M/S JAGANNATH CEMENT WORKS LIMITED,KOLKATA vs. ITO, WARD-3(4), KOLKATA

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ITA 639/KOL/2020Status: DisposedITAT Kolkata25 October 2021AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty proceedings were invalid because the show-cause notice issued under section 274 did not specify whether the assessee was guilty of furnishing inaccurate particulars or concealing income. Following jurisdictional High Court decisions, the penalty was cancelled.

What were the facts?

The assessee company's income was assessed at Rs. 18,09,360/- after an addition of Rs. 11,06,823/- on account of unexplained cash expenditure. A penalty of Rs. 3,43,310/- was imposed under section 271(1)(c) and confirmed by the CIT(Appeals).

What were the issues?

Whether penalty proceedings under section 271(1)(c) are valid if the show-cause notice under section 274 does not specify the contravention (furnishing inaccurate particulars or concealment of income).

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA

Before: Shri P.M. Jagtap, Vice-(KZ) & Shri A.T. Varkey

Date of concluding the hearing : October 25, 2021 Date of pronouncing the order : October 25, 2021

O R D E R Per Shri P.M. Jagtap, Vice-President:- This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Kolkata dated 21.06.2017, whereby he confirmed the penalty of Rs.3,43,310/- imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961.

2.

The assessee in the present case is a Company, which is engaged in dealing in job works, trading and various types of works. The return of income for the year under consideration was filed by it on 29.09.2011 declaring total income of Rs.3,11,860/-. In the assessment completed under section 143(3) vide an order dated 14.02.2014, the total income of the assessee was determined by the Assessing Officer at Rs.18,09,360/- after making addition of Rs.11,06,823/- on account of unexplained cash expenditure. Penalty proceedings under section 271(1)(c) were also initiated by the Assessing Officer and since the explanation offered by the assessee in response to the show-cause notices issued during the course of the said proceedings was not found acceptable by him, the Assessing Officer imposed the penalty of Rs.3,43,310/- under section 271(1)(c) of the Act.

3.

On appeal, the ld. CIT(Appeals) confirmed the said penalty imposed by the Assessing Officer vide his appellate order dated 21.06.2017. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

4.

We have heard the arguments of both the sides and also perused the relevant material available on record. At the time of hearing before us, the ld. Counsel for the assessee has raised a new preliminary issue challenging the very initiation of the penalty proceedings by the Assessing Officer under section 271(1)(c) on the ground that in the absence of any specific mention in the show-cause notice issued under section 274 of the Act for the year under consideration as to whether the asseessee is guilty of having “furnished inaccurate particulars of income” or of having “concealed particulars of such income”, the initiation of penalty proceedings itself was bad in law and the penalty order passed in pursuance thereof is liable to be quashed being invalid. He has invited our attention to the relevant penalty notice (copy placed at page no. 16 of the paper book) to point out that the irrelevant portion, viz. “furnished inaccurate particulars of income” or “concealed particulars of such income” was not struck off by the Assessing Officer. It is observed that the Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya –vs.- ACIT (in had an occasion to consider a similar issue in the identical fact situation and the order passed by the Assessing Officer imposing penalty under section 271(1)(c)

was held to be invalid by the Tribunal relying on the decision of the Hon’ble Karnataka High Court in the case of CIT & Another –vs.- Manjunatha Cotton & Ginning Factory reported in 359 ITR 565. In our opinion, the decision of the Coordinate Bench of this Tribunal rendered in the case of Suvaprasanna Bhattacharya –vs.- ACIT rendered vide its order dated 06.11.2015 in by relying on the decision of the Hon’ble Karnataka High Court in the case of CIT & Another –vs.- Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 is squarely applicable in the present case. It is also noted that a similar view has been taken by the Hon’ble Calcutta High Court in the case of Principal CIT –vs.- Bijoy Kr. Agarwal (ITAT No. 272 of 2017 dated 02.04.2019), wherein the decision of the Tribunal cancelling the penalty imposed under section 271(1)(c) was upheld by the Hon’ble Jurisdictional High Court holding that the notice issued under section 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. To arrive at this conclusion, Hon’ble Calcutta High Court relied on the decision of Amrit Foods –vs.- Commissioner of Central Excise UP reported in (2005) 13 SCC 419 as well as their own decision in the case of Principal CIT –vs. Dr. Murari Mohan Koley (ITAT No. 306 of 2017 dated 18.07.2018). The issue raised by the assessee in this appeal thus is squarely covered by the said judicial pronouncements including the decision of the Hon’ble Jurisdictional High Court and respectfully following the same, we cancel the penalty imposed upon the assessee under section 271(1)(c) and allow the appeal of the assessee.

5.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on October 25, 2021.

Sd/- Sd/- (A.T. Varkey (P.M. Jagtap) Judicial Member Vice-President Kolkata, the 25th day of October, 2021 Copies to : (1) Jagannath Cement Works (P) Limited, 70, Amherest Row, Manicktala, Kolkata-700009

(2) Income Tax Officer, Ward-3(4), Kolkata Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069

(3) Commissioner of Income Tax (Appeals)-1, Kolkata, (4) Commissioner of Income Tax- , (5) The Departmental Representative

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