TANIMA ROY,KOLKATA vs. ASSESSING OFFICER, NFAC, DELHI

Though the assessee has taken four grounds of appeal, but her grievances revolve around a single issue, namely whether the assessee deserves to be visited with penalty under section 271(1)(c) of the Income Tax Act or not?

Brief facts of the case are that the assessee has filed her return of income, which was processed under section 143(1) on a total income of Rs.12,30,070/- on 10.05.2013. Thereafter the assessment of the assessee was reopened by issuance of a notice under section 148 of the Income Tax Act. The ld. Assessing Officer has re- determined the income of the assessee at Rs.24,99,576/- . It revealed to the ld. Assessing Officer that assessee has claimed exemption under section 10(38) of the Income Tax Act. However, ld. Assessing Officer was of the view that such gain has been earned by the assessee out of penny stock and he treated such a gain as bogus and made an addition of Rs.12,32,530/- under section 68 of the Income Tax Act. Similarly he estimated expenditure for earning such an exempt income as unexplained expenditure under section 69 and made an addition of Rs.36,976/-. The ld. Assessing Officer initiated the penalty proceedings for visiting the assessee with penalty Assessment Year : 2012-2013 Tanima Roy on the ground that the assesese has concealed the particulars of income and furnished inaccurate particulars of income.

The ld. Assessing Officer thereafter issued a show- cause notice dated 28.12.2019 under section 274 read with section 271(1)(c) of the Income Tax Act.

The ld. Assessing Officer has ultimately imposed a penalty of Rs.2,38,808/- under section 271(1)(c).

Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee.

Ld. Counsel for the assessee while impugning the orders of the revenue authorities raised two-fold submissions. In his first-fold of contention, he submitted that in the show-cause notice issued under section 274 of the Income Tax Act, whose copies are available on page no. 1 of the paper book, the ld. Assessing Officer has mentioned both the charges. He drew our attention towards the last line of the show-cause notice, which reads as under:- “Additional remarks:- Concealment of particulars of income or furnishing inaccurate particulars of such income”. Assessment Year : 2012-2013 Tanima Roy He submitted that the ld. Assessing Officer has not specified the charges, whether, he wishes to visit the assessee with penalty on account of concealment of particulars of income or on account of furnishing inaccurate particulars of income. He brought to our notice the judgment of the Hon’ble Calcutta High Court rendered in the case of PCIT –vs.- Dr. Murari Mohan Koley (ITAT No. 306 of 2017, GA No. 2968 of 2017), wherein the Hon’ble High Court has put reliance upon the judgment of the Hon’ble Karnataka High Court in the case of CIT –vs.- Manjunatha Cotton and Ginning Factory reported in 354 ITR 565 and took a view that if charges are not specific to an assessee, demonstrating the fact on which point assessee has to give his explanation, then, penalty will not be survived. On the strength of this decision and a large number of other decisions on this proposition, he submitted that there is an ambiguity in the show-cause notice and, therefore, penalty is not sustainable.

In his second-fold of submission, he contended that the judgment of the Hon’ble Calcutta High Court in the case of PCIT –vs.- Swati Bajaj has come on 14.06.2022, prior to that it was not certain whether capital gain earned by the assessee on alleged penny stock is eligible for exemption or not. He submitted that though Hon’ble Jurisdictional High Court has considered a large number Assessment Year : 2012-2013 Tanima Roy of decisions on this point, but there are judgments at the end of other Hon’ble High Courts whereby these additions are not upheld. This difference of opinion amongst Tribunal’s order as well as of Hon’ble High Courts’ order at the time when asessee filed the return giving rise to a debate on this point and there is a difference of opinion about taxability of a particular item of income, then, atleast assessee does not deserve to be visited with penalty. He also drew our attention towards the order of the ITAT, Ahmedabad Bench in the case of DCIT –vs.- Abhishek Export rendered in ITA No. 150/AHD/2013. He placed on record copy of this order. On the strength on these decisions, he submitted that penalty is not imposable upon the assessee.

On the other hand, ld. D.R. relied upon the orders of Revenue Authorities.

On due consideration of the facts and circumstances, we find that in the show-cause notice, ld. Assessing Officer has not specified the charges for which assessee is being visited with penalty. Therefore, respectfully following the decision of the Hon’ble Calcutta High Court on the first-fold of submission made by the ld. Counsel for the assessee, we allow this appeal and delete the penalty. Assessment Year : 2012-2013 Tanima Roy 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on August 10, 2023.