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Income Tax Appellate Tribunal, BENCH ‘C’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM ]
ORDER PER N.V.VASUDEVAN, JM:
These are appeals by the Assessee against 5 orders all dated 28.3.2014 of CIT(A)-XXXVI, Kolkata, relating to AY 2004-05, 05-06, 06-07, 07-08 & 09-10.
In all these appeals the Assessee has challenged the order of the CIT(A) whereby the CIT(A) confirmed the order of the AO 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 imposed on the Assessee by the AO are as follows: The Assessee is an individual. He is a doctor by profession. In the course of assessment proceedings for AY 2008-09 the revenue came across a Bank Account viz., A/C.No.116010100002738 with Axis Bank, Howrah in the name of the Assessee. This bank account had not been disclosed by the Assessee in the return of income or in the accounts filed along with the return of income. Based on the aforesaid .,1396,1398,1400,1402&1405/Kol/2014.A.Y.2004-05 to 2007-08&2009-10-Dr.Murari Mohan Koley 2 discovery, the revenue initiated reassessment proceedings u/s.147 of the Act for AY 2004-05 to 2007-08 and in those proceedings, the AO called upon the Assessee to explain the source of funds for the various deposits in this bank account both cash and cheque deposit. In AY 2009-10, the proceedings were u/s.143(3) of the Act i.e., regular assessment proceedings and in that proceeding, the AO called upon the Assessee to explain the source of funds for the various deposits in this bank account both cash and cheque deposit All the assessments were completed u/s.144 of the Act i.e., best judgment assessment, as the Assessee did not participate in the assessment proceedings so initiated. The AO treated the deposits in cash and cheque in the aforesaid bank account as unexplained and added the same to the total income of the Assessee. The interest earned on the aforesaid bank account was also added to the total income of the Assessee. All the orders of assessments for the assessments years 2004-05 to 07-08 and 2009-10 were passed on 30.12.2011.
In the order of assessment, the AO initiated penalty proceedings u/s.271(1)( c) of the Act against the Assessee. The AO passed an order dated 29.6.2012 in AY 2004- 05 to 2007-08 & 2009-10 imposing penalty on the Assessee u/s.271(1)( c) for concealing particulars of income or furnishing of inaccurate particulars of income. The orders imposing penalty were also passed ex-parte as the Assessee did not participate in those proceedings.
Against the orders of assessment dated 30-12-2011 as also the orders dated 29.6.2012 imposing penalty u/s.271(1)( c) of the Act, the Assessee preferred appeal before the CIT(A). There was a delay of about 310 days in filing appeal before CIT(A) against the orders of assessments dated 30.12.2011 and a delay of about 135 days in filing appeal against the orders dated 29.6.2012 passed u/s.271(1)( c) of the Act. All the appeals were filed before the CIT(A) on the same day.
The CIT(A) refused to condone the delay in filing appeals. The CIT(A) further confirmed the orders of assessment by the AO dated 30.12.2011 by orders dated .,1396,1398,1400,1402&1405/Kol/2014.A.Y.2004-05 to 2007-08&2009-10-Dr.Murari Mohan Koley 3 21.3.2014 and also confirmed the orders dated 29.6.2012 imposing penalty on the Assessee u/s.271(1)( c) of the Act by order dated 28.3.2014 which orders are subject matter of these appeals.
Against the order of CIT(A) in the appeals against the orders of assessment dated 30.12.2011, the Assessee preferred appeals before the Tribunal in 1401, 1403 and 1406/Kol/2014 and this Tribunal by order dated 5.11.2014 condoned the delay in filing appeal by the Assessee and further set aside the order of the CIT(A) on the additions made on merits in the assessment orders dated 30.12.2011 and remanded the issues for fresh consideration by the CIT(A).
As far as the appeals arising out of the orders of the CIT(A) confirming the order imposing penalty, the first issue to be decided is with regard to condonation of delay in filing appeals before CIT(A) which the CIT(A) refused to condone. The Tribunal in the appeals against the orders of CIT(A) dated 21.3.2014 arising out of the orders of assessment dated 30.12.2011 has already condoned the delay for the identical period, accepting the illness of the wife of the Assessee and his consequent absence from Kolkata as proper and sufficient reason. We therefore following the view of the Tribunal in 1401, 1403 and 1406/Kol/2014 and this Tribunal by order dated 5.11.2014, condone the delay in filing appeal by the Assessee before the Tribunal.
As far as the merits of the order of CIT(A) confirming the order of the AO imposing penalty on the Assessee u/s.271(1)( c) of the Act is concerned, the ld. Counsel for the assessee submitted before us that the show cause notice issued u/s 274 of the Act before imposing penalty 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. Copies of the show cause notice u/s 274 of the Act were filed before us in this regard. Perusal of the same reveals that AO has not struck out the irrelevant portion in the show cause notice and .,1396,1398,1400,1402&1405/Kol/2014.A.Y.2004-05 to 2007-08&2009-10-Dr.Murari Mohan Koley 4 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.
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 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. The learned DR relied on the order of the CIT(A).
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 inappropriate words. .,1396,1398,1400,1402&1405/Kol/2014.A.Y.2004-05 to 2007-08&2009-10-Dr.Murari Mohan Koley 5 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. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled.
In the result, all the appeals of the Assessee are allowed.
Order pronounced in the Court on 05.04.2017.