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Income Tax Appellate Tribunal, KOLKATA BENCH (D
Before: Shri P.M. Jagtap & Shri A. T. Varkey, JM]
order
: February 15, 2019 ORDER
Per P.M. Jagtap, Vice President
This appeal filed by the assessee is directed against the order of Ld. CIT(A) – 14, Kolkata dated 04.11.2015 whereby he confirmed the penalty of Rs. 3,24,159/- imposed by the AO u/s 271(1)(c) of the Income tax Act, 1961.
The assessee in the present case is an individual who is engaged in the business of trading of hossiery goods. The return of income for the year under consideration was filed by him on 15.03.2010 declaring a total income of Rs. 3,03,080/-. In the assessment completed u/s 143(3) vide an order dated 24.11.2011, the total income of the assessee was determined by the AO at Rs. 14,14,441/- after making inter alia the addition of Rs. 9,80,000/- on account of undisclosed investment in mutual fund. Penalty proceedings u/s 271(1)(c) were also initiated by the AO and since the explanation
2 Manoj Kumar Shaw Assessment Year: 2009-10 offered by the assessee in response to the show cause notice issued during the course of the said proceedings was not found acceptable by him, the AO imposed a penalty of Rs. 3,24,159/- u/s 271(1)(c) of the Act. On appeal, the Ld. CIT(A) confirmed the said penalty. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.
We have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has raised a preliminary issue challenging the penalty imposed u/s 271(1)(c) on the ground that the notice issued initiating the penalty proceedings being defective, the penalty imposed in pursuance of such defective notice is not sustainable in law. He has placed on record, a copy of the said notice issued by the A.O. and pointed out that the irrelevant portion having been not struck off by the A.O. in the said notice, the exact charge against the assessee as to whether he conceded the particulars of his income or furnished inaccurate particulars of such income was not clear. In support of this contention, the learned counsel for the assessee has relied on the decision of the coordinate bench of this Tribunal in the case of Jeetmal Choraria vs ACIT rendered vide its order dated 01.12.2017 passed in wherein a similar issue is decided by the Tribunal after taking into consideration, the relevant decision of the different High Courts vide paragraph no. 14 and 15 of its order which read as under: “From the aforesaid discussion it can be seen that the line of reasoning of the Hon’ble Bombay High Court and the Hon’ble Patna High Court is that issuance of notice is an administrative device for informing the assessee
3 Manoj Kumar Shaw Assessment Year: 2009-10 about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The Tribunal Benches at Mumbai and Patna being subordinate to the Hon’ble Bombay High Court and Patna High Court are bound to follow the aforesaid view. The Tribunal Benches at Bangalore have to follow the decision of the Hon’ble Karnataka High Court. As far as benches of Tribunal in other jurisdictions are concerned, there are two views on the issue, one in favour of the assessee rendered by the Hon’ble Karnataka High Court in the case of Manjunatha Cotton & Ginning (supra) and other of the Hon’ble Bombay High Court in the case of Smt. Kaushalya. It is settled legal position that where two views are available on an issue, the view favourable to the assessee has to be followed. We, therefore, prefer to follow the view expressed by the Hon’ble Karnataka High Court in the case of Manjunatha Cotton & Ginning (supra). 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 ld. 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.”
In our opinion, the decision rendered by the Coordinate Bench of this Tribunal in the case of Jeetmal Choraria vs ACIT (supra) is squarely applicable in the present case and even the learned DR has not disputed this position. We, therefore, respectfully follow the said decision of the Coordinate Bench of this Tribunal and cancel the penalty imposed by the A.O. under section 271(1)(c) and confirmed by the Ld. CIT(A).
4 Manoj Kumar Shaw Assessment Year: 2009-10
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 15th February, 2019.