SATISH KUMAR AGARWAL(HUF),KOLKATA vs. ACIT, CIRCLE-45, KOLKATA, KOLKATA

Sri S.L. Kochar, Advocate, Ld. AR appeared on behalf of assessee and Sri Sallong Yaden, Addl.CIT, Ld. Departmental Representative appeared on behalf of Revenue.

Brief facts of the issue are that the assessee is an HUF and deriving his income from house property and capital gains etc. The assessee filed his return of income declaring total income of Rs.52,03,244/-. The AO

The ld.AR further submits that the assessee filed appeal before the Tribunal on 10-11-2016, which is pending for adjudication. The ld.AR further argued that the notice dt. 23-02-2015 issued by the AO u/s. 274 r.w.s 271 is defective without specifying the charge of offence. He submits that the assessee has fair chance to succeed in the said appeal as the issue in hand is fully covered in favour of assessee by 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) filed by the Revenue in CC No. 11485/2016 dated 5.8.2016.

In response to this, the ld DR raised an objection that this Tribunal shall not hear the main appeal as it is not fixed for hearing. He relied on the order of the ld AO.

We have heard the rival submissions. We find that the assessee raised the grounds of appeal challenging the notice issued by the AO U/Sec. 274 r.w.s 271(1)(c) of the Act. We find that the issue in hand is squarely covered by the decision of the Hon’ble Supreme Court in the case of supra. Therefore, we find force in the arguments of the ld.AR and proceed to hear the appeal. We find that the penalty notice dt. 23-02-2015 u/s 274 r.w.s S.A No. 22/Kol/2017 3 & Satish Kumar Agarwal(HUF) 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 :- 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 Commissioner of Income Tax vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565.

We find that the Revenue had preferred a SLP before the Hon’ble Supreme Court against this judgment which was dismissed in CC No. 11485/2016 dated 5.8.2016 by observing as under:- UPON hearing the counsel, the Court made the following ORDER Delay condoned. We do not find any merit in this petition. The special leave petition is , accordingly dismissed. Pending application, if any, stands disposed of.

Respectfully following the aforesaid judicial precedents, we cancel the penalty levied of Rs.37,30,711/- U/Sec. 271(1) (c) of the Act and confirmed by the CIT-A. Accordingly the grounds raised by the assessee are allowed.

In view of above, the stay application filed by the assessee is liable to be dismissed.