9911796707
TMI Blog2017 (12) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... ng penalty on the assessee u/s 271(1)(c) of the Income Tax Act, 1961 (Act). 3. 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 carries on the business of trading in cloth and acts as commission agent in cloth dealing and ready-made garments as proprietor M/S.J.M.Jain. In the assessment completed u/s.143(3) of the Act, the AO noticed that out of the sum of ₹ 14,21,052 which was claimed as expenses under the Electricity expenses, a sum of ₹ 1,81,730 did not relate to the business premises of the Assessee. The said sum was added to the total income of the Assessee. In respect of the aforesaid addition made in the course of assessment proceedings, the AO initiated penalty proceedings u/s 271(1)(c) of the Act. There were seven other additions made to the income declared by the Assessee in the return of income. The initiation of penalty proceedings was not made with reference to any specific item of addition. In the last paragraph of the order of Assessment, the AO has observed as follows: Penalty proceedings u/s.271(1)( c) has been initiated in this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt 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. 7. The learned DR submitted that the Hon ble Calcutta High Court in the case of Dr.Syamal Baran Mondal Vs. CIT (2011) 244 CTR 631 (Cal) has taken a view that Sec.271 does not mandate that the recording of satisfaction about concealment of income must be in specific terms and words and that satisfaction of AO must reflect from the order either with expressed words recorded by the AO or by his overt act and action. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Patna High court in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) wherein it was held that under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings. 10. In the case of Earthmoving Equipment Service Corporation (supra), the ITAT Mumbai did not follow the decision rendered in the case of Manjunatha Cotton Ginning Factory (supra) for the reason that penalty in that case was deleted for so many reasons and not solely on the basis of defect in show cause notice u/s.274 of the Act. This is not factually correct. One of the parties before the group of Assessees before the Karnataka High Court in the case of Manjunatha Cotton Ginning (supra) was an Assessee by name M/s.Veerabhadrappa Sangappa Co., in ITA NO.5020 OF 2009 which was an appeal by the revenue. The Tribunal held that on perusal of the notice issued under Section 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down by the Hon ble Bombay High Court in the case of Smt.Kaushalya (supra) appears to have been reiterated, as is evident from the extracts furnished in the written note furnished by the learned DR before us. 12. In the case of Trishul Enterprises ITA No.384 385/Mum/2014, the Mumbai Bench of ITAT followed the decision of the Hon ble Bombay High Court in the case of Smt.Kaushalya (supra). 13. In the case of Mahesh M.Gandhi (supra) the Mumbai ITAT the ITAT held that the decision of the Hon ble Karnataka High Court in the case Manjunatha Cotton Ginning (supra) will not be applicable to the facts of that case because the AO in the assessment order while initiating penalty proceedings has held that the Assessee had concealed particulars of income and merely because in the show cause notice u/s.274 of the Act, there is no mention whether the proceedings are for furnishing inaccurate particulars or concealing particulars of income, that will not vitiate the penalty proceedings. In the present case there is no whispher in the order of assessment on this aspect. We have pointed out this aspect in the earlier part of this order. Hence, this decision will not be of any assistance ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
