IMPORTANT POINT
The necessity for the Assessing Officer to clearly indicate the provision/limb under which penalty proceedings are triggered against the assessee.

JUDGMENT

[Physical Hearing/Hybrid Hearing (as per request)]

Rajiv Shakdher, J. (Oral)

1. This appeal concerns Assessment Year (AY) 2003-04.

2. Via the instant appeal, the appellant/revenue seeks to assail the order dated 14.06.2018 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"].

3. The questions of law proposed in the instant appeal are the following:

(i) Whether on the facts and circumstances of the case the Ld. ITAT was justified in law in deleting the penalty u/s 271(1)(c) of the Income Tax Act, 1961 amounting to Rs.12,90,00,000/- by relying upon the decision of the Hon'ble Apex Court in the case of SSA Emerald Meadows (2016) 73 taxrnann.com 248(SC) ignoring the fact that the AO has clearly recorded his satisfaction regarding furnishing of inaccurate particulars of the income in the assessment order?

(ii) Whether on the facts and circumstances of the case the Ld. ITAT was justified in law in deleting the penalty u/s 271(1 )(c) of the Income Tax Act, 1961, amounting to Rs. 12,90,00,000/- by holding that there was no application of mind in issue of notice proposing levy of penalty due to non-ticking of the relevant clause of 'concealment of income' or 'furnishing of inaccurate particulars of income'; ignoring that such action cannot invalidate the notice when the Bombay High Court in CIT v. Smt. Kaushalya has held that mere non striking off specific limb cannot by itself invalidate notice issued under S. 274 of the Act as the language of the Section does not speak about the issuance of notice.

(iii) Whether the ITAT has failed to consider that it is the revenue's case that the assessee has failed to furnish true particulars of its income and therefore the levy of penalty was proper in this case?

4. Therefore, in a nutshell, the question which arises for consideration in the instant matter is, whether failure on the part of the Assessing Officer (AO) to put to the respondent/assessee a specific charge is fatal to the penalty proceedings, having regard to the provision of Section 271(1)(c) of the Income Tax Act, 1961 [in short, "Act"].

4.1. The said provision, i.e., Section 271(1)(c) of the Act, permits the AO to levy penalty, either for concealment of particulars of income or where the assessee furnishes inaccurate particulars of income. There is a third possibility, that is perhaps, the available to the AO to impose penalty on both counts if such facts in a given matter. However, we find upon perusal of the assessment order, the following has been stated by the AO, with regard to initiation of penalty:

".... I am satisfied that this is a fit case for imposition of penalty u/s 271(1)(c) for failure on the part of the assessee to disclose true particulars of its income on all the issues on which additions/disallowances have been made as discussed in the order. Thus penalty proceedings u/s 271(1)(c) are initiated by issuing penalty show cause notice."

5. It is not in dispute that thereafter a notice under Section 274 of the Act was issued, to which reference is made in the order of the Tribunal. The relevant part of the notice reads as follows:

"Whereas in the course of proceedings before me for the assessment year 2003-2004 appears to me that you:-

Have without reasonable cause failed to comply with a notice under section 142(1)/143(2) of the Income Tax Act, 1961 dated......

Have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2, 3, 4 and 5.

You are hereby requested to appear before me at 11.00 A.M./P.M. on 28.01.2011 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271(1)(c)."

[Emphasis by us]

6. A perusal of the notice would show, something w