MADAN KUMAR JHA,KOLKATA vs. DCIT, CC-XIII, KOLKATA, KOLKATA

The brief facts of the issue are that the a search and seizure operation us/ 132 of the Act was conducted on 08-12-2009 and subsequent dates in the case of Shashi Kant Khetan Group, in which undisclosed bank account no. 33105147097 with Standard Chartered Bank was found and by alleging the said bank account belonged to assessee the AO assessed the total income at Rs.39,12,550/- u/s. 153C/143(3) by treating the credits in the said bank account of Rs.37,00,000/- as ‘Unexplained cash credit’.

The ld AR apart from reiterating the facts also brought to the notice of the Bench that the penalty notice issued u/s 274 read with section 271(1)(c ) of the Act had not struck off the relevant portion by specifically mentioning the charge of offence committed by the assessee viz., whether it had concealed the particulars of income or it had furnished inaccurate particulars of income. Accordingly he stated the show cause notice for penalty proceedings was defective and in support of this, he placed reliance on 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 which was later approved by the Hon’ble Supreme Court by dismissal of Special Leave Petition (SLP) by the revenue in CC No. 11485/2016 dated 5.8.2016. In response to this, the ld DR vehemently relied on the order of the ld AO.

We have heard the rival submissions. We find that the penalty notice dt. 17-10-2011 u/s 274 r.w.s 271(1)(c ) of the Act does not specify the charge of offence committed by the assessee viz whether it had concealed the particulars of income or it had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. Now the short question that arises for consideration is as to whether the penalty could be validly levied based on the defective show cause notice. This issue has been addressed by the Hon’ble Karnataka High Court in the case of CIT vs SSA’S Emerald Meadows in of 2015 dated 23.11.2015 which in turn placed reliance on another judgment of the same court in the case of CIT vs Manjunatha Cotton and Ginning Factory reported in 359 ITR 565 (Kar). In the said decision, their Lordships of Hon’ble Karnataka High Court held that :- 2 ITA No. 1998/Kol/2014 Madan Kumar Jha

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 Commissioner of Income Tax vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565.

In the result, the appeal of the assessee is allowed. . Order pronounced in the open court on 05-04-2017