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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri Aby.T Varkey & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
These three appeals by the Revenue are arising out of common order of Commissioner of Income Tax (Appeals)-Jalpaiguri dated 27.02.2015. Penalty levied by DCIT, Circle-1, Jalpaiguri u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 29.05.2014 for assessment years 2007-08, 2009-10 & 2010-11 respectively. Shri Saurabh Kumar, Ld. Departmental Representative represented on behalf of Revenue and Rip Das, Ld. Authorized Representative appeared on behalf of assessee.
The issue involved in all the appeals are arising out of same facts and circumstances, therefore we deem it appropriate to pass a common , 399-400/Kol/2015 A.Ys. 07-08, 09-10 &10-11 ACIT, Cir-1 Jal Vs. The Jalpaiguri Central Co-op Bank Ltd. Page 2 consolidate order. The grounds of appeal
s in all the three appeals are common. For the sake of ready reference, the grounds of appeal taken by the Revenue’s appeal in A.Y 2007-08 are reproduced below:- “1. The Ld CIT(A) has erred in considering the fact in deleting penalty imposed by the AO u/s 271(1)(c) merely relying upon the case law of the Hon'ble Supreme Court in the case of CIT v/s Reliance Petroproducts Pvt Ltd.
2. The Ld. CIT(A) erred in law by considering the provisions for NP. Standard assets and overdue interest as allowable deductions which is not permitted under Income Tax Act, 1961.
3. The Ld CIT(A) has erred in considering the fact that claiming deductions for provision of NPA and overdue interest has lead to inaccurate particulars of the total income whereby the total income is reduced.
4. Ld CIT(A) erred in relying only upon the judgment of Hon'ble Supreme Court in the case of CIT Vs. Reliaance Petroproducts Pvt. Ltd. but could not follow the judgment of Hon'ble High Court in the following cases. a) Union of India (UOI) v/s Dharmendra Textile Processor (2008) 13 SC 369. b) CIT v/s Atul Mohan Bindal 317 ITR 1 (SC) c) Mak Data Pvt Ltd v/s CIT (2014) 1 SCC 674 SC.”
3. In this appeal the assessee has challenged the order of CIT(A) whereby the CIT(A) confirmed the order of Assessing Officer for imposing penalty on the assessee u/s 271(1)(c) of the Income Tax Act, 1961 (Act).
The facts and circumstances under which penalty u/s 271(1)(c) of the Act was levied on the assessee by the AO are as follows :- The Assessee is a co-operative bank and is engaged in the business of banking. The Assessee filed return of income for A.Y. 2007-08 declaring total income (–) ₹1,43,53,483/- only. The assessee in its return of income claimed deduction for provision for the standard assets, bad & doubtful debts and income tax for ₹68,583.00, ₹ 1,15,13,869.00 and ₹71,210.00 respectively but inadvertently omitted to add the same in the computation of income. The assessee was under the impression that the deduction for the above was to be allowed in view of the Banking Regulation Act. In the course of 399-400/Kol/2015 A.Ys. 07-08, 09-10 &10-11 ACIT, Cir-1 Jal Vs. The Jalpaiguri Central Co-op Bank Ltd. Page 3 assessment proceedings the AO noticed that the assessee had not added the aforesaid provisions and therefore added the same to the 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 AO imposed penalty holding that the assessee has violated the provision of law enumerated in Section 271(1)(c) of the Act and imposed penalty u/s 271(1)(c) of the Act. The CIT(A) reversed the order of AO. Hence this appeal by the Revenue is filed before the Tribunal.
The ld. DR for the Revenue submitted that it is not necessary to specify charge whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The ld. Counsel further relied on the judgment of Hon’ble High Court of Calcutta in the case of DR. Syamal Baran Mondal Vs. CIT reported in 244 CTR 631. The ld. DR relied on the order of lower authorities.
On the other hand the ld. Counsel for the assessee before us submitted that the show cause notice issued u/s 274 of the Act 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 is placed on record. 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.
5. 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 ITA No.396, 399-400/Kol/2015 A.Ys. 07-08, 09-10 &10-11 ACIT, Cir-1 Jal Vs. The Jalpaiguri Central Co-op Bank Ltd. Page 4 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.
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 specific charge whether it is for concealment of income or inaccurate particulars of income and in the absence of specific charge, the initiation proceeding u/s. 271(1)(c) of the Act is bad in law. 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. The judgment relied by the ld. DR Syamal Baran Mondal (supra) cannot be accepted in view of the fact that it was decided on 18th February 2011 where