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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI LALIET KUMAR
Smt. Jaya Nagaraja, #19, Sumeru, NTI Layout, The Income Tax Officer, RMV 2nd Stage, vs. Ward – 5 (3) (2), Opp: High Colony, 1stMain, Bangalore. Bangalore – 560 094. PAN: ACDPN4778R APPELLANT RESPONDENT Appellant by : Shri S.V. Ravishankar, Advocate Respondent by : Shri R.N. Siddappaji, Addl. CIT (DR) Date of hearing : 19.11.2018 Date of Pronouncement : 07.12.2018 O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A)-5, Bangalore dated 23.03.2017 for Assessment Year 2009-10.
The grounds raised
by the assessee are as under. “1. The order of the learned Commissioner of Income-tax (Appeals) passed under Section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
2. The appellant denies to be liable to a penalty of Rs. 8,09,552/- under section 271(1)(c) of the Act, on the facts and circumstances of the case.
3. The learned CIT(A) was not justified in not appreciating that the notice issued under section 274 r.w.s 271(1)(c) of the Act, was bad in law on the facts and circumstances of the case.
4. The learned CIT(A) was not justified in not appreciating that the learned assessing Officer has not assumed proper jurisdiction in penalty proceedings due to the defective notice on the facts and circumstances of the case.
5. The learned CIT(A) was not justified in not appreciating that the Page 2 of 4 penalty proceedings have not been properly initiated, by recording satisfaction in the assessment proceedings, on the facts and circumstances of the case.
The learned CIT(A) was not justified in appreciating that penalty was not automatic and the AO has not exercised the discretion not to levy penalty on the facts and circumstances of the case.
The learned CIT(A) was not justified in not appreciating that the penalty proceedings are independent proceedings and the AO ought to have considered the submissions of the appellant on the facts and circumstances of the case.
The learned CIT(A) was not justified in ignoring the fact that penalty has been levied for concealment of income and there was no instance of concealment by the appellant on the facts and circumstances of the case.
Without prejudice, the learned CIT(A) was not justified in ignoring the fact that the appellant has utilised a portion of the capital gains and penalty if levied ought to have been restricted to the extent of unutilised capital gains, on the facts and circumstances of the case.
Without prejudice, the learned CIT(A) was not justified in ignoring the fact that the addition of income of the spouse and mother were to be taxed in their individual hands and the additions were illegal and hence the satisfaction derived in levying penalty on all the additions were bad in law on the facts and circumstances of the case.
The learned CIT(A) was not justified in confirming the penalty levied on additions made in respect of interest earned by spouse and mother of the appellant on the facts and circumstances of the case.
Without prejudice, the penalty levied is highly excessive and requires to be substantially reduced on the facts and circumstances of the case.
The Appellant craves leave to add, alter, substitute and delete any or all of the grounds of appeal
urged above.
14. For the above and other grounds to be urged during the hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.”
3. At the very outset, it was submitted by ld. AR of assessee that notice issued by the AO u/s. 274 r.w.s. 271 of IT Act on 29.12.2011 is available on page no. 41 of the appeal memo and as per the same, it can be seen that the AO has not pinpointed what is his allegation as to whether it is regarding concealment of income or for furnishing of inaccurate particulars of income.
Page 3 of 4 Thereafter he placed reliance on the Tribunal order rendered in the case of Sri A. Nagaraju Vs. ITO in dated 06.04.2018. He submitted a copy of this Tribunal order and pointed out that in this case, the Tribunal has also considered the Tribunal order rendered in the case of P.M. Abdullah vs. ITO in ITA Nos. 1223 & 1224/Bang/2012 dated 17.10.2016. In spite of that, the Tribunal has followed the judgement of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning factory as reported in (2013) 359 ITR 565 and held that the order imposing penalty is invalid and the same was cancelled. He further submitted that on page no. 3 of this Tribunal order, the Tribunal has reproduced the allegation of the AO in the notice issued by the AO in that case u/s. 274 which says that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. He submitted that therefore, the facts are identical and hence, this Tribunal order should be followed and the issue should be decided in favour of the assessee. The ld. DR of revenue supported the order of CIT(A).
We have considered the rival submissions. We find that this is true that as per the notice issued by the AO u/s. 274 r.w.s. 271 of IT Act, the AO has stated that it appears to him that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. Hence, it is clear that the facts of the present case and in the case of Sri A. Nagaraju Vs. ITO (supra) are identical. In that case, the Tribunal has decided the issue in favour of the assessee by respectfully following the binding judgement of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning factory (supra). The Tribunal in that case has also considered the Tribunal order rendered in the case of P.M. Abdullah vs. ITO (supra) which was rendered in favour of the revenue and regarding this Tribunal order, it was stated by the Tribunal in para 9 of this Tribunal order that this Tribunal order is contrary to the decision of the Hon'ble Karnataka High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning factory (supra) and the Tribunal followed the same judgement of Hon'ble Karnataka High Court. In the present case also, we respectfully follow this Tribunal order and in consequence, we follow this judgement of Hon'ble Page 4 of 4 Karnataka High Court rendered in the case of CIT Vs. Manjunatha Cotton and Ginning factory (supra) and hold that the penalty order is invalid and consequently the penalty imposed is cancelled.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on the date mentioned on the caption page.