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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI, M. BALAGANESH
आदेश /O R D E R
PER M. BALAGANESH, ACCOUNTANT MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-4, Chennai dated 07.01.2016 pertaining to assessment year 2011-12 confirming the penalty levied u/s 271(1)(c) of the Act.
ITA No.772/Mds./2017 :- 2 -:
2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in upholding the levy of penalty u/s 271(1)(c) of the Act, in the facts and circumstances of the case.
The brief facts of this issue is that the assessee is a salaried employee working with M/s Infosys Technologies Limited and admitted salary income only from the said company. During the asst year under appeal, the assessee had shifted his employment from M/s KPIT Cummins Info Systems Ltd to M/s Infosys Technologies Ltd and the salary derived from the former employer was informed duly to the new employer to be included in the Form 16. The new employer did not include the salary component from M/s KPIT Cummins Info Systems Ltd, which resulted in underassessment of salary income. This was brought to the notice of the assessee in the course of scrutiny assessment proceedings. The assessee immediately rectified this mistake by offering the salary from former employer and paid the requisite taxes with interest thereon before the completion of assessment. The assessee pleaded that the original return was filed based on the Form 16 issued by the new employer and he was unaware of the fact that the salary from former employer was not included in the said Form 16 and accordingly pleaded that it was only a bonafide mistake on his part which deserves to be condoned as the ITA No.772/Mds./2017 :- 3 -:
assessee had already paid the necessary taxes and interest before the completion of assessment. The ld AO however, levied penalty u/s 271(1)(c ) of the Act for the said default on the part of the assessee to the tune of `2,29,552/-. This action of the ld AO was upheld by the ld CITA. Aggrieved, the assessee is in appeal before us on the following grounds:-
“1. The penalty order of the Commissioner of Income Tax (Appeal) is totally contrary to law, facts and in the circumstances of the case.
The Commissioner of Income Tax (Appeals) has erred in not appreciating the fact that appellant’s has disclosed all the income in his computation of total income.
3. The Commissioner of Income Tax (Appeals) has erred in not appreciating the fact that the appellant had informed the present employee to take the income of the previous employment in the FORM 16.
4. The Commissioner of Income Tax (Appeals) has erred in not appreciating the fact that the appellant on bonafide belief thought that the previous employment income is also included in the FORM 16. This act of the appellant will not amount to concealment of income.
5. The Commissioner of Income Tax (Appeals) has erred in not appreciating the fact that various High Courts have held that levy of penalty is not automatic consequence of an addition to income and penalty is not leviable where the tax payer is able to provide a reasonable explanation that is not found to be false by the tax authorities.”
4. The ld AR argued that the show cause notice issued by the ld AO u/s 274 read with section 271(1)(c ) of the Act was defective in as much as it did not contain the offence committed by the assessee i.e. whether the assessee had concealed the particulars of his income or ITA No.772/Mds./2017 :- 4 -:
had furnished inaccurate particulars of his income. There was no specific charge made out by the ld AO in this regard on the assessee in the said show cause notice. Accordingly, the ld AR prayed for cancellation of the penalty by placing reliance on the decision of the Hon’ble Karnataka High Court in the case of CIT vs SSA’S Emerald Meadows in of 2015 dated 23.11.2015 which was later approved by the Hon’ble Supreme Court by dismissal of Special Leave Petition (SLP) by the revenue in C.C No. 11485/2016 dated 05.8.2016.
In response to this, the ld DR vehemently relied on the order of the ld LD AO.
We have heard the rival submissions. We find that the penalty notice u/s 274 r.w.s 271(1)(c ) of the Act does not specify the charge of offence committed by the assessee viz whether it had concealed the particulars of income or it had furnished inaccurate particulars of income. Hence the said notice is to be held as defective.
Now the short question that arises for consideration is as to whether the penalty could be validly levied based on the defective show cause notice. This issue has been addressed by the Hon’ble Karnataka High Court in the case of CIT vs SSA’S Emerald Meadows in of 2015 dated 23.11.2015 which in turn placed reliance on another judgement of the same court in the case of CIT vs Manjunatha Cotton
ITA No.772/Mds./2017 :- 5 -: and Ginning Factory reported in 359 ITR 565 (Kar). In the said decision, their Lordships of Hon’ble Karnataka High Court held that :-
3. The Tribunal has allwoed 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 icnome 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 reported in (2013) 359 ITR 565.
In our view, since the matter is covered by judgement 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.
5.1. We find that the Revenue had preferred a SLP before the Hon’ble Supreme Court against this judgement which was dismissed in CC No. 11485/2016 dated 5.8.2016 by observing as under:-
UPON hearing the counsel, the Court made the following ORDER Delay condoned. We do not find any merit in this petition. The special leave petition is , accordingly dismissed. Pending application, if any, stands disposed of.
5.2. Respectfully following the aforesaid judicial precedents, we cancel the levy of penalty in the facts and circumstances of the case.
ITA No.772/Mds./2017 :- 6 -:
Since the levy of penalty has been cancelled on this technical issue, no decision is hereby rendered on merits of the addition. Accordingly the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed. Order pronounced on 25th January, 2018 at Chennai.