BANARASI HOLDING PVT. LTD.,KOLKATA vs. ITO, WARD-13(1), KOLKATA, KOLKATA

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ITA 1574/KOL/2016Status: DisposedITAT Kolkata02 February 2018AY 2010-114 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 imposed under Section 271(1)(c) cannot be sustained because the show cause notice issued under Section 274 did not clearly specify whether the charge was for concealment of income or furnishing inaccurate particulars of income. The penalty was directed to be deleted.

What were the facts?

The assessee company had additions made to its total income during assessment proceedings. The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was imposed by the AO and confirmed by the CIT(A) as the assessee failed to appear.

What were the issues?

Whether the penalty imposed under Section 271(1)(c) is valid when the show cause notice under Section 274 is defective for not specifying the exact charge against the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA

Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi

आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-I, Kolkata dated 06.09.2016. Assessment was framed by ITO Ward-3(3), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 28.03.2013 for assessment year 2010-11.

2.

In this appeal the assessee has challenged the order of CIT(A) whereby the CIT(A) confirmed the order of AO imposing penalty on the assessee u/s 271(1)(c) of the Income Tax Act, 1961 (Act).

1.

Banarasi Holding Pvt. Ltd. vs. ITO Wd-3(3) Kol. Page 2 3. The facts and circumstances under which penalty u/s 271(1)(c) of the Act was imposed on the assessee by the AO are as follows :- The Assessee is a private limited company and deriving income from the business of publishing & book selling. During assessment proceedings under section 143(3) of the Act various additions amounting to Rs. 18,03,542.00 were made to the total income of the assessee. In respect of the aforesaid addition made in the course of assessment proceedings, the AO initiated penalty proceedings u/s 271(1)(c) of the Act. The initiation of penalty proceedings was made by the AO by observing as follows:

“Penalty proceedings u/s.271(1)( c) is initiated separately” 4. In the penalty proceedings the assessee failed to appear to raise its points of contentions. Thus penalty u/s 271(1)(c) of the Act for Rs. 5,41,063.00 being 100% of the amount of tax sought to be evaded was imposed on the assessee by the AO. The order of AO was confirmed by CIT(A). 5. Aggrieved by the order of CIT(A) the assessee has filed the present appeal before the Tribunal.

6.

The ld. Counsel for the assessee submitted before us that the show cause notice issued u/s 274 of the Act before imposing penalty does not contain the specific charge against the assessee namely as to whether the assessee was guilty of having concealed particulars of income or having furnished inaccurate particulars of income. A copy of the show cause notice u/s 274 of the Act was filed before us and perusal of the same reveals that AO has not struck out the irrelevant portion in the show cause notice and therefore the show cause notice does not specify the charge against the assessee as to whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars of income. The same is reproduced for the purpose of ready reference:

“Have concealed the particulars of your income or …… furnished inaccurate particulars of such income.”

Banarasi Holding Pvt. Ltd. vs. ITO Wd-3(3) Kol. Page 3 7. The ld. Counsel for the assessee drew our attention to 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 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 it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The ld. Counsel further brought to our notice that as against the 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 ld. Counsel also brought to our notice the decision of the Hon’ble Bombay High Court in the case of CIT vs Shri Samson Perinchery in ITA No.1154 of 2014 dated 05.01.2017 wherein the Hon’ble Bombay High Court following the decision of the Hon’ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning Factory (supra) came to the conclusion that imposition of penalty on defective show cause notice without specifying the charge against the assessee cannot be sustained. Our attention was also drawn to the decision of ITAT in the case of Suvaprasanna Bhattacharya vs ACIT in ITA No.1303/Kol/2010 dated 06.11.2015 wherein identical proposition has been followed by the Tribunal.

8.

The learned DR submitted that the assessee failed to appear before the ld. CIT(A) at the time of hearing, therefore the matter should be restored back to the ld. CIT(A) for fresh adjudication.

9.

We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the case have already been elaborated in the preceding paragraphs therefore we are not repeating the same for the sake of brevity. From the foregoing discussion we find that the impugned penalty issue has been settled by various courts. Therefore we are not inclined to restore the issue to the

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