DIPU KUMAR JAISWAL,KEONJHAR vs. ITO, KEONJHAR WARD, KEONJHAR

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ITA 146/CTK/2018Status: DisposedITAT Cuttack05 June 2020AY 2011-124 pages
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What did the Tribunal hold?

The Tribunal held that the penalty notice was not specific as it failed to strike off inappropriate words and did not clearly mention the specific charge for concealment or furnishing inaccurate particulars. Therefore, the penalty order was bad in law.

What were the facts?

The assessee appealed against the penalty imposed under Section 271(1)(c) of the Income Tax Act. The penalty notice issued by the Assessing Officer had inappropriate words not struck off and did not clearly specify the limb of Section 271(1)(c) under which the penalty was levied.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid when the notice issued under Section 274 is vague and does not specify the exact charge against the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 275(1)(a)

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Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH, CUTTACK

Before: SHRI CHANDRA MOHAN GARG

For Appellant: Shri Somnath Sahoo/S.N.Sahu,, AR
For Respondent: Shri J.K.Lenkja, DR
Pronounced: 05/06/2020

This is an appeal filed by the assessee against the order of the CIT(A), Cuttack dated 19.2.2018 for the assessment year 2011-12.

2.

The assessee has raised additional ground of appeal, which reads as under:

“That the penalty imposed pending quantum appeal is premature and invalid in view of section 275(1)(a) of the I.T.Act, 1961. Reliance is placed by the decision of Bombay High Court in the case of R.B.Shreeram Durgaprasad vs CIT, 287 CTR 228 order dated 24.11.2015.” 3. At the time of hearing, ld A.R. did not press the additional ground appeal, hence, same is dismissed as not pressed.

4.

In the Grounds of appeal, the only grievance of the assessee is that the ld CIT(A) is not justified in confirming the levy of penalty u/s.271(1)(c) of the Act of Rs.2,53,600/-.

P a g e 1 | 4 46/CTK/201 8 Assessm ent Y ear : 20 11- 12

5.

At the outset, ld Counsel for the assessee submitted that in this case, notice u/s 274 r.w.s. 271 was issued on 31.3.2014 and the inappropriate words in the said notice have not been struck off. Therefore, it is not understood as to under which limb of provisions of Section 271(1)(c) of the Act, the Assessing Officer has levied penalty. Since the said show cause notice issued u/s 274 did not specify the charge against the assessee as to whether it was for concealing the particulars of income or for furnishing inaccurate particulars of income, therefore, the penalty order passed under Section 271(1)(c) of the Act in pursuance to the said notice is bad in law. He referred to the decision of Hon’ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory reported in 359 ITR 565, which decision has been upheld by the Hon’ble Apex Court in case of CIT Vs. SSA’s Emerald Meadows (2016) 73 Taxman.com 248 (SC).

Therefore, it was his contention that the penalty order deserves to be quashed.

6.

On the other hand, ld D.R. supported the penalty order as well as the order of the ld CIT(A).

7.

I have heard the rival submissions and perused the material available on record, inter alia, notices u/s.274 read with section 271(1)(c) of the Act dated 31.3.2014. I find the only issue to be decided in the grounds of appeal is regarding imposition of penalty levied u/s 271(1)(c) of the Act. I find that in the penalty notice inappropriate words have not been struck

P a g e 2 | 4 46/CTK/201 8 Assessm ent Y ear : 20 11- 12 off. Even the last line of the said notice only speaks of Section 271 and does not even mention of section 271(1)(c) of the I.T. Act. It is pertinent to note here that the penalty order is based on furnishing of inaccurate particulars but the notice is not specifying exactly on which limb the penalty u/s 271(1)(c) has been initiated. From the notice dated 31.3.2014, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. Therefore, the issue is squarely covered by the decision of the Hon'ble Supreme Court in case of M/s SSA' Emerald Meadows (supra). Since in the instant case also the inappropriate words in the penalty notice have not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, I am of the considered opinion that the ld CIT(A) was not justified in confirming the penalty levied u/s 271(1)(c) of the Act.

Hence, I quash the penalty order and allow the appeal of the assessee.

8.

In the result, appeal of the assessee is allowed.

Order pronounced on 5 /06/2020.

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