PUSHPA DOSHI,KOLKATA vs. ITO, WD-55(2), KOLKATA, KOLKATA

This appeal filed by the assessee is directed against the order of Ld. CIT(Appeals) – 6, Kolkata dated 27.01.2016 whereby he confirmed the penalty of Rs. 2,16,475/- imposed by the A.O. under section 271(1)(c) of the Income Tax Act, 1961.

The assessee in the present case is an individual who filed his return of income for the year under consideration on 21.08.2006 declaring a total income of Rs. 48,162/-. In the assessment completed under section 143(3) vide an order dated 31.12.2008, the total income of the assessee was determined by the A.O. at Rs. 9,93,750/- after making inter alia in the following additions:

Penalty proceedings under section 271(1)(c) were also initiated by the A.O. in respect of above three additions and since the explanation offered by the assessee in response to the show cause notice issued during the course of the proceedings was not found acceptable by him, the A.O. imposed penalty of Rs. 2,16,475/- under section 271(1)(c) being 100% of the tax sought to be added by the assessee in respect of three additions made to his total income.

The penalty imposed under section 271(1)(c) was challenged by the assessee in the appeal filed before the Ld. CIT(A) and since the submissions made by the assessee in support of his case were not found acceptable by the Ld. CIT(A), he proceeded to confirm the penalty of Rs. 2,16,475/- imposed by the A.O. under section 271(1)(c) of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has challenged the penalty imposed under section 271(1)(c) on the assessee by raising a preliminary issue that the notice issued by the A.O. initiating the penalty proceedings being defective, the penalty imposed under section 271(1)(c) in pursuance thereof is not sustainable. He has placed on record, a copy of the said Assessment Year: 2006-07 Pushpa Doshi notice issued by the A.O. and pointed out that irrelevant portion having been not struck off by the A.O. in the said notice, the exact charge against the assessee as to whether he conceded the particulars of his income or furnished inaccurate particulars of such income was not clear. In support of this contention, the learned counsel for the assessee has relied on the latest decision of the coordinate bench of this Tribunal in the case of Jeetmal Choraria vs ACIT rendered vide its order dated 01.12.2017 passed in wherein a similar issue is decided by the Tribunal after taking into consideration, the relevant decision of the different High Courts vide paragraph no. 14 and 15 of its order which read as under: “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 Benches 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