Case Law Details
Jumbo Electronics Corp. Pvt. Ltd. Vs. DCIT (ITAT Mumbai)
The impugned penalty order certainly gives an impression that the Assessing Officer himself was not sure which limb of section 271(1)(c) is applicable to the assessee. In any case of the matter, non mentioning of particular limb for which the Assessing Officer has imposed penalty under section 271(1)(c) in the impugned penalty order coupled with the fact that in the show cause notice issued under section 274 in the standard printed form the Assessing Officer has not struck off the irrelevant clauses, thereby, not specifying exact charge made against the assessee vis–a–vis section 271(1)(c), makes the penalty order invalid as it contravenes the principles of natural justice.
Full Text of the ITAT Order is as follows:-
Aforesaid appeal filed by the assessee is against the order dated 17th July 2012, passed by the learned Commissioner (Appeals)–5, Mumbai, confirming penalty imposed under section 271(1)(c) Income-tax Act, 1961 (for short “the Act”) for an amount of ` 15,67,406, for the assessment year 2006-07.
2. Brief facts are, the assessee a company filed its return of income for the impugned assessment year on 23rd September 2006, declaring loss of Rs. 48,94,672. During the scrutiny assessment proceedings, the Assessing Officer after verifying the books of account and information called for, disallowed certain expenditures claimed by the assessee. Further, the interest earned on fixed deposit amounting to Rs. 3,30,015, which was shown as income from business was treated as income from other sources. As a result, the Assessing Officer while assessing the business income as nil, determined the total income at Rs. 3,30,020 by assessing the interest earned on fixed deposit as income from other sources. On the basis of such dis allowance / addition made, the Assessing Officer while completing assessment also initiated proceedings for imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income. In the course of penalty proceedings, in response to the show cause notice issued under section 274 r/w 271(1)(c) of the Act, though, the assessee furnished its explanation denying the allegation made by the Assessing Officer, however, the Assessing Officer rejecting the explanation of the assessee proceeded to imposing penalty of ` 15,67,406 under section 271(1)(c) of the Act.
3. The learned Commissioner (Appeals) also sustained the penalty imposed by dismissing the appeal preferred by the assessee.
4. Learned Authorized Representative raising a legal contention before us submitted that while initiating proceedings for imposition of penalty under section 271(1)(c) of the Act in the assessment order, the Assessing Officer has alleged furnishing inaccurate particulars of income, however, in the show cause notice issued under section 274 r/w section 271(1)(c) of the Act, the Assessing Officer has not specific charge for which he intended to impose penalty under section 271(1)(c). Further, the learned Authorized Representative submitted, while imposing penalty in the penalty order passed the Assessing Officer has not mentioned the exact offence committed by the assessee for which he is imposing penalty under section 271(1)(c). He, therefore, submitted penalty order passed being invalid should be quashed. In support of his contentions, the learned Authorized Representative relied upon the following decisions:–
i) Meherjee Cassinath Holdings P. Ltd. v/s ACIT, ITA no. 2555/Mum./2012, dated 28.04.2017;
ii) M/s. Orbit Enterprises v/s ITO, ITA no. 1596 & 1597/2014, dated 01.09.2017;
iii) Mangalam Drugs & Organics Ltd. v/s DCIT, ITA no. 5454/Mum./2011, dated 24.09.2015;
iv) CIT v/s Samson Perinchery, ITA no. 1154/2014, etc., dated 05.01.2017;
v) M/s. Wadhwa Estate & Developers India Pvt. Ltd. v/s ACIT, ITA no. 2158/Mum.2016, dated 24.02.2017;
vi) Jehangir HC Jehangir v/s ACIT, ITA no. 1261/Mum./2011, dated 17.05.2017;
vii) CIT v/s SSA ’s Emerald Meadows, [2016] 73 taxmann.com 241 (Kar.); and
viii) Dr. Sarita Milind Davare v/s ACIT, ITA no. 2187/Mum ./2014, etc., dated 21.12.2016;
5. Learned Departmental Representative relied upon the decision of the learned Commissioner (Appeals) and Assessing Officer.
6. We have heard rival contentions and perused the material available on record in the light of the decisions relied upon. Undisputedly, while completing the assessment, the Assessing Officer has initiated proceeding for imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income by the assessee. However, in the show cause notice under section 274 r/w section 271(1)(c) dated 29th September 2008, which is in a standard printed form and a copy of which was placed by the learned Authorized Representative before us, the Assessing Officer has not specifically mentioned for which offence he intends to impose penalty, by striking off inappropriate words. Further, though, in the first paragraph of the impugned penalty order, the Assessing Officer has stated that penalty proceedings under section 271(1)(c) was initiated for concealing the income and furnishing inaccurate particulars of income, however, while ultimately recording his finding for imposition of penalty, the Assessing Officer has not mentioned the exact offence committed by the assessee for which he has imposed penalty under section 271(1)(c). In fact, the penalty order passed reveals complete non–application of mind by the Assessing Officer. As could be seen, in the assessment order the Assessing Officer has initiated proceeding for imposition of penalty under section 271(1)(c) on the specific allegation of furnishing of inaccurate particulars of income. Whereas, at the beginning of the impugned penalty order, the Assessing Officer has mentioned that penalty proceedings under section 271(1)(c) were initiated for concealing the income and furnishing inaccurate particulars of income. Thus, charge relating to the initiation of penalty proceedings under section 271(1)(c) is at variance with the charge for which penalty proceedings was initiated under section 271(1)(c) in the assessment order, inasmuch as, in the show cause notice issued under section 274 of the Act the Assessing Officer has not specified the exact limb of section 271(1)(c) for which he wants to impose penalty under section 271(1)(c) and ultimately while imposing penalty, the Assessing Officer has not recorded for which limb of section 271(1)(c) i.e., concealing particulars of income or furnishing of inaccurate particulars of income, he is imposing penalty. Thus, the penalty order suffers from serious infirmities. The Hon’ble Jurisdictional High Court in CIT v/s Samson Perinchery, ITA no.4625 to 4630/Mum./2013 dated 11th October 2013, has held that the Assessing Officer cannot initiate proceedings for imposition of penalty under one limb of section 271(1)(c) and impose the penalty for another limb of the said provision. In the present case, the Assessing Officer while imposing penalty has not even stated which limb of section 271(1)(c) he is applying for imposing penalty. The impugned penalty order certainly gives an impression that the Assessing Officer himself was not sure which limb of section 271(1)(c) is applicable to the assessee. In any case of the matter, non mentioning of particular limb for which the Assessing Officer has imposed penalty under section 271(1)(c) in the impugned penalty order coupled with the fact that in the show cause notice issued under section 274 in the standard printed form the Assessing Officer has not struck off the irrelevant clauses, thereby, not specifying exact charge made against the assessee vis–a–vis section 271(1)(c), makes the penalty order invalid as it contravenes the principles of natural justice.
The ratio laid down in the decisions relied upon by the learned Authorized Representative would, therefore, squarely apply to the facts of the present case. In view of the aforesaid, we delete the penalty imposed under section 271(1)(c) of the Act.
7. In the result, assessee’s appeal is allowed.
Order pronounced in the open Court on 22.11.2017
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