The necessity for the show cause notice under Section 271(1)(c) of the Income Tax Act, 1961 to specifically indicate whether there was any concealment of income or furnishing of incorrect particulars.

JUDGMENT

a.S.Chandurkar, J. - When this Income Tax appeal was admitted the following sub-stantial questions of law were framed :

(I) Whether the Income Tax appellate Tribunal, Nag-pur was justified in law in upholding the levy of penalty under Section 271(1)(c) of the Income Tax act, 1961 by holding that the assessee has concealed the income of Rs.96 Lakhs ?

(II) Whether the Income Tax appellate Tribunal, Nag-pur was justified in law in upholding the levy of penalty under Section 271 (1) (c) of the Income Tax act, 1961 when the assessee had offered income of Rs.96 Lakhs in order to buy peace and avoid litigation even though no such income is assessable at the hands of assessee ?

2. after hearing the learned counsel for the parties for some time an additional substantial question of law was framed on 23.11.2021 which reads as under:

(III) 'Whether the show cause notice dated 12.02.2008 issued to the appellant without indicating that there was concealment of particulars of income or furnishing of incorrect particulars of such income would vitiate the penalty proceedings or whether such notice as issued can be held to be valid ?'

3. The learned counsel for the parties have been heard on all the three substantial questions of law as framed.

4. Shri K.P.Dewani, learned counsel for the appellant - assessee inter-alia submits that the assessing Officer on 31.12.2007 in proceedings under Section 143 (3) of the Income Tax act, 1961 (for short, 'the said act') observed that an amount of Rs.96,00,000/- towards unexplained cash was taken into consideration by the assessing Officer and on the premise that the assessee had concealed income, proposed imposition of penalty under Section 271(1)(c) of the said act. Pursuant thereto a show cause notice dated 12.02.2008 was issued by the assistant Commissioner of Income Tax as to why penalty under Section 271(1)(c) of the said act should not be imposed. It is submitted by the learned counsel in the context of substantial question of law no. III that since the show cause notice refers to concealment of particulars of income or furnishing inaccurate particulars of such income, the said show cause notice being vague in nature indicates non-application of mind on the part of the authority issuing the same. Placing reliance on the judgment of the Full Bench in Mohd. Farhan a. Shaikh vs. Deputy Commissioner of Income Tax, Central Circle 1, Belgaum 2021 (434) ITR 1 (Bombay), it was submitted that such defect in the show cause notice of not mentioning the basis for imposition of penalty resulted in vitiating the penalty proceedings. It was his submission that under Section 271(1)(c) of the said act penalty was contemplated either for concealment of income or for furnishing incorrect particulars of the same or both. It was necessary for the authority issuing the show cause notice to specifically indicate as to whether there was any concealment of particulars or furnishing of incorrect details on the part of the assessee or both. In that regard the learned counsel referred to the decisions in Income Tax appeal No.796 of 2016 with connected appeal (The Pr. Commissioner of Income Tax-17 Vs. Hafeez S. Contractor) decided on 11.12.2018, Commissioner of Income Tax vs. Samson Pernchery (2017) 98 CCH 0039 (Mum.), Principal Commissioner of Income Tax (Central) vs. Goa Coastal Resorts and Recreation Pvt. Ltd. (2019) 106 CCH 0183 (Mum.) and in Tax appeal Nos.70/2018 with connected appeals (The Principal Commissioner of Income Tax, Panji vs New Era Sova Mine) decided on 18.06.2019. It was his contention that the law as laid down by the Hon'ble Supreme Court in Dilip N.Shroff Vs. Joint Commissioner of Income-Tax and anr. (2007) 291 ITR 519 (SC) as clarified by the Hon'ble Supreme Court in the decision in Commissioner of Income Tax vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 0158, it was necessary for the show cause notice to be specific and clear as to whether there was any concealment of income or furnishing of inacc