for Revenue argued that the AO while framing assessment initiated penalty on both the charges and the same is clearly reflected in the order that assessee furnished inaccurate particular and concealed income. The Ld. DR further disputed the contention of Ld. AR of the assessee that the AO has not strike out the portion of notice u/s 274 r.w.s. 271(1)( c) about ticking the specific limb of charges. The Ld.

We have considered the rival contention of the parties and gone through the orders of authority is below. From the records we have noticed that a survey proceeding u/s 133A were carried out in the business premises of Patel Group of Cases. As assessee’s case was covered in this group, certain incriminating documents were found and seized. Consequent upon notice u/s 153A was issued to the assessee. In response to said notice assessee filed return of income on 17-10-2008 declaring income of Rs. 81,17,970/-. Assessment was completed u/s 143(3) r.w.s. 153A on 30-12-2009. The AO made the addition of Rs. 47,000-/ holding that assessee incurred these expenses in cash in construction Patel Heritage. The amount is not reflected in the books of account. The assessee not furnished any explanation during the course of assessment proceedings. No appeal was filed against the addition in quantum assessment. The AO levied the penalty holding that the assessee concealed the particular of income. And failed to discharge the primary onus upon it. In the explanation the assessee submitted that there was no intention to hide or suppress anything. The explanation furnished by the assessee was not accepted by AO, thus minimum penalty as prescribed under section 271(1)(c) was levied. The Ld. CIT(A) confirmed the penalty holding that assessee has not disclosed the expenditure incurred in cash in its books of account. And it was not disclosed in the return of income file subsequent to this search action. No satisfactory explanation for not disclosing additional income on account of unexplained expenditure was given by assessee.

We have noticed that during the survey action under section 133A on 17.01.2008 on the group cases of assessee, certain material found and seized. After survey the assessee was served notice under section 153A (a) on 04.08.2008. In response to the notice the assessee filed its return of income on 17.01.2008. During the assessment the AO made addition of Rs.47,000/- under section 69C. The addition was made by AO holding that the assessee has made expenses in cash and has not reflected this expenditure in its books of account. No explanation was offered by assessee for not reflecting such expenditure in books of accounts. Thus, it is a clear case of concealment of income. It was not a case that any legal claim of expanses was made and the same was disallowed during the assessment proceedings. The material was seized during the survey under section 133A, despite the evidence in possession of revenue the assessee has not shown the cash expanses in its books of account. In the explanation the assessee contended that there was no intention to hide or suppress anything. In our considered opinion the explanation offered by assessee is not satisfactory. The ld AR for the assessee relied on the decision of Hon’ble Gujarat High Court in CIT Vs Whiteford India Ltd (supra) wherein it was held that where no clear finding was recorded by assessing officer was guilty of considering income and/or furnishing inaccurate particular of income, criminal was justified in deleting penalty under section 271(1)(c) of the act. However, with the utmost regard to the decision of honourable Gujarat High Court, we have seen that the facts of the present case are at variance, in the present case the assessing officer clearly recorded that “assessee furnished inaccurate particulars and concealed the income”.

The Hon’ble jurisdictional High Court in CIT Vs Smt. Kaushalya (216 ITR 660) while considering similar contention with regards to not striking off of inaccurate particular or concealed income in the notice, held, that mere not striking off specific limb cannot by itself invalidate notice issued under section 274 of the Act. The language of the section does not speak about the issuance of notice. All that is required is that the assessee be given an opportunity of show cause. The issuance of notice is an administrative device for informing the assessee about the proposal of levy of penalty in order to enable him to explain why it should not be levied against him. If it is taken for the sake of argument that mere mistake in the language in the notice for non-striking off of ‘inaccurate particular’ or marking on ‘concealment of income’ portion cannot by itself invalidate the notice. Entire facts and backgrounds thereof are to be kept in mind. Every concealment of fact may ultimately result in filing of or furnishing inaccurate particular. The decision of Bombay High Court in Kaushalya (supra) was brought in the notice of ld AR for assessee at the time of hearing of the submission. With utmost regard to the decision of Gujarat High Court in CIT Vs Whiteford India ltd (supra), we may note that the judgement of Hon’ble Jurisdictional High Court in CIT Vs Kaushalya (supra) is binding precedent upon us. In view of the above factual and legal position which do not find any merit in the submission of the dead AR of the assessee that while issuing notice the specific limb of charges for living penalty was not strike of in the notice under section 274 read with section 271 (1)(c) of the Act. Hence we do not find any merit in the grounds of appeal