Indrani Sunil Pillai vs. ACIT (ITAT Mumbai)
S. 271(1)(c) penalty: If the AO has not recorded any satisfaction in absolute terms whether the assessee. Has concealed particulars of income or has furnished inaccurate particulars of income. The levy of penalty is invalid. The judgement of the Bombay High Court in Maharaj Garage cannot be read out of context or in a manner. To mean that there is no need for mentioning the specific limb of section 271(1)(c). Of the Act for which the penalty was intend to be impose. As such issue never came up for consideration before the High Court.
As far as the judgment of the Hon’ble Jurisdictional High Court in Maharaj Garage dated 22nd August 2017 in ITA no. 21 of 2008 relied upon by the learned Departmental Representative, on a careful reading of the said judgment, we are of the view that it will have no application to the facts of the case. As could be seen, the basic issue arising out of the reference application which fell for consideration of the Hon’ble Jurisdictional High Court was, while granting previous approval by Inspecting Assistant Commissioner of Income–tax as per provisions of section 271(1)(c)(iii) of the Act whether the assessee was require to be give an opportunity of being hear.
While considering this issue, the Hon’ble Jurisdictional High Court observed that provisions of section 271(1)(c)(iii) does not attract rule of presumption of mens rea as the penalty imposable under the said provision is for the breach of civil obligation. The observations of the Hon’ble Court against issuance of show cause notice appears to be in the context of quantum of penalty propose to be impose and not with reference to the doing away with the issuance of show cause notice as contemplate under section 274 of the Act. Therefore, the judgment of the Honorable Court cannot be read out of context or in a manner to that there is no need for mentioning the specific lim of section 271(1)(c) of the Act for which the penalty was intend to be impose, as such issue never came up for consideration before the Hon’ble High Court.
That being the case, the aforesaid decision cannot be apply for rebutting the proposition . That in the absence of recording of satisfaction regarding the exact nature of offence, no penalty under section 271(1)(c) can be impose…..