|CORAM:||Manoj Kumar Aggarwal (AM), Saktijit Dey (JM)|
|CATCH WORDS:||concealment of income, furnishing inaccurate particulars of income, natural justice|
|COUNSEL:||F. V. Irani|
|DATE:||May 17, 2017 (Date of pronouncement)|
|DATE:||May 25, 2017 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 271(1)(c): 'Furnishing of inaccurate particulars of income' and 'concealment of particulars of income' have different connotations. The failure by the AO to specify in the s. 274 notice which of the two charges is applicable reflects non-application of mind and is in breach of natural justice as it deprives the assessee of an opportunity to contest. The penalty proceedings have to be quashed|
Since legal grounds goes to the roots of the matter, we take up the same first. A perusal of the quantum assessment order reveals that the penalty has been initiated for furnishing of inaccurate particulars of income and concealment of particulars of income which, as per settled legal propositions, are different connotations and carry different meaning and two separate limbs. The same also becomes clear from the language of show-cause notice which states that the assessee have concealed the particulars of income or furnished inaccurate particulars of income. Finally, the penalty has been levied for filing of inaccurate particulars of income and hence concealed particulars of income which shows inconsistent thinking on the part of AO. Undisputedly, the AO was required to specify the exact charge for which the assessee was being penalized which he has failed to do so and the same has resulted into taking away assessee’s valuable right of contesting the same and thereby violates the principles of natural justice. Our view is fortified by the cited judicial pronouncements of superior court and even the SLP filed by the revenue in CIT Vs. SSA’s Emerald Meadows [supra] has been dismissed by the Apex Court, being devoid of any merits. Even in the case of CIT Vs. Smt. Kaushalya [supra], the Hon’ble jurisdictional High Court observed that the notice issued under Section 274 must reveal application of mind by the Assessing Officer and the assessee must be aware of the exact charge on which he had to file his explanation. It was further observed that vagueness and ambiguity in the notice deprives the assessee of reasonable opportunity to contest the same. Therefore, viewed in the light of principles laid down in the judicial precedents discussed hereinabove, we are inclined to conclude that the penalty proceedings stood vitiated for want of principles of natural justice and hence liable to be quashed. Accordingly, we delete the same.
CIT Vs. Smt. Kaushalya [216 ITR 660 14/01/1992].
CIT Vs. Dharmendra Textile Processor (306 ITR 277)
CIT Vs. Reliance Petro products Pvt. Ltd. [322 ITR 158]
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. CIT Vs. Shri Samson Perinchery [ITA No. 1154 of 2014 order dated 05/01/2017]
Wadhwa Estate & Developers Vs. ACIT [ITA N0. 2158/Mum/2016 dated