PREEETI JHANGIANI, MUMBAI v. ITO 11(1)(3), MUMBAI

ITA 5447/MUM/2014 | 2006-2007
Pronouncement Date: 03-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 544719914 RSA 2014
Assessee PAN ACZPJ7129C
Bench Mumbai
Appeal Number ITA 5447/MUM/2014
Duration Of Justice 3 year(s) 2 month(s) 6 day(s)
Appellant PREEETI JHANGIANI, MUMBAI
Respondent ITO 11(1)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 03-11-2017
Date Of Final Hearing 16-05-2017
Next Hearing Date 16-05-2017
First Hearing Date 16-05-2017
Assessment Year 2006-2007
Appeal Filed On 28-08-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5447/MUM/2014 ASSESSMENT YEAR: 2006 - 07 & ITA NO. 5448/MUM/2014 ASSESSMENT YEAR: 2008 - 09 MS. PREETI JHANGIANI 17 SEA MIST 14 PALLI ROAD BANDRA (W) MUMBAI - 400050. VS. ITO - 11(1)(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI400020. PAN NO. ACZPJ7129C APPELLANT RESPONDENT ASSESSEE BY : MR. R.C. JAIN AR REVENUE BY : MR. RAJAT MITTAL DR DATE OF HEARING : 22 /08/2017 DATE OF PRONOUNCEMENT : 03/11/2017 ORDER PER N.K. PRADHAN A.M. THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 MUMBAI AND ARISE OUT OF THE PENALTY MADE U/S 271(1)(C) OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSUES ARE INVOLVED WE ARE P ROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 2 ITA NO. 5447/MUM/2014 ASSESSMENT YEAR: 2006 - 07 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ITO IN TREATING THE APPELLANT TO BE IN DEFAULT U/S 271 (1)(C) OF THE ACT IN RESPECT OF ADDITION OF RS.16 01 149/ - SUSTAINED BY TRIBUNAL READ WITH ORDER IN MA DATED 27 - 06 - 12 AND RECALLED ORDER DATED 16 - 03 - 11. 1.1 THE LD. CIT (APPEALS) IN UPHOLDING THE LEVY OF PENALTY DID NOT APPRECIATE THE METHOD OF ACCOUNTING FOLLOWED IN RESPECT OF ADVANCE RECEIVED AGAINST PROFESSIONAL INCOME AND ACCEPTED IN PAST. 1.2 THE LD. CIT (APPEALS) IN UPHOLDING THE PENALTY DID NOT APPRECIATE THAT THE ADDITION WAS AGREED TO ON CONCESSIO N GIVEN BY THE APPELLANT. 1.3 THE LD. CIT (APPEALS) IN THE FACE OF HIS HAVING HELD THAT THE APPELLANT HAD FULLY DISCLOSED ALL PARTICULARS PERTAINING TO THE ADVANCE RECEIVED ERRED IN HOLDING THAT THE DECISIONS RELIED UPON BY THE APPELLANT PARTICULARLY THE DECI SIONS OF THE APEX COURT IN RELIANCE PETRO PRODUCTS PVT. LTD. AND OF JURISDICTIONAL HIGH COURT IN THE CASE OF NALIN P. SHAH AND ESTATE OF LATE E. F. DINSHAW WERE DISTINGUISHABLE ON FACTS. 1.4 THE LD. CIT (APPEALS) IN CONFIRMING THE PENALTY ERRED IN HOLDING THAT EXPLANATION TO SECTION 271 (1)(C) APPLIED TO THE FACTS IN THE INSTANT CASE. 1.5 THE ORDER OF LD. CIT (APPEALS) CONFIRMING THE APPEAL IS DIAMETRICALLY OPPOSITE TO HIS OWN CONCLUSION IN ORDER DATED 02 - 06 - 14 PASSED ON THE SAME DAY FOR ASSESSMENT YEAR 2007 - 08. 3. THE ASSESSEE FILES AN ADDITIONAL GROUND STATING THAT THE ORDER UNDER APPEAL IS BAD IN LAW IN AS MUCH AS THE LIMB OF SECTION 271(1)(C) UNDER WHICH THE ASSESSEE WAS CONSIDERED TO BE IN DEFAULT WHILE INITIATING PROCEEDINGS U/S 271(1)(C) WAS NOT STATED. PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 3 4. AS TH E ABOVE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS A PURE QUESTION OF LAW WE ADMIT IT FOR ADJUDICATION. 5 . BRIEFLY STATED THE FACTS THE CASE ARE THAT THE ASSESSEE FILED HER RETURN O F INCOME FOR THE AY 2006 - 07 ON 3 0 .10.2006 DECLARING TOTAL INCOME OF RS.6 99 052/ - . THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 143(3) ON 30.12.2008 DETERMINING THE TOTAL INCOME AT RS.49 39 430/ - . THE AO FOUND THAT AS PER THE TAX AUDIT REPORT THE ASSESSEE WAS FOLLOWING CASH METHOD OF ACCOUNTING WHEREAS IN HER BALANCE SHEET SHE HAD SHOWN ADVANCES OF RS.35 75 000/ - . THE ASSESSEE HAD CONTENDED BEFORE THE AO THAT THE ADVANCES RECEIVED WERE IN THE NATURE OF BOOKING FOR THE FOLLOWING YEARS. THE AO WAS NOT CONVINCED WITH ABOVE REPLY AS THE ASSESSEE WAS FOLLOWING CASH METHOD OF ACCOUNTING. FURTHER THE AO MADE DISALLOWANCE ON ACCOUNT OF COMMISSION PAID OF RS.5 60 000/ - AS THE ASSESSEE HAD NOT MADE TDS ON IT. THE AO THUS MADE A DISALLOWANCE OF THE ABOVE SUM U/S 40(A)(IA). 6 . AGGRIEVED BY THE ORDER OF THE AO THE ASSESSE E FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS.35 75 000/ - MADE BY THE AO ON ACCOUNT OF ADVANCES RECEIVED AND ALSO THE DISALLOWANCE OF RS.5 60 000/ - MADE BY THE AO U/S 40(A)(IA). 7. IN FURTHER APPEAL T HE ITAT C BENCH MUMBAI IN THE CASE OF THE ASSESSEE FOR THE IMPUGNED ASSESSME NT YEAR (ITA NO. 5211/MUM/2009) PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 4 PASSED AN ORDER DATED 16.03.2011. IN RESPECT OF THE ADDITION OF RS.35 75 000/ - THE TRIBUNAL HELD AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE PARTIES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS AN ACTRESS AND DERIVES INC OME FROM ADVERTISEMENT MODELING MUSIC ALBUM AND ACTING. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE FOLLOWS CASH SYSTEM OF ACCOUNTING. IN CASH SYSTEM OF ACCOUNTING ALL THE RECEIPTS DURING THE YEAR HAS TO BE TREATED AS INCOME OF THE YEAR AND AL L THE PAYMENTS FOR AND EXPENSES ARE TO BE TREATED AS EXPENDITURE OF THE YEAR. THE SURPLUS OR DEFICIT SHALL BE TREATED AS INCOME OR LOSS OF THE YEAR. IN SUCH A SYSTEM THERE IS NO QUESTION OF RECEIPT IN ADVANCE OR OUTSTANDING LIABILITY. MERELY BECAUSE THE ASSESSEE WAS FOLLOWING SOME WRONG SYSTEM OF ACCOUNTING THE SAME IN OUR OPINION CANNOT BE LEGALIZED ; ESPECIALLY IN AN ASSESSMENT FRAMED U/S 143(3); IT CANNOT PERPETUATE A WRONG METHOD OF ACCOUNTING. 6.1 IT IS THE ALTERNATIVE CONTENTION OF THE LD COUN SEL FOR THE ASSESSEE THAT THE ACTUAL ADVANCE OF RS. 16 01 049/ - RECEIVED DURING THE YEAR MAY BE ADDED TO THE GROSS RECEIPT. IN OUR OPINION IF THAT IS DONE THEN THE AMOUNT WHICH HAS NOT BEEN OFFERED TO TAX IN THE PRECEDING YEAR HAS TO BE BROUGHT TO TAX I N THAT YEAR. WE THEREFORE DIRECT THE ASSESSING OFFICER TO CONSIDER THE ADVANCE RECEIVED DURING THE YEAR AS PART OF THE INCOME. AT THE SAME TIME HE IS DIRECTED TO TAKE CONSEQUENTIAL MEASURES BY REOPENING THE ASSESSMENT AND BRING TO TAX THE AMOUNT RECEIVE D AS ADVANCE IN THE RESPECTIVE PRECEDING YEARS. WE HOLD AND DIRECT ACCORDINGLY. THE ISSUE IN THE GROUNDS OF APPEAL NO.1 IS ACCORDINGLY PARTLY ALLOWED . PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 5 7.1 IN RESPECT OF THE DISALLOWANCE OF RS.5 60 000 / - MADE BY THE AO U/S 40(A)(IA) THE TRIBUNAL HELD AS UNDER: 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE PARTIES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 5 60 000/ AS COMMISSION AS PER INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31.3.2006. THERE IS ALSO NO DISPUTE TO THE FACT THAT AN AMOUNT OF RS.3 LACS HAS BEEN SHOWN AS COMMISSION OUTSTANDING IN THE BALANCE SHEET AS ON 31.3.2006. WE FIND THE ASSESSIN G OFFICER DISALLOWED THE ENTIRE COMMISSION OF RS. 5 60 000/ - ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE FROM SUCH COMMISSION WHICH HAS BEEN UPHELD BY THE CIT(A). IT HAS BEEN MENTIONED EARLIER IN THE PRECEDING PARAGRAPH 6 THAT IN CASH SYSTEM OF ACCOUNTING ONLY THE AMOUNT RECEIVED DURING THE YEAR HAS TO BE TAKEN AS INCOME OF THE YEAR AND THE PAYMENTS RELATING TO EXPENDITURE MADE DURING THE YEAR ARE TO BE TREATED AS EXPENDITURE FOR THE YEAR. THEREFORE ONLY THE AMOUNT WHICH HAS BEEN PA ID DURING THE YEAR ON ACCOUNT OF COMMISSION HAS TO BE ALLOWED AS ALLOWABLE EXPENDITURE. SINCE THE ASSESSEE HAS CLAIMED COMMISSION OF RS. 5 60 000/ - OUT OF WHICH AN AMOUNT OF RS. 3 LACS IS SHOWN AS OUTSTANDING; THEREFORE THE ASSESSEE FIRST OF ALL SHOU LD NOT HAVE CLAIMED THE COMMISSION WHICH IS PAYABLE. THEREFORE OUT OF RS. 5 60 000/ - RS.3 LACS IS DISALLOWED BEING WRONG CLAIM MADE BY THE ASSESSEE WHO FOLLOWS CASH SYSTEM OF ACCOUNTING. 9.1 SO FAR AS THE REMAINING AMOUNT OF RS. 2 60 000/ - IS CON CERNED IN OUR OPINION THE PROVISIONS OF SEC. 194H ARE NOT APPLICABLE TO THE ASSESSEE SINCE HER GROSS RECEIPTS DURING THE YEAR IS RS. 30 92 000/ - WHICH IS BELOW THE PRESCRIBED LIMIT OF RS. 40 LACS FOR AN INDIVIDUAL FOR ATTRACTING PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 6 THE PROVISIONS OF SEC. 194H. WE THEREFORE SUSTAIN THE DISALLOWANCE OF RS. 3 LACS OUT OF THE COMMISSION DISALLOWED AT RS. 5 60 000/ - . THE 2ND ISSUE IN THE GROUNDS OF APPEAL IS ACCORDINGLY PARTLY ALLOWED. 8. SUBSEQUENTLY MIS CELLANEOUS APPLICATION S WERE FILED BOTH BY THE ASSESS EE AND REVENUE AGAINST THE ABOVE ORDER OF THE TRIBUNAL. WE FIND THAT THE ITAT C BENCH MUMBAI VIDE ITS ORDER DATED 27.06.2012 (MA NO. 520 & 83 /MUM/2011) ALLOWED BOTH THE MISCELLANEOUS APPLICATIONS. 9. THEREAFTER THE ITAT C BENCH MUMBAI IN ITS ORDER DATED 11. 01.2013 (ITA NO. 5211/MUM/2009) CONSIDERED THE FOLLOWING GROUNDS OF APPEAL FILED BY THE ASSESSEE: 3. GROUND NOS. 1& 2 READ AS UNDER: 1. LD. CIT(A) ERRED IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE ADDITION OF RS.35 75 000/ - BEING ADVANCES RECEIVED WAS MADE WITHOUT VERIFICATION OF FACTS AND EVIDENCES. 2. LD. CIT(A) ERRED IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE PROVISIONS OF S. 194H WERE NOT APPLICABLE TO THE PAYMENTS MADE BY THE ASSESSEE AS COMMISSION OF RS.5 60 000/ - IN VIEW OF THE FACTS AND CIRCUMSTANCES PECULIAR TO THE PROFESSION OF THE ASSESSEE. IT WOULD BE RELEVANT TO QUOTE THE ORDER OF THE TRIBUNAL AT LENGTH AND THE SAM E IS PRODUCED BELOW: 4. IN RESPECT OF GROUND NO.1 OF APPEAL ID A.R. SUBMITTED THAT ASSESSEE IS AN ACTRESS. HE REFERRED PAGE 56 OF PB AND SUBMITTED THAT A SUM OF RS.19 73 951/ - HAS BEEN BROUGHT FORWARD FROM EARLIER YEARS. HE SUBMITTED THAT IT WAS ONLY AN ADVANCE AND THE ADDITION COULD NOT BE MADE. HE FURTHER SUBMITTED THAT ONLY A SUM OF RS.16 01 0491 - / WAS RECEIVED IN ASSESSMENT PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 7 YEAR UNDER CONSIDERATION AND IT TOO WAS AN ADVANCE FOR THE PERFORMANCE OF ASSESSEES ACTIVITIES. HE SUBMITTED THAT NO ACTIVITIES WERE PERFORMED BY ASSESSEE AND HENCE TOTAL AGGREGATE AMOUNT OF RS.35 75 000/ - WILL BE CONSIDERED AS ADVANCE AND SAME WILL BE ADJUSTED AS AND WHEN ASSESSEE PERFORMS THE FUNCTION. DURING THE COURSE OF HEARING LD A.R. ADMITTED THAT ASSESSEE IS FOLLOWING CA SH SYSTEM OF ACCOUNTING. IN REPLY TO A QUERY FROM THE BENCH ID A.R. SUBMITTED THAT EVEN IF ON RECEIPT BASIS ADDITION HAS TO BE MADE CONSIDERING AS INCOME OF THE ASSESSEE ONLY A SUM OF RS.16 01 049/ - COULD BE CONSIDERED AS INCOME OF THE ASSESSEE I.E. THE AMOUNT RECEIVED BY HER IN THE ASSESSMENT YEAR UNDER CONSIDERATION. DURING THE COURSE OF HEARING LD. A.R. CONCEDED THAT THE BROUGHT FORWARD AMOUNT OF RS.19 73 951/ - HAD NOT BEEN TAXED IN EARLIER YEARS. LD. A.R. CONCEDED THAT ASSESSEE COULD NOT FURNISH DETAI LS IN RESPECT OF WHICH OF THE ACTIVITIES TO BE PERFORMED BY THE ASSESSEE THE SAID ADVANCES WERE RECEIVED AND HAVE BEEN ADJUSTED TILL DATE. LD. A.R. ALSO CONCEDED THAT IN VIEW OF THE FACT THAT SAID ADVANCE IS BROUGHT FORWARD FROM THE LAST 3 - 4 YEARS AND ALS O THAT THE SAID ADVANCE WAS TO BE ADJUSTED AGAINST THE ACTIVITIES TO BE PERFORMED BY HER IN THE ABSENCE OF THE DETAILS HE HAS NO OBJECTION IF THE SAID SAME AMOUNT I S CONSIDERED AS INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR. LD. D.R. SUBMITTED THAT IF THE SAID AGGREGATE AMOUNT OF RS.35 75 000/ - IS ASSESSED AS INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION HE HAS NOTHING TO SAY EXCEPT RELYING ON ORDERS OF AUTHORITIES BELOW. 5. IN VIEW OF ABOVE SUBMISSIONS OF ID. REPRESENTATIVES OF PA R TIES AND PARTICULARLY THAT ID. A.R. HAS SUBMITTED THAT HE HAS NO OBJECTION IN TAXING T HE SAID AGGREGATE AMOUNT OF RS.35 75 000/ - AS INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR UNDER CONSIDERATION WE UPHOLD THE O RDER OF ID CIT(A) AND REJECT GROUND NO.1 TAK EN BY THE ASSESSEE. 6. AT THE TIME OF HEARING IN RESPECT OF GROUND NO.2 ID A.R. SUBMITTED THAT ASSESSEE PAID TDS ON ABOVE AMOUNT UNDER DISPUTE IN SUBSEQUENT YEAR(S) AND ASSESSEE GOT CREDIT FOR THAT. THEREFORE SAID GROUND IS NOT PRESSED FOR. LD. PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 8 D.R. HAS NO OBJECTION TO ABOVE SUBMISSION OF LD. AR. HENCE GROUND NO. 2 OF APPEAL TAKEN BY ASSESSEE IS REJECTED. 10. THEN THE AO PASSED ORDER U/S 271(1)(C) ON 27.03.2012 ON CONCEALED INCOME OF RS.21 61 049/ - (RS.16 01 049/ - PLUS RS.5 60 000/ - BY REFERRING TP THE ORDER DATED 16.03.2011 OF THE ITAT C BENCH MUMBAI. THE MINIMUM PENALTY THUS IMPOSED BY HIM COMES TO RS.7 27 410/ - . IN APPEAL THE LD. CIT(A) VIDE ORDER DATED 16.06.2014 CONFIRMED THE PENALTY ON THE ADDITION OF RS.16 01 049/ - . HOWEVER HE DELETED THE PENALTY LEVIED ON THE ADDITION OF RS.5 60 000/ - . 11. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE AO WHILE ISSUING NOTICE U/S 274 R.W.S. 271(1)(C) HAS NOT DELETED THE INAPPROPRIATE WORDS AND PARAGRAPHS OF HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN SUPPORT OF HIS CONTENTIONS HE RELIED ON THE DECISION IN (I) MEHERJEE CASSINATH HOLDINGS PVT. LT D. VS. ACIT (ITA NO. 2555/MUM/2012) (II) JEHANGIR HC JEHANGIR VS. ACIT (ITA NO. 1261/MUM/2011) (III) SHRI CHANDRU K. MIRCHANDANI (ITA NO. 5368/MUM/2014) (IV) AMIT TANDON VS. DCIT (ITA NO. 2688/MUM/2013) (V) CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMA NN.COM 241 (KARNATAKA) AND (VI) CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC) . 12 . PER CONTRA THE LD. DR RELIES ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA AND OTHERS (1995) 216 ITR 660 (BOM). PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 9 1 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE FACT REMAINS THAT IN THE ASSESSMENT ORDER DATED 30.12.2008 THE AO HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE PENALTY ORDER DATED 27.03.2012 HE HAS IMPOSED PENALTY ON THE REASON THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HER INCOME FOR THE YEAR UNDER CONSIDERATION. IN THE CASE OF SMT. KAUSHALYA AND OTHERS (SUPRA) THE HONBLE BOMBAY HIGH COURT HELD: 9. WE WILL FIRST TAKE UP THE SHOW - CAUSE NOTICE DATED MARCH 29 1972 PERTAINING TO THE ASSESSMENT YEARS 1968 - 69 AND 1969 - 70. THE ASSESSMENT ORDERS WERE ALREADY MADE AND THE REASONS FOR ISSUING THE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) WERE RECORDED BY THE INCOME - TAX OFFICER. THE ASSESSEE FULLY KNEW IN DETAIL THE EXACT CHARGE OF THE DEPARTMEN T AGAINST HIM. IN THIS BACKGROUND IT COULD NOT BE SAID THAT EITHER THERE WAS NON - APPLICATION OF MIND BY THE INCOME - TAX OFFICER OR THE SO - CALLED AMBIGUOUS WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF THE ASSESSEE TO REASONABLE OPPORTUNITY OF B EING HEARD. AFTER ALL SECTION 274 OR ANY OTHER PROVISION IN THE ACT OR THE RULES DOES NOT EITHER MANDATE THE GIVING OF NOTICE OR ITS ISSUANCE IN A PARTICULAR FORM. PENALTY PROCEEDINGS ARE QUASI - CRIMIN AL IN NATURE. SECTION 274 CONTAINS THE PRINCIPLE OF NATURAL JUSTICE OF THE ASSESSEE BEING HEARD BEFORE LEVYING PENALTY. RULES OF NATURAL JUSTICE CANNOT BE IMPRISONED IN ANY STRAIGHT - JACKET FORMULA. FOR SUSTAINING A COMPLAINT OF FAILURE OF THE P RINCIPLES OF NATURAL JUSTICE ON THE GROUND OF ABSENCE OF OPPORTUNITY IT HAS TO BE ESTABLISHED THAT PREJUDICE IS CAUSED TO THE CONCERNED PERSON BY THE PROCEDURE FOLLOWED. THE ISSUANCE OF NOTICE IS AN ADMINISTRATIVE DEVICE FOR INFORMING THE ASSESSEE ABOUT T HE PROPOSAL TO LEVY PENALTY IN ORDER PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 10 TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DONE. MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRIKING OF THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. THE ENTIRE FACTUAL BACKGROUND WOULD FALL FOR CONSIDERATION IN THE MATTER AND NO ONE ASPECT WOULD BE DECISIVE. IN THIS CONTEXT USEFUL REFERENCE MAY BE MADE TO THE FOLLOWING OBSERVATION IN THE CASE OF CIT V. MITHILA MOTOR 'S (P.) LTD. [1984] 14 9 ITR 751 (PATNA) (HEAD NOTE) : UNDER SECTION 274 OF THE INCOME - TAX ACT 1961 ALL THAT IS REQUIRED IS THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO SHOW CAUSE. NO STATUTORY NOTICE HAS BEEN PRESCR IBED IN THIS BEHALF. HENCE IT IS SUFFICIENT IF THE ASSESSEE WAS AWARE OF THE CHARGES HE HAD TO MEET AND WAS GIVEN AN OPPORTUNITY OF BEING HEARD. A MISTAKE IN THE NOTICE WOULD NOT INVALIDATE PENALTY PROCEEDINGS.' THE ABOVE ISSUE HAS BEEN SUCCINCTLY DEALT BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SAMSON PERINCHERRY (ITA NO. 953 1097 1154 & 1226 OF 2014). THE HONBLE HIGH COURT HELD AS UNDER: THEREFORE THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UND ER SECTION 271(1)(C ) OF THE ACT FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMP O SED FOR THE ORDER BREACH. THIS IS MORE SO AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST THEREFORE FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. IN VIEW OF THE ABOVE JUDGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT WE ARE NOT ADVERTING TO THE ORDER OF THE TRIBUNAL RELIED ON BY THE LD. COUNSEL MENTIONED AT PARA 11 HEREINBEFORE. WE ALSO MENTION THAT IN PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 11 SSAS EMERALD MEADOWS (SUPRA) THE SLP FILED B Y THE REVENUE HAS ONLY BEEN DISMISSED BY THE HONBLE SUPREME COURT. 1 3 .1 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN SMT. KAUSHALYA AND OTHERS (SUPRA) AND SAMSON PERINCHERRY (SUPRA) WE DISMISS THE GROUND RAISED BY THE LD. COUN SEL OF THE ASSESSEE THAT THE AO WHILE ISSUING NOTICE U/S 274 R.W.S. 271(1)(C) HAS NOT DELETED THE INAPPROPRIATE WORDS AND PARAGRAPHS OF HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 1 4 . HOWEVER WE FIND THAT THE AO HAS LEVIED PENALTY ON THE ADDITION OF RS.16 01 049/ - VIDE ORDER DATED 27.03.2012. THE SAME HAS BEEN ADJUDICATED BY THE LD. CIT(A) VIDE ORDER DATED 16.06.2014. THE AO HAS TAKEN INTO ACCOUNT THE ORDER OF THE ITAT DATED 16.03.2011. AS MENTIONED HEREINBEFORE THE TRIBUNAL HAS PASSED A SUBSEQUENT ORDER DATED 11.01.2013. THIS HAS NOT BEEN TAKEN INTO ACCOUNT EITHER BY THE AO OR THE LD. CIT(A). IN VIEW OF THE ABOVE WE SET ASIDE THE ORDER OF THE LD. CIT(A) DATED 16.06.2014 AND RESTORE TH E MATTER TO FILE OF THE AO TO EXAMINE THE ISSUE AFRESH AND PASS A N ORDER AFTER FOLLOWING THE ORDER OF THE ITAT DATED 11.01.2013 EXTRACTED AT PARA 9 HEREINBEFORE AND GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 1 5 . IN THE RESULT THE APPEAL IS PARTLY ALLOWED. PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 12 ITA NO. 5448/MUM/2014 ASSESSMENT YEAR: 2008 - 09 1 6 . THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ITO IN TREATING THE APPELLANT TO BE IN DEFAULT U/S 271 (1)(C) OF THE ACT IN RESPECT OF ADDITION OF RS.1 50 000/ - (RS.35 00 000 - RS.33 50 000/ - ) MADE IN THE ASSESSMENT ORDER AND SUSTAINED BY LD. CIT (APPEALS) IN APPEAL ON THE ADVANCE RECEIVED AGAINST PROFESSIONAL INCOME. 1.1 THE LD. CIT (APPEALS) IN UPHOLDING THE LEVY OF PE NALTY DID NOT APPRECIATE THE METHOD OF ACCOUNTING FOLLOWED IN RESPECT OF ADVANCE RECEIVED AGAINST PROFESSIONAL INCOME AND ACCEPTED IN PAST. 1.2 THE LD. CIT (APPEALS) IN UPHOLDING THE PENALTY BASED ON HIS ORDER FOR ASSESSMENT YEAR2006 - 07 PASSED ON THE SAME DAY . 1.3 THE LD. CIT (APPEALS) IN THE FACE OF HIS HAVING HELD THAT THE APPELLANT HAD FULLY DISCLOSED ALL PARTICULARS PERTAINING TO THE ADVANCE RECEIVED ERRED IN HOLDING THAT THE DECISIONS RELIED UPON BY THE APPELLANT PARTICULARLY THE DECISIONS OF THE APEX COURT IN RELIANCE PETRO PRODUCTS PVT. LTD. AND OF JURISDICTIONAL HIGH COURT IN THE CASE OF NALIN P. SHAH AND ESTATE OF LATE E. F. DINSHAW WERE DISTINGUISHABLE ON FACTS. 1.4 THE LD. CIT (APPEALS) IN CONFIRMING THE PENALTY ERRED IN HOLDING THAT EXPLANATION TO SECTION 271 (1)(C) APPLIED TO THE FACTS IN THE INSTANT CASE. 1.5 THE ORDER OF LD. CIT (APPEALS) CONFIRMING THE APPEAL IS DIAMETRICALLY OPPOSITE TO HIS OWN CONCLUSION IN ORDER DATED 02 - 06 - 14 PASSED ON THE SAME DAY FOR ASSESSMENT YEAR 2007 - 08. 1 7 . THE ASSESSEE FILES AN ADDITIONAL GROUNDS STATING THAT THE ORDER UNDER APPEAL IS BAD IN LAW IN AS MUCH AS THE LIMB OF SECTION 271(1)(C) UNDER WHICH THE ASSESSEE WAS CONSIDERED TO BE IN DEFAULT WHILE INITIATING PROCEEDINGS U/S 271(1)(C) WAS NOT STATED. PREETI JHANGIANI ITA NO. 5447 & 5448/MUM/2014 13 1 8 . AS THE ABOVE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS A PURE QUESTION OF LAW WE ADMIT IT FOR ADJUDICATION. 1 9 . WE FIND THAT IN THE ASSESSMENT ORDER DATED 29.10.2010 THE AO HAS INITIATED THE PENALTY PROCEEDINGS FOR UNDISCLOSED INCOME WHEREAS IN THE PE NALTY ORDER DATED 26.06.2012 HE HAS IMPOSED PENALTY U/S 271(1)(C) ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF HER INCOME. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN SAMSON PERINCHERRY (SUPRA) WE HOLD THE PENALTY LEVIED BY THE AO FOR THE AY 2008 - 09 AS BAD IN LAW. 20 . IN THE RESULT THE APPEAL IS ALLOWED. 21 . TO SUM UP THE APPEAL FOR THE AY 2006 - 07 IS PARTLY ALLOWED WHEREAS THE SAME FOR THE AY 2008 - 09 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/11/2017. SD/ - SD/ - ( JOGINDER SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 03/11/2017 RAHUL SHARMA SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE . BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT MUMBAI