DCIT, CIRCLE-4, KOLKATA, KOLKATA vs. M/S. ANDREW YULE & CO. LTD., KOLKATA

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ITA 2067/KOL/2014Status: DisposedITAT Kolkata12 July 2017AY 1988-893 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the penalty notice was bad in law as it did not clearly specify the default. Following the Karnataka High Court's decision, the Tribunal confirmed the deletion of the penalty.

What were the facts?

The revenue appealed against the CIT(A)'s order deleting the penalty levied under Section 271(1)(c). The penalty notice issued to the assessee did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars.

What were the issues?

Whether a penalty notice under Section 271(1)(c) is invalid if it fails to specify whether the default is concealment of income or furnishing 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, “C” BENCH: KOLKATA

Hearing: 20.06.2017Pronounced: 12.07.2017

ORDER Per Shri A.T.Varkey, JM This is an appeal preferred by the revenue against the order of Ld. CIT(A)-IV, Kolkata dated 01.08.2014 for AY 1988-89 for deleting the penalty levied by the AO u/s. 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

2.

At the outset itself, the Ld. Counsel for the assessee Shri Anjan Kr. Bandyopadhyay drew our attention to the notice served on the assessee u/s. 274 of the Act r.w.s. 271 of the Act dated 27.03.1991 wherein both the faults i.e. “concealed the particulars of income or furnished inaccurate particulars of such income” have been reproduced without striking out any one of the faults so that the assessee could be put on notice for the fault/charge that he is being given notice u/s. 271(1)(c) of the Act. 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 Andrew Yule & Co. Ltd., AY 1988-89 (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).

3.

We note that since the penalty notice issued to the assessee dated 27.03.1991 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 Manjunatha Cotton & Ginning Factory (supra) and SSA’s Emerald Meadows (supra), we concur with the action of the ld. CIT(A) deleting the penalty imposed by the AO. We have not gone into the merits of the impugned Ld. CIT(A)’s order while confirming the decision of the Ld. CIT(A) to delete the penalty on the aforesaid legal ground so we do not wish to comment on the merit of the decision of the Ld. CIT(A). Therefore, on this alternate legal ground, we confirm the order of the Ld. CIT(A) and dismiss the appeal of the revenue.

4.

In the result, appeal of revenue is dismissed.

Order is pronounced in the open court on 12.07.2017 Sd/- Sd/- (J. Sudhakar Reddy) (Aby. T. Varkey) Accountant Member Judicial Member

Dated : 12th July, 2017 Jd.(Sr.P.S.)

Andrew Yule & Co. Ltd., AY 1988-89

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