NATHMAL TUNGAR,KOLKATA vs. ITO, W-43(4), KOLKATA, KOLKATA

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ITA 612/KOL/2016Status: DisposedITAT Kolkata29 November 2017AY 2005-20063 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 was bad in law as it failed to specify the limb of Section 271(1)(c) under which the penalty proceedings were initiated. Following the precedent set by the Karnataka High Court, the Tribunal cancelled the penalty.

What were the facts?

The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. The penalty notice issued to the assessee did not clearly specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income. The CIT(A) confirmed the penalty.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid if the notice issued does not clearly specify the default (concealment or inaccurate particulars)?

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “D”, BENCH KOLKATA

Before: SHRI S. S. VISWANETHRA RAVI, JM &DR. A.L.SAINI, AM

For Appellant: Shri S.D. Verma, Advocate
Hearing: 16/10/2017Pronounced: 29/11/2017

O R D E R

Per Dr. Arjun Lal Saini, AM:

1.

The captioned appeal filed by the assessee, pertaining to Assessment Year 2005-06, is directed against the order passed by the ld Commissioner of Income Tax (Appeals)-21,Kolkata, in appeal No.1362/ITO,ward- 43(4)/CIT(A)-21/kol/14-15, dated 25.01.2016,which in turn arises out of an assessment order passed by the Assessing Officer u/s.271(1)(C)/254/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’), dated 23.07.2012.

2.

The assessee has raised the following grounds of appeal: “01. The ld. Commissioner of Income Tax(Appeals) was not justified in confirming penalty order passed by AO u/s 271(1)(c) Rs.1,90,414/- without judicially considering the entire facts and circumstances of the case.

02. That in the fact and circumstances of the case, the ld. Commissioner of Income Tax (Appeals) has erred in law and in fact in confirming of penalty of Rs.1,90,414/- imposed by the AO u/s 271(1)(C).

03. The appellant craves leave to add, alter or modify any other grounds of appeal at the hearing stage.”

3. At the outset itself, the Ld. Counsel for the assessee drew our attention to the notice u/s. 274 of the act r.w.s. 271 of the Act dated 28.12.2010 served on the assessee wherein we note that the AO has not struck down the limb of Nathmal Tungar Assessment Year: 2005-06 charge/default for which the penalty is being initiated against the assessee. We find that the notice has been issued for having concealed the particulars of income or furnished inaccurate particulars of such income. We also notice that penalty order speaks about inaccurate particulars of income whereas penalty notice was ticked by AO for concealment of income. We note that in a similar case the Hon’ble High court of Karnataka in the case of CIT Vs. Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar) has cancelled the penalty taking note of the fact that the penalty notice did not spell out clearly as to whether the assessee has concealed the particulars of income or has furnished inaccurate particulars of Income. We also find that Hon’ble Karnataka High Court in the case of CIT Vs. SSA’s Emerald Meadows, reported in (2016) 73 taxmann.com 241 (Kar) endorsed the same view in Manjunatha Cotton and Ginning Factory(supra) and held as under: “3. The Tribunal has allowed 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 income 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 CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565/218 Taxman 423/35 taxmann.com 250(Kar).

4.

In our view, since the matter is covered by judgment 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.” We also find that the aforesaid order of the Hon’ble High Court was challenged by the department before the Hon’ble Supreme Court by preferring an SLP which has been dismissed, which fact has been reported in CIT Vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 248 (SC).

4. We note that since the penalty notice issued to the assessee dated 28.12.2010 did not spell out as to which default the assessee has committed for which penalty u/s. 271(1)(c) of the Act has been initiated, therefore, respectfully following the Hon’ble Karnataka High Court’s order in Page | 2

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