SHRI JOSEPH M JOY,BHILAI vs. DEPUTY COMMISSIONER OF INCOME TAX 1(1), BHILAI

PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the order dated

03.11.2017 of the ld. CIT(A)-II, Raipur (CG) relating to assessment year

2015-16.

Assessing Officer and confirmed by the ld. CIT(A) is the only issue raised by

the assessee in the grounds of appeal.

ground which reads as under :- “In the facts and circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) has erred in dismissing the appeal by confirming the penalty order which is illegal, bad-in-law and without jurisdiction being based on show cause

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notice issued u/s 274 read with section 271(1)(c) of the Income-tax Act, 1961 without specifying the nature of default i.e. whether there is concealment of income or furnishing of inaccurate particulars of income and contrary to the law laid down by Hon’ble Supreme Court in the case of CIT vs. SSA’s Emerald Meadows in SLP CC No.11485/2016.”

this ground being a legal one and all facts are already on record the additional

ground should be admitted.

ground.

being a legal one is admitted for adjudication

notice u/s 274 r.w.s. 271, copy of which is placed at page 67 of the Paper Book,

submitted that the show cause notice issued u/s 274 r.w.s. 271 did not define the

nature of default i.e. whether the penalty is levied for concealment of income or

for furnishing of inaccurate particulars of income. He submitted that the

Assessing Officer imposed the penalty u/s 271(1)(c) in this case on the ground

that the assessee has concealed his income and furnished inaccurate particulars

of income. Referring to the decision of the Hon’ble Karnataka High Court in

the case of CIT vs. M/s SSA’S Emerald Meadows vide ITA No.380 of 2015

order dated 23.11.2015, he submitted that the Hon'ble High Court in the said

decision, following the decision in the case of Manjunath Cotton and Ginning

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Factory reported in 359 ITR 565, had upheld the decision of the Tribunal

cancelling the penalty and dismissed the appeal filed by the Revenue on the

ground that the notice issued by the Assessing Officer u/s 274 r.w.s. 271 is bad

in law since it did not specify under which limb of section 271(1)(c) penalty

proceedings have been initiated. He submitted that the SLP filed by the

Revenue has been dismissed by the Hon’ble Supreme Court. Referring to

various decisions filed in the Paper Book, he submitted that under identical

circumstances various Benches of the Tribunal are cancelling the penalty so

levied where the inappropriate words are not struck off from the notice issued

u/s 274 r.w.s. 271 of the Act. He accordingly submitted that on this

preliminarily ground itself the order of the ld. CIT(A) sustaining the penalty

levied by the Assessing Officer should be set-aside and the penalty should be

cancelled.

CIT(A). He submitted that mere non-striking of the inappropriate words will

not invalidate the initiation of penalty proceedings and the provisions of section

292B/292BB will come to rescue of the Department.

perused the material available on record. A perusal of the notice issued u/s 274

r.w.s. 271 shows that the inappropriate words in the said notice has not been

struck off i.e. the notice does not specify under which limb of section 271(1)(c)

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the penalty proceedings had been initiated i.e. whether for concealment of

income or for furnishing of inaccurate particulars of income. We find the

Hon’ble Karnataka High Court in the case of M/s SSA’S Emerald Meadows

(supra) has observed as under :-

“3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.”

Apex Court. Further, the various Benches of the Tribunal following the above

decisions are cancelling the penalty so levied by the Assessing Officer and

confirmed by the ld. CIT(A) on account of non-striking of the inappropriate

words from the notice issued u/s 274 r.w.s. 271 of the Act. Since in the instant

case, the Assessing Officer has not struck off the inappropriate words in the

notices issued u/s 274 r.w.s. 271, therefore, the notice does not specify under

which limb of section 271(1)(c) the penalty proceedings had been initiated i.e.

whether for concealment of income or for furnishing of inaccurate particulars of

income. Therefore, the penalty proceedings become bad in law. We, therefore,

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set-aside the order of the ld. CIT(A) and direct the Assessing Officer to cancel

the penalty so levied. The appeal filed by the assessee is accordingly allowed.

Order pronounced in the open Court at the time of hearing itself i.e. on this 09th August, 2018.

Sd/- Sd/- (SUCHITRA KAMBLE) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09-08-2018. Sujeet Copy of order to: - 1) The Appellant 2) The Respondent 3) The CIT 4) The CIT(A) 5) The DR, I.T.A.T., Raipur. By Order //True Copy// Sr. Private Secretary ITAT, Raipur