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

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).

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.

In the result, appeal of revenue is dismissed.