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Income Tax Appellate Tribunal, KOLKATA ‘ C’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S.S. Godara]
Subrata Dewan.......................................................................……………………………….……..Appellant 18, Baishnabghata Patuli Main Road Nutan Para Garia Kolkata – 700 084 [PAN : AEAPD 7961 D] Income Tax Officer, ward-24(4), Kolkata.....…………..……..……………………………..Respondent Appearances by: Shri B.P. Jaiswal, FCA, appeared on behalf of the assessee. Shri Saurabh Kumar, Addl. CIT, Sr.DR, appearing on behalf of the Revenue Date of concluding the hearing : July 2nd, 2018 Date of pronouncing the order : July 25th, 2018 O R D E R Per J. Sudhakar Reddy :-
This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-19, Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 30/03/2016, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2010-11, wherein penalty levied u/s 271(1)(c) of the Act, by the Assessing Officer was confirmed.
Facts of the case are as follows:- The assessee filed his Income tax Return for the Assessment year 2010 - 2011 on 21st October, 2011 declaring Total Income of Rs. 3,42,710.00. The Learned Assessing Officer, Ward No. 24(4), Kolkata completed the Assessment U/S. 143(3) of the Act on 12th March, 2013 determining total income of Rs.10,17,350.00. Substantial part of addition was of Rs. 6,44,640.00 made on account of undisclosed cash deposits with the banks which was brought to the notice of the Assessing Officer by the A. R. by submitting day-wise cash flow statement and was offered for taxation voluntarily
After hearing rival contentions, we find that the sole issue that arises for our adjudication, is whether the levy of penalty u/s 271(1)(c) fo the Act, is bad in law, for the reason that, the showcause notice issued u/s 274 of the Act, before imposing penalty, does not contain the specific charge against the assessee mainly, as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income. A copy of the showcause notice is filed for our perusal.
3.1. On a consideration of the contentions of both the parties and the propositions of law laid down by the various Courts and Tribunals on the issue, we are of the considered opinion, that the penalty levied u/s 271(1)(c) of the Act, is bad in law, for the reason that, the showcause notice issued before levy of penalty does not contain the specific charge against the assessee as to whether, the charge is of concealment of particulars of income or charge is of furnishing of inaccurate particulars of income.
The ITAT ‘D’ Bench of the Kolkata Tribunal in the case of Jeetmal Choraria vs. ACIT being order dt. 01.12.2017, considered in detail all the case-law on this issue especially the decision of the Hon’ble Karnataka High Court in the case of CIT vs. SSA’s Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 wherein the Hon’ble Karnataka High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory (2013) 359 ITR 565 took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid, for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee, as to whether the penalty proposed to be levied is for concealment of particulars of income or furnishing of inaccurate particulars of income. Against this decision of the Hon’ble Karnataka High Court the revenue preferred an appeal in SLP in CC No.11485 of 2016 and the Hon’ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department.
The Tribunal at para 14 & 15, held as follows:- “14. 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 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 Benchs 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.”
Respectfully following the same, we quash the levy of penalty u/s 271(1)(c) of the Act.
In the result, appeal of the assessee is allowed. Kolkata, the 25th day of July, 2018.