D.C.I.T.,CIRCLE-2(1), JALPAIGURI vs. SHRI BHOLANATH AGARWAL, COOCHBEHAR

The above said appeal is listed before us under the caption ‘early hearing’. Shri Subhash Agarwal, the ld. AR submitted that the CIT(A) by placing reliance in the case of CIT vs. M/s. SSA’s Emerald Meadows, cancelled the penalty imposed by the Assessing Officer u/s 271(1)(c) of the Act. Further he submitted since the issue is covered by the decision of Hon’ble Supreme Court, the main appeal may be heard and disposed off the same. The ld. DR did not report any objection in taking up the hearing of main appeal and fairly conceded that the issue raised in main appeal is covered by the decision of Hon’ble Supreme Court. Therefore with the consent of both the parties, we proceed to hear the main appeal itself and dispose off the same. Page | 1

Heard both parties and perused the material available on record. The issue raised by the Revenue before us is challenging the action of CIT(A) in cancelling the penalty imposed u/s 271(1)(c) of the Act on account of concealment of particulars of income. We find that the assessee contended before the CIT(A) that the imposition of penalty on a defective notice is not maintainable under law. Considering the same, the CIT(A) cancelled the penalty of Rs.28,43,783/- u/s 271(1)(c) of the Act for the reasons stated hereunder: “4.2 I have considered the findings of the A.O. in penalty order and the submissions made by the appellant. As in this case, (i) Existence of conditions stipulated in Section 271(1)(c)is a sine quo non for initiation of penalty proceeding u/s 271, (ii) The existence of such condition should be discernible from assessment order or order of the appellate authority or revisional authority, (iii) Notice u/ s 274 should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income. Respectfully following the decision of Supreme Court in the case of CIT vs. M/s. SSA's Emerald. Meadows, of 2015 dated 23/11/2015 has held that the notice would be bad in law if it does not specify which limb of sec.271(1)(c) of the Act, the penalty proceeding had been initiated, irrespective of the fact that the A.O. has specified in assessment order that the assessee has concealed particulars of income. Accordingly, the penalty cannot be sustained as the notice is defective. Hence, ground of appeal is allowed.”

In the result, the appeal of the Revenue is dismissed.