Sec. 271(1)(c) of Income Tax Act, 1961— Penalty- Levy of penalty has to be clear as to the limb for which penalty is levied

Facts: Issue in this appeal is sustaining by the lower appellate authorities the imposition of penalty of Rs. 22,08,860.00 under Section 271(1)(c) by the Assessing Officer on account of disallowance of Rs. 62,47,460.00 claimed as a deduction under Section 36(i)(vii) on account of bad debt and subsequently claimed as a deduction under Section 37 as expenditure expended wholly and exclusively for the purpose of business.

Held, that levy of penalty has to be clear as to the limb for which penalty is levied. If the Assessing Officer proposes to invoke the first limb, then the notice has to be appropriately marked. Similarly, if the Assessing Officer wants to invoke the second limb then the notice has also to be appropriately marked. If there is no striking off of the inapplicable portion in the notice which is in printed format, it would lead to an inference as to nonapplication of mind. In such a case, penalty would not be sustainable. The question relating to non-striking off of the inapplicable portion in the show-cause notice which is in printed format, thereby not indicating therein as under which limb of Section 271(1)(c) penalty was proposed to be imposed i.e. whether for concealing the particulars of income or for furnishing inaccurate particulars of such income would go to the root of the lis. Therefore, it would be a jurisdictional issue. Being a jurisdictional issue, it can be raised before the High Court for the first time and adjudicated upon even if it was not raised before the Tribunal. it is quite evident that assessee had declared the full facts; the full factual matrix or facts were before the Assessing Officer while passing the asessment order. It is another matter that the claim based on such facts was found to be inadmissible. This is not the same thing as furnishing inaccurate particulars of income as contemplated under Section 271(1) (c). - VENTURA TEXTILES LTD. V/s CIT - [2020] 26 ITCD Online 062 (BOM)