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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI. N. V. VASUDEVAN & SHRI. A. K. GARODIA
O R D E R PER ARUN KUMAR GARODIA, A. M.: This appeal is filed by the assessee and the same is directed against the order of CIT(A), Bagalkot, dated 30.03.2019 for Assessment Year 2009-10. The assessee has raised four grounds but there is only one grievance about penalty imposed by the AO u/s 271 (1) (c).
In course of hearing, it was submitted by learned AR of the assessee that the notice issued by the AO under section 274 r.w.s. 271 of the Income Tax Act, 1961 (hereinafter called ‘the Act’) is available on page 52 of the appeal memo and he pointed out that in this notice, the AO has not specified as to whether the allegation is regarding concealment of income or furnishing of inaccurate particulars of income and therefore, this notice is bad in law and based on this notice, penalty cannot be imposed under section 271(1)(c) of the Act as held by Hon’ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565. At this juncture, it was pointed out by the Bench that in the notice issued by the AO under section 274 r.w.s. 271 of the Act of which copy is available on page 52 of the Paper Book, the AO has stated that the assessee has concealed the income and furnished inaccurate particulars of such income and hence, the allegation of the AO is clear that the assessee is guilty of both the defaults i.e. concealment of income and furnishing of inaccurate particulars of income and therefore, prima facie, there is no ambiguity in the allegation of the AO and hence, under these facts, this judgment of Hon’ble Karnataka High Court rendered in the case of Manjunatha Cotton and Ginning Factory (supra) does not appear to be applicable because the facts in that case were different. The Bench asked learned AR of the assessee as to whether he wants to argue on the merit of the penalty imposed by the AO and confirmed by learned CIT(A). In reply, it was submitted by learned AR of the assessee that apart from this argument, he does not want to raise any other argument on any aspect and he simply placed reliance on this judgment of Hon’ble Karnataka High Court rendered in the case of Manjunatha Cotton and Ginning Factory (supra) and also relied upon another judgment of Hon’ble Karnataka High Court rendered in the case of Safina Hotels (P) Ltd., Vs. CIT 66 taxmann.com 334, copy available on pages 52 to 57 of the Paper Book filed by the assessee and he also placed reliance on the Tribunal order rendered in the case of Smt. Nadira Iqbal Vs. DCWT in WTA Nos.19 to 21/Bang/2016 dated 25.01.2019, copy available on pages 47 to 51 of the Paper Book. Learned DR of the Revenue supported the orders of authorities below.
We have considered the rival submissions. First of all, we reproduce the relevant portion of the notice issued by the AO under section 274 r.w.s 271 of the Act as available on page 52 of the appeal memo. This is as under:
“have concealed the income and furnished inaccurate particulars of such income.”
Now we examine the applicability of this judgment of Hon’ble Karnataka High Court rendered in the case of Manjunatha Cotton and Ginning Factory (supra). We find that in clause (p) of para 63 of this judgment of Hon’ble Karnataka High Court where the conclusions of Hon’ble Karnataka High Court are summarised, it is noted that notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. In clause (r) in same para, it is also observed by Hon’ble High Court that the assessee should know the grounds which he has to meet specifically and otherwise, principles of natural justice is offended and on the basis of such proceedings, no penalty could be imposed to the assessee. When we apply these conclusions of Hon’ble Karnataka High Court in the facts of the present case, we find that in the present case, as per notice issued by the AO under section 274 r.w.s. 271 of the Act, relevant portion of which is reproduced above, the allegation of the AO is specific that the assessee has concealed the income and furnished inaccurate particulars of such income and there is no ambiguity on this aspect as to whether the allegation is for concealment of income or for furnishing inaccurate particulars of income. The allegation of the AO in this notice is both that the assessee is guilty of concealment of income and furnishing of inaccurate particulars of income. As per the Assessment Order on page 6, the allegation made by the AO is only regarding concealment of income and as per penalty order passed by the AO under section 271(1)(c) of the Act, penalty has been imposed by the AO on this basis that the assessee is guilty of concealment of income. Since as per the notice issued by the AO under section 274 r.w.s. 271 of the Act, the assessee was asked to explain about this allegation of concealment of income also, the principles of natural justice is followed in the present case and the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (supra) is not applicable in the present case. The other two judgments cited by the learned AR of the assessee of Hon’ble Karnataka High Court having been rendered in the case of Safina Hotels (P.) Ltd., Vs. CIT (Supra) and Tribunal Order rendered in the case of Smt. Nadira Iqbal Vs. DCWT (supra) also do not support the case of the assessee in this regard. No argument was advanced by learned AR of the assessee regarding merit of the penalty or on any other aspect. Therefore, we decline to interfere in the order of CIT(A).
In the result, this appeal of the assessee is dismissed.
Pronounced in the open court on the date mentioned on the caption page.