SONA KUMAR SHOW,KOLKATA vs. ACIT, WARD-23(1),HG, HOOGHLY

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ITA 423/KOL/2023Status: DisposedITAT Kolkata21 February 2024AY 2014-15Bench: Dr. Manish Borad (Accountant Member), Shri Sonjoy Sarma (Judicial Member)5 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued by the AO did not clearly specify the default committed by the assessee. Therefore, the penalty order passed under Section 272B was considered void and unsustainable.

What were the facts?

The assessee failed to quote PAN while depositing cash of Rs. 50,000 or more, despite having a PAN. The Assessing Officer (AO) initiated penalty proceedings under Section 272B for this violation of Section 139A(5). The assessee did not appear in response to the penalty notice, leading the AO to impose a penalty of Rs. 10,000.

What were the issues?

Whether the penalty imposed under Section 272B is valid when the notice initiating penalty proceedings does not clearly specify the default committed by the assessee.

Which sections of the Income-tax Act were involved?

Section 272B,Section 139A(5),Section 274,Section 273B

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, KOLKATA BENCH ‘C’, KOLKATA

Before: Dr. Manish Borad & Shri Sonjoy Sarma]

Hearing: 20.02.2024Pronounced: 21.02.2024

ORDER

Per Sonjoy Sarma, JM:

1.

This appeal of the assessee for the assessment year 2014-15 is directed against the order dated 01.03.2023 passed by the ld. Commissioner of Income-tax, Appeals, NFAC, Delhi [hereinafter referred to as ‘the ‘ld. CIT(A)’]. The assessee has raised the following grounds of appeal:

“1. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. failed to appreciate that none of the conditions precedent required to be satisfied for the assumption of jurisdiction u/s. 274 of the Income Tax Act, 1961 existed and/or have been complied with and/or fulfilled in the instant case by the Ld. Assistant Commissioner Income Tax, Circle 23(1). Hooghly and his specious action of upholding the impugned order imposing penalty of Rs. 10,000/- passed u/s 272B of the Act for purported infringement to the provisions of s. 139A(5) of the Act is therefore ab initio void, ultra vires, and ex-facie null in law.

2. FOR THAT on a true and proper interpretation of the scope of the provisions of s. 272B of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals)-N.E.A.C. was absolutely in error in upholding the impugned order imposing penalty in the sum of Rs. 10.000/- passed by the Ld. Assistant Commissioner Income Tax, Circle 23(1), Hooghly and his purported finding de hors any notice thereof is wholly arbitrary, unreasonable, and perverse.

Sona Kumar Show 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. erred in sustaining the impugned order imposing penalty u/s. 272B of the Act passed without considering explanation tendered by the appellant in light of the provision of s. 273B of the Income Tax Act, 1961 by the Ld. Assistant Commissioner Income Tax, Circle 23(1), Hooghly and thereby failing to controvert his bonafides in the facts of the instant case and the impugned findings on the issue is therefore, unfounded, unjustified, and untenable in law.

4.

FOR THAT the specious approach of the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. of considering improper facts, failing to consider proper position in law and thus coming to an erroneous finding in confirming the impugned order imposing penalty u/s. 272B of the Income Tax Act, 1961 in the sum of Rs. 10,000/- passed by the Ld. Assistant Commissioner Income Tax, Circle 23(1), Hooghly is wholly illegal, legitimate, and infirm in law.”

2.

Brief facts of the case are that the assessee filed its original return of income disclosing a total income of Rs. 5,24,400/-. The case of the assessee was selected for scrutiny through CASS and order u/s 143(3) of the Act was passed by AO assessed the income at Rs. 18,22,300/-. During the course of scrutiny proceeding it was noticed that the assessee maintained account with Punjab National Bank as well as SBI and deposited huge cash on different occasions in his accounts. However, the ld. AO found that as per the provision of sub-section 5 of section 139A of the I.T. Act, 1961, the assessee was required to quote his Pan at the time of depositing of cash of Rs. 50,000/- or more. However, assessee did not mention his PAN while depositing cash of Rs. 50,000/- or more. Although, he has having his PAN at that time of such deposits were made. Accordingly penalty notice 272B was issued to the assessee. However, no one turned up in terms of notice issued to assessee therefore, the ld. AO imposed penalty of Rs. 10,000/- upon the assessee.

Sona Kumar Show 3. Aggrieved by the above order, assessee went into appeal before the ld. CIT(A) where the appeal of the assessee was dismissed.

4. Dissatisfied with the above order, assessee is in appeal before this Tribunal raising various grounds of appeal. However, main grievance of the assessee is in this appeal relating to upholding the impugned order passed by the AO by which imposing penalty of Rs. 10,000/- u/s 272B of the Act. On this context, ld. AR submitted before the bench in the case of assessee no notice was issued u/s 274 of the Act issued before passing the penalty order in the case of assessee and even on the notice issued u/s 272B does not reveal the specific default justifying the issuance thereof. The ld. AR brought to our notice as in the case of CIT vs Manjunatha Cotton And Ginning Factory (2013) 359 ITR 565 (Kar.) where show cause notice u/s 274 of the Act was issued termed as defective notice as it did not spell out the grounds on which penalty was sought to be imposed and Hon’ble High Court declaring such imposition of penalty was not proper in the hands of assessee by deleting the same. The ld. AR prayed before the bench applying the same proposition of law where show cause notice did not spell out the specific ground on which penalty was sought to be imposed. Therefore the notice was bad in law accordingly imposition of penalty upon the assessee is liable to be deleted.

5.

We after hearing the submission of the parties and a perusal of the notice has issued in the case of assessee in following manner:

Sona Kumar Show 6. We after perusing the above notice issued by the AO it did not clearly specified under specific default has been done by the assessee also did not satisfy the charges leveled against him. As in the present case penalty proceeding initiated without specifying any particular default in the case of assessee followed by imposition of penalty therefore order passed u/s 272B of the Act is null & void. Accordingly, penalty imposed u/s 272B of the Act imposed upon the assessee is not sustainable and directed to delete the same. In terms of the above, the appeal of the assessee is allowed.

7.

In the result, the appeal of the assessee is allowed.

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