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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI N.V. VASUDEVAN, JM & DR. A.L.SAINI, AM
O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the Assessee, pertaining to the assessment year 2007-2008, is directed against the order passed by the ld. Commissioner of Income Tax (Appeals)-XX, Kolkata, in Appeal No.8/CIT(A)-XX/Circle-36/2012-13/Kol, dated 23.04.2014, which in turn arises out of an order passed by the Assessing Officer u/s.271 (1) (c ) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 23/03/2012.
Brief facts of the case qua the assessee are that in the instant case the assessment U/s 143(3) was made on 15.12.2009 after computing total income at Rs.2,08,33,210/- against the returned income of Rs.2,05,20,600/- The assessee deals in trading of Iron & Steel, Alloys Steel Bar, Rods and Flats. During the course of assessment proceedings, it was found by the A.O. that the assessee failed to produce any business. It was submitted at the assessment stage that the assessee was the importer of Tools and Alloy Steels and the foreign tour was undertaken for finalizing the terms and conditions for import. The A.O. noted that the assessee has made all the imports from China whereas the foreign tour was made to Australia and Dubai. Thus the AO held that foreign tour expenses were not incurred for the purpose of business and were not allowable as business expenditure. Accordingly, the AO disallowed the entire sum of Rs. 2,25,720/- and penalty proceedings U/s 271(1) (c ) of the I.T. Act was initiated for concealment of income and furnishing of inaccurate particulars.
3. Not being satisfied with the penalty order passed by the AO, the assessee filed an appeal before the ld CIT(A), who has confirmed the penalty imposed by AO under section 271(1) (c) of the Act. The ld CIT(A) observed that assessee had concealed the particulars of income and furnished inaccurate particulars of income to the extent of addition made by the Assessing Officer U/s 143(3) of the Act. Besides, the assessee did not file any appeal against the order of CIT(A), for quantum, therefore, the AO was justified to levy penalty U/s 271(1) (c ) of the Act.
Not being satisfied with the order of ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal :- 1.For that on the facts and in the circumstances of the case, the ld CIT(Appeals) was wrong in confirming the penalty of Rs.75,978/- U/s 271(1) (c ) on account of foreign travel expenses. There was no element of concealment of income or furnishing of inaccurate particulars”
3 M/s United Steel Corporation 2.For that on the facts and in the circumstances of the case, the ld CIT(Appeals) was wrong in coming to the conclusion that non filing of Second appeal before higher authorities against quantum addition constituted admission of addition by the appellant. The ld CIT(Appeals) failed to understand that non filing of second appeal by the appellant against quantum addition was for reason to avoid protracted litigation.
For that on the facts and in the circumstances of the case, the ld CIT(Appeals) is wring and not specific in coming to the conclusion whether the appellant had concealed the particulars of its income or furnished inaccurate particulars thereof.
Ld. AR for the assessee has submitted, before us, stating that at the outset notice issued by the Assessing Officer U/s 271(1) (c ) of the Act is defective. The said notice does not speak about any specific charge for which the penalty on the assessee is to be levied. It is not clear as to whether the assessee is being penalized for the concealment of income or for the furnishing of inaccurate particulars of income. The Assessing Officer did not strike off the irrelevant portion in the notice, therefore it is not clear for which particular default the assessee is being penalized. The ld AR for the assessee has relied on the judgment of Hon`ble Karanataka High Court in the case of Manjunatha Cotton & Ginning Mills 359 ITR 565 (Karnataka), wherein it was held that notice under section 271(1) (c ) of the Act, should specifically state as to whether penalty is being imposed for concealment of income or for furnishing inaccurate particulars of income and as was followed by the Kolkata tribunal in the case of “Suvaprasanana Bhattacharya Vs. ACIT, dated 6.11.2015, Kolkata. Therefore, penalty U/s 271 (1) (c ) should not be levied.
AO, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
Having heard the submissions of ld AR for the assessee and perused the material available on records, we are of the view that notice issued by the AO under section 271(1) (c ) of the Act is defective. The notice under section 271 (1) (c ) of the Act, should specifically state as to whether penalty is being imposed for concealment of income or for furnishing inaccurate particulars of income. There is no any specific charge on the assessee in the case under consideration therefore the penalty imposed by the AO and confirmed by the ld CIT(A) needs to be deleted. Accordingly, we delete the penalty.
In the result, the appeal filed by the assessee, is allowed.
Order pronounced in the open court on this 26/04/2017.