TEEGALA HUNUMATH RAO,BHILAI vs. INCOME TAX OFFICER, WARD-1(5), BHILAI

PAN : ACTPR3433K (Appellant) (Respondent)

: Assessee by Shri S. R. Rao, Adv. Department by : Shri Rituparan Namdeo, DR Date of hearing : 09-08-2018 : 09-08-2018 Date of pronouncement

O R D E R PER R. K. PANDA, AM : All the above appeals filed by the respective assessees are directed

against the separate orders of the ld. CIT(A)- II, Raipur (CG) relating to respective assessment years mentioned therein. For the sake of convenience, all the above appeals of the respective assessees were heard together and are being

disposed of by this common order. 2. Levy of penalty u/s 271(1)(c) of the I.T. Act, 1961 by the Assessing Officer which has been confirmed by the ld. CIT(A) is the only issue raised by

the above assessees in their respective grounds of appeal. 3. All the above assessees are employees of SAIL, Bhilai Steel Plant and derive income from salary. In the return of income, all these employees have

claimed the perquisites received from the employer as exempt. The Assessing Officer reopened all these cases by issue of notice u/s 148 of the Act. The respective employees offered the entire income and paid the taxes thereon and repaid refunds issued earlier on the basis of the original returns of income. The

Assessing Officer thereafter initiated penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961. Rejecting the various explanations given by the respective assessees, the respective Assessing Officers levied penalty u/s 271(1)(c) which

has been upheld by the ld. CIT(A). The amount of penalty for each of the

assessees for the relevant assessment years are as under :-

Name of the Assessee A.Y. Penalty (Rs.) Shri KVS Prakasa Rao 2015-16 47,720/- 2012-13 12,750/- Shri Amit Kumar Prakash 2013-14 7,000/- 2014-15 14,200/- 2013-14 5,200/- Shri Kishore Kumar Pritam 2014-15 3,500/- 2013-14 12,800/- Shri Amlendra Kumar Pandey 2014-15 16,800/- 2013-14 28,890/- Shri Raghavendra Tarduri 2014-15 33,160/- Shri Teegala Hanumant Rao 2012-13 13,700/-

issued in each case u/s 274 r.w.s. 271 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 each 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 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 in each case should be cancelled.

292B/292BB will come to rescue of the Department. 6. We have considered the rival arguments made by both the sides and perused the material available on record. A perusal of the notice issued u/s 274

r.w.s. 271 in each case 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) 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,

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

the penalty so levied. The appeals filed by the assessee are 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