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TMI Blog2018 (7) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... 19/03/2014, had explained to AO that the interest income of ₹ 37, 71, 024/- reflected in 26AS statement, was received from M/s. Bau Developer P. Ltd, and had been offered for taxation by the assessee, in the Assessment Year 2012-13. We note that the date of booking of the transaction in respect of M/s. Bau Developer P. Ltd is on 01. 08. 2011 (vide pb 11), which falls in assessment year 2012-13, therefore, the assessee has offered interest income of ₹ 37, 71, 024/-for taxation in the Assessment Year 2012-13. Since the assessee has offered the said income for taxation in the A. Y. 2012-13, hence there is no concealment We note that since the penalty notice issued to the assessee dated 20. 04. 2013 did not spell out as to which default the assessee has committed for which penalty u/s. 271(1)(c) of the Act has been initiated, therefore, respectfully following the Hon’ble Karnataka High Court’s order in Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we cancel the penalty imposed by the AO which has been erroneously confirmed by the ld. CIT(A), partly. Therefore, the appeal of the Revenue is dismissed and cross objections raised by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in the penalty order, therefore, penalty should not be levied. 6. The facts of the case which can be stated quite shortly are as follows:During the course of assessment proceedings, the Assessing Officer, on verification of profit loss account found that the assessee has received interest income of ₹ 50, 28, 374/- and interest on FDRs of ₹ 6, 53, 537/-. The assessee was requested to submit copy of 26AS (Traces). On verification the AO noted that the assessee has received interest of ₹ 87, 08, 521/-. The TDS deducted on this amount was to the tune ₹ 8, 70, 851/-. However, the interest income of ₹ 37, 71, 024/- received from M/s. Bau Developer P. Ltd. has not been offered for taxation during this year. The assessee was issued show cause notice in respect of the interest amount of ₹ 37, 71, 024/- as to why this amount should not be added as his undisclosed income. The assessee vide letter dated 19/03/2014 has explained that the interest income of ₹ 37, 71, 024/- reflected in 26AS statement received from M/s. Bau Developer P. Ltd, is offered for taxation in the financial year 2011-12 i. e. Assessment Year 2012-13. However, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, however, mere making of this claim cannot lead to penalty automatically. Therefore ld. CIT(A) deleted the penalty U/s 271(1)(c) in respect of the addition of ₹ 56, 81, 911/- made by the Assessing Officer towards interest income not eligible for deduction under sec. 80IB of the Act. 9. Aggrieved by the order passed by the ld. CIT(A), the Revenue is in appeal and the assessee is in Cross Objection before this Tribunal. 10. Learned counsel for the assessee begins by pointing out that the Assessing Officer has not recorded any satisfaction while imposing penalty. Notice under sec. 271(1)(c) is a defective notice and it is not certain whether the penalty is initiated on account of concealment of income or furnishing of inaccurate particulars of income. The Ld. counsel further pointed out that non-striking of irrelevant portion of the penalty order reflects non-application of mind on the part of the Assessing Officer and the Assessing Officer himself was not sure about the limb/exact charge for which the assessee was being penalised which is evident from the fact that the relevant limb of the penalty has not been ticked and the irrelevant limb has not been strike off. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had made full disclosure in respect of interest to the tune of ₹ 56, 81, 911/-, and therefore, ld CIT(A) has rightly deleted the penalty U/s 271(1)(c ) of the Act. The ld. Counsel prayed the Bench that penalty under section 271(1) (c ) of the Act in respect of interest income of ₹ 37, 71, 024/- should also be deleted, as the assessee has offered the said amount for taxation in A. Y. 2012-13. 13. On the other hand, ld. Departmental Representative for the Revenue has submitted that there is a concealment of income on the part of the assessee. The assessee has not disclosed the interest on FDR and interest income received from M/s. Bau Developer P. Ltd. to the tune of ₹ 37, 71, 024/-, which is reflected in 26AS. Had the assessee s case not been selected for scrutiny, the interest shown in the profit loss account would have escaped from assessment. The ld DR stated that the requirement of section 274, read with section 271 (1) (c ) of the Income Tax Act for granting reasonable opportunity of being heard in the matter cannot be stretched to the extent of framing a specific charge or asking the assessee an explanation in respect of the quantum of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be levied. 14. We have given a careful consideration to the rival submissions and perused the material available on record. We note that the penalty imposed under section 271 (1) (c ) of the Act, in respect of other interest income of ₹ 56, 81, 911/-, which has been deleted by the ld CIT(A), as the said amount was duly disclosed in the financial statement by the assessee. There was a claim by the assessee that said interest income of ₹ 56, 81, 911/-was eligible for deduction under section 80IB of the Act, and the assessee had disclosed the fact of earning said interest in the financial statements. We note that the assessee has disclosed the particulars of his income in the financial statements and has made full disclosure, in respect of other interest income of ₹ 56, 81, 911/- hence, there is neither concealment of income nor furnishing inaccurate particulars of income . We note that mere making of this claim cannot lead to penalty automatically. Therefore, ld. CIT(A) has rightly deleted the penalty U/s271 (1) (c) of the Act, in respect of addition of ₹ 56, 81, 911/-. 15. We note that the assessee, vide letter dated 19/03/2014, had explained to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing 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 CIT Vs. Manjunatha Cotton Ginning Factory (2013) 359 ITR 565/218 Taxman 423/35 taxmann. com 250(Kar). 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed. We also find that the aforesaid order of the Hon ble High Court was challenged by the department before the Hon ble Supreme Court by preferring an SLP which has been dismissed which fact has been reported in CIT Vs. SSA s Emerald Meadows (2016) 73 taxmann. com 248 (SC). 17. We note that case law relied on by the ld DR for the Revenue is distinguish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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