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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S. Godara]
Date of concluding the hearing : February 18th, 2020 Date of pronouncing the order : February 26th, 2020 ORDER
Per J. Sudhakar Reddy, AM:
This is an appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-2, Kolkata [‘CIT(A)’ for short] dated 29.01.2019 u/s 250 of the Income Tax Act, 1961 (‘the Act’ for short) for AY 2014-15.
In this case the ld. CIT(A) cancelled the order passed by the AO levying penalty u/s 271(1)(c) of the Act, on the ground that, the show cause notice issued u/s 274 r.w.s. 271(1)(c) of the Act, the irrelevant portions of the notice have not been struck off, resulting in the charge for which the penalty is proposed to be levied being not specified. 3. The ld. DR submits that the AO in the assessment order has noted that penalty has been initiated u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income and hence the charge is specific. We find that the AO has levied penalty u/s 271(1)(c) of the Act by holding as follows: “Thus it is clear that the assessee has tried to conceal the income and filed inaccurate particular in the return of income in the form of fictitious liability which was not claimable as the said share capital was pre-arranged and not genuine.”
Assessment Years: 2014-15 M/s. Cabcon India (P) Ltd.
Thus it is clear that the penalty was imposed only for concealment of income.
It is also not disputed that in the notice, issued for levy of penalty, the charge is not specified.
The jurisdictional High Court in the case of Pr.CIT vs. Dr. Murari Mohan Koley in ITAT No. 306 of 2017 GA No. 2968 of 2017, judgment dated 18.07.2018 at para 10 and 11 held as follows: “10. The ld. Counsel for the assessee drew our attention to the decision of the Hon'ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows in of 2015 dated 23.11.2015 wherein the Hon'ble Karnataka High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory (2013) 359 ITR 565 took a view that imposing of penalty u/s. 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The ld. Counsel further brought to our notice that as against the decision of the Hon'ble Karnataka High Court the revenue preferred an appeal in SLP in CC No. 11485 of 2016 and the Hon’ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department. The ld. Counsel also brought to our notice the decision of the Hon'ble Bombay High Court in the case of CIT vs Shri Samson Perinchery in ITA No. 1154 of 2014 dated 05.01.2017 wherein the Hon’ble Bombay High Court following the decision of the Hon'ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning factory (supra) came to the conclusion that imposition of penalty on defective show cause notice without specifying the charge against the assessee cannot be sustained. Our attention was also drawn to the decision of ITAT in the case of Suvaprasanna Bhattacharya vs ACIT in ITA NO 1303/Kol/2010 dated 06.11.2015 wherein identical proposition has been followed by the Tribunal. The learned DR relied on the order of the CIT(A).
We have already observed that the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the Id. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. Mr. Chowdhury in course of argument has urged us to remand the matter before the assessing officer. According to him, this was a technical flaw, which the Revenue must be given a chance to cure. The reason why the penalty order was not sustained by the Tribunal appears from the passages of the decision of the Tribunal quoted earlier in this judgement. We find that there was no specific charge against the assessee in the notice. Revenue has missed out their opportunity to subject the assessee to the penalty proceeding by not issuing a proper notice. No specific case has been made out by the Revenue as to why the matter should be remanded except that the assessee had not participated properly in the assessment proceedings but for that reason best judgment assessment has been made and the income, which had escaped assessment has been added to the income of the assessee. It was incumbent upon the Revenue to make out a specific case for imposition of penalty, on which count the Revenue has failed. Under such circumstances, we do not find any reason to interfere with the Tribunal's order. The Tribunal's order does not suffer from any error of law. No substantial question of law is involved in this appeal. Hence, the same is dismissed. Hence, stay petition is also dismissed.”
Assessment Years: 2014-15 M/s. Cabcon India (P) Ltd. 7. Applying the propositions of law laid down in this binding judgment of the jurisdictional High Court to the facts of the case we have no other alternative but to uphold the order of the first appellate authority and dismiss the appeal of the Revenue. 8. In the result, the appeal of the Revenue is dismissed. Kolkata, the 26th February, 2020. Sd/- Sd/- [S.S. Godara] [J. Sudhakar Reddy] Judicial Member Accountant Member Dated: 26.02.2020 Bidhan Copy of the order forwarded to:
1. 1. DCIT, Circle-6(1), Kolkata.
2. M/s. Cabcon India (P) Ltd., 4A, Swaika Centre, Pollock Street, Dalhousie, Kolkata- 700 001.
3. CIT(A)-2, Kolkata. (sent through e-mail) 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. (sent through e-mail)