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TMI Blog2018 (2) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court in the case of SSA s Emerald Meadows . He also submits that the AO imposed penalty on defective notice issued u/s. 274 r.w.s 271(1)(c) of the Act on 18-03- 2013, copy of the same is on record, and in view of the decision supra the penalty imposed on defective notice is not maintainable. 3. The ld.AR of the assessee further submits that the statutory notice dt. 18-03-2013 issued by the AO [ Rajib Kumar Saha, I.T.O, Wd 5(4) Kol ] u/s. 274 r.w.s 271 of the Act is defective. He further argued that the issue in hand as raised by the assessee is squarely covered in favour of assessee by the decision of the Hon ble Supreme Court in the case of SSA s Emerald Meadows. In support of his contention, he placed reliance on the decision of the Hon ble Karnataka High Court in the case of CIT vs SSA S Emerald Meadows supra in ITA No. 380 of 2015 dated 23.11.2015 which was 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. 4. On the other hand, the ld.DR relied on the order of the CIT-A in confirming the impugned penalty imposed u/s. 271(1)(c) of the Act. In support of his conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposing the penalty by the Income Tax Officer. 5. Honble Mumbai E Bench in the case of Earthmoving Equipment Service Corporation vs DCIT 22(2), Mumbai (2017) 84 taxmann.com 51 looked into the issue very closely and opined that after perusing the ratio of the judgement rendered in Manjunatha Coton and Ginning Factory we find that the assessees appeal was allowed by the Honble High Court after considering the multiple factors and not solely on the basis of defect in notice u/s 274. Therefore we are of the opinion that the penalty could not be deleted merely on the basis of defect pointed by the Ld AR in the notice and therefore the legal grounds raised are rejected. 6. Therefore, it is submitted that service of notice u/s.274 for initiating penalty proceedings u/ s.271 (l)(c) of the I.T. Act, would constitute valid initiation of penalty proceedings and the case may be heard on merits. 5. In view of above, the Ld. DR prayed to dismiss the grounds raised in appeal of assessee by confirming the penalty imposed and confirmed by the AO and CIT-A respectively. 6. We have heard the rival submissions and considered the written submissions and the case laws relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before us. 9. In the case of CIT Vs. Kaushalya (supra), the Hon ble Bombay High Court held that section 274 or any other provision in the Act or the Rules, does not either mandate the giving of notice or its issuance in a particular form. Penalty proceedings are quasi-criminal in nature. Section 274 contains the principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the Principles of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. The issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The ITAT Mumbai Bench in the case of Dhanraj Mills Pvt.Ltd. (supra) followed the decision rendered by the Jurisdictional Hon ble Bombay High court in the case of Kaushalya (supra) and chose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority, the initiated penal proceedings, nolonger exists. If the Appellate Authority had initiated penal proceedings on the basis of the addition sustained under a new ground it has a legal sanctum. This was not so in this case and therefore, on both the grounds the impugned order passed by the Appellate Authority as well as the Assessing Authority was set-aside by its order dated 9th April, 2009. Aggrieved by the said order, the revenue filed appeal before High Court. The Hon ble High Court framed the following question of law in the said appeal viz., 1. Whether the notice issued under Section 271(1)(c) in the printed form without specifically mentioning whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal? 2. Whether the proceedings initiated by the Assessing Authority was legal and valid? The Hon ble Karnataka High Court held in the negative and against the revenue on both the questions. Therefore the decision rendered by the ITAT Mumbai in the case of Earthmoving Equipment Service Corporation (supra) is of no assistance to the plea of the revenue before us. 11. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invalidate the notice. The Tribunal Benches at Mumbai and Patna being subordinate to the Hon ble Bombay High Court and Patna High Court are bound to follow the aforesaid view. The Tribunal Benchs at Bangalore have to follow the decision of the Hon ble Karnataka High Court. As far as benches of Tribunal in other jurisdictions are concerned, there are two views on the issue, one in favour of the Assessee rendered by the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning (supra) and other of the Hon ble Bombay High Court in the case of Smt.Kaushalya. It is settled legal position that where two views are available on an issue, the view favourable to the Assessee has to be followed. We therefore prefer to follow the view expressed by the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning (supra). 15. 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. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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