STEEL AND METAL TRADING CO.,KOLKATA vs. DCIT, CIRCLE - 36, KOLKATA, KOLKATA

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ITA 898/KOL/2018Status: DisposedITAT Kolkata21 August 2018AY 2012-133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued by the AO was defective as it did not clearly specify whether the charge was for concealment of income or furnishing inaccurate particulars. Following the jurisdictional High Court's decision, the penalty was cancelled.

What were the facts?

The assessee, a partnership firm, had additions made to its income during assessment for discrepancies in stock and disallowance of loading/unloading charges. The AO initiated penalty proceedings under Section 271(1)(c) and imposed a penalty, which was confirmed by the CIT(A).

What were the issues?

Whether a penalty imposed under Section 271(1)(c) is sustainable if the notice issued under Section 274 is defective for not clearly specifying the charge against the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “B”, KOLKATA

Before: SH. P.M.JAGTAP & SH. S.S. VISWANETHRA RAVI

Hearing: 04.07.2018Pronounced: 21.08.2018

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “B”, KOLKATA BEFORE SH. P.M.JAGTAP, ACCOUNTANT MEMBER AND SH. S.S. VISWANETHRA RAVI, JUDICIAL MEMBER Year: 2012-13] M/s Steel & Metal Trading vs DCIT, Co., Subash Agarwal & Circle-36, Aayakar Associates, Siddha Gibson, Bhawan Poorva, 110, 1, Gibson Lane, 2nd Floor, Shanitpally, 8th Floor, Suite-213, Kolkata-700069. E.M.Bypass, Kolkata- PAN-ABCFS1371B 700107 (Appellant) (Respondent) Appellant by Sh. Subash Agarwal, Advocate Respondent by Sh.S.Dasgupta, Addl. CIT DR Date of Hearing 04.07.2018 Date of Pronouncement 21.08.2018 ORDER

This appeal filed by the assessee is directed against the order of Ld. CIT(A)- 10, Kolkata dated 30.01.2018 whereby he confirmed the penalty of Rs.3,50,206/- imposed by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (in short “Act”).

2.

The assessee in the present case is a partnership firm which is engaged in the business of iron and steel. The return of income for the year under consideration was filed by it on 29.09.2012 declaring a total income of Rs.50,26,950/-. In the assessment completed u/s 143(3) of the Act vide an order dated 31.03.2015, the total income of the assessee was determined by the AO at Rs.62,94,950/ after making addition inter alia of Rs. 11,33,350/- and Rs.1,26,879/- on account of discrepancy in stock and disallowance of loading and unloading charges respectively. Penalty proceedings u/s 271(1)(c) of the Act were also initiated by the AO and since the explanation 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 proceeded to impose penalty of Rs.3,50,206/- u/s 271(1)(c) of the Act, being 100% of the tax sought to be evaded

Year: 2012-13] by the assessee. On appeal Ld.CIT(A) confirmed the said penalty imposed by the AO. Aggrieved by the order of Ld.CIT(A), the assessee has preferred this appeal before the Tribunal.

3.

We have heard the arguments of both the sides and perused the relevant material available on record. Ld. Counsel for the assessee has challenged the penalty imposed u/s 271(1)(c) on the assessee by raising a preliminary issue that the notice issued by the AO initiating penalty proceedings being defective, the penalty imposed u/s 271(1)(c) in pursuance thereof is not sustainable. He has placed on record a copy of the said notice issued by the AO and pointed out that the irrelevant portion in the said notice having not been struck of by the AO, the exact charge against the assessee as to whether he concealed the particulars of his income/furnished inaccurate particulars of such income was not clear. In the recent decision rendered on 18.07.2018 in the case of Pr.CIT vs Doctor Murari Mohan Koley, Hon’ble Calcutta High Court has held that where the show cause notice issued 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 by striking out the inappropriate words, the notice is defective and the penalty imposed in pursuance thereof is not sustainable. Respectfully following the said decision of the Hon’ble Jurisdictional High Court, we cancel the penalty imposed by the AO u/s 271(1)(c) of the Act in the present case and allow this appeal of the assessee.

5.

In the result, the appeal of the assessee is treated as allowed.

Order pronounced in the open court on 21.08.2018.

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