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Income Tax Appellate Tribunal, “A”
Before: Shri P. M. Jagtap, Vice- & Shri Partha Sarathi Choudhury
order : November 11, 2021 ORDER Shri Partha Sarathi Choudhury, Judicial Member: This appeal preferred by the assessee emanates from the order of Ld. CIT(A)-8, Kolkata dated 24.08.2020 for the assessment year 2009-10 u/s 271(1)(c) of the Act as per the grounds of appeal
on record.
2. The sole grievance of the assessee in this case is the imposition of penalty u/s 271(1)(c) of the Act.
3. At the very outset, the Ld. Counsel for the assessee submitted that the charge for imposition of penalty is not specific and that the Assessing Officer has failed to arrive at the satisfaction as to which charge the penalty u/s 271(1)(c) of the Act should be levied on the assessee whether for concealment of income or for furnishing of inaccurate particulars of income. That bringing our attention to the penalty notice annexed at page 17 of the paper-book, which is as follows:
Assessment Year: 2009 Assessment Year: 2009-10 Vinay Gupta
Therefore, in the afore Therefore, in the afore-stated notice, the Assessing Officer has not specifically ficer has not specifically stated in which limb of section u/s 271(1)(c) of the Act the penalty shall be levied on the of section u/s 271(1)(c) of the Act the penalty shall be levied on the of section u/s 271(1)(c) of the Act the penalty shall be levied on the assessee whether for concealment of income or for furnishing of inaccurat concealment of income or for furnishing of inaccurat concealment of income or for furnishing of inaccurate particulars of income. It is the crucial facet of natural justice that the assessee should be given an facet of natural justice that the assessee should be given an facet of natural justice that the assessee should be given an opportunity to defend his case and he can do so only if he opportunity to defend his case and he can do so only if he is made aware of the charge on made aware of the charge on Assessment Year: 2009-10 Vinay Gupta which he has been proceeded against by the Department. It is the inherent right of the assessee to defend his case. The Hon’ble Calcutta High Court in the case of CIT vs. The Ganges Manufacturing Co. Ltd. dated 14.03.2014 wherein it was observed that the Tribunal by the impugned order held that the assessee must be made aware of the charge for which the penalty is sought to be imposed. In the absence of any specific charge, the Tribunal held, the order of imposition of penalty was vitiated and accordingly the penalty order was quashed. The aforesaid opinion of the Tribunal was affirmed by the Hon’ble Calcutta High Court by observing as follows:
In the present context, the Ld. Assessing Officer did not specify the nature of charge on the appellant but simply levied penalty with a predetermined mindset. Thus, the Ld. Assessing Officer is caught in the paradox of his own making which renders the impugned order imposing penalty passed u/s. 271(1)(c) of the Act ex facie null in law and ab initio void. The Hon'ble Gujarat High Court in the case of NEW SORATHIA ENGINEERING CO. -VS- C.I.T. (2006) 282 ITR 642 (GUJ) held that where penaly order and order of Commissioner (Appeals) showed that no clear- cut finding had been reached as to whether penalty under section 271(1)(c) was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished, order of penalty could not be sustained. 1Thus, as in the present context, there is no evidence adduced on record to justify the satisfaction of the Ld. Assessing Officer in respect of the charge of furnishing of inaccurate particulars of income or of concealment by the appellant prior to the imposition of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 and accordingly, the order imposing penalty being ultra vires is liable to be cancelled.
We further rely on the Hon’ble Karnataka High Court decision in the case of C.I.T. -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR) wherein it has been held that notice u/s. 274 of the Act should specifically state as to whether penalty which is proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. It was trite that no penalty can be imposed without specifying which limb of section 271(1)(c) of the Act would be applicable. It was held in the case of P.C.I.T. -VS- BASANTI PROPERTIES P. LTD. (ITA NO. 14 OF 2019 DATED 26-02-2019) (CAL) that the charge against the assessee in the notice u/s 274 of the Act has to be specific, in absence of which the penalty is not maintainable. We are of the considered view that since in the notice u/s 274 of the Act the charge was not specified and the Assessing Officer has not arrived at the proper satisfaction as to which limb, he was willing to impose penalty on the Assessment Year: 2009-10 Vinay Gupta assessee, in such a scenario, the levying of penalty and the entire process is vitiated, bad in law and the penalty thus liable to be quashed. We order accordingly. 6. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 11.11.2021.