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TMI Blog2018 (8) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the AO. 2. The ld. AR submits that the notice dt. 14-03-2013 issued by the AO [ITO, Ward 7(2), Kolkata U/Sec 274 r.w.s 271(1) ( c) of the Act is defective for not mentioning the specific charge and placed reliance on the decision of the Hon ble Supreme Court in the case of SSA s Emerald Meadows. 3. The ld.AR further submits that the issue raised in the appeal is covered by the decision of the Hon 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 of the Act on 14-03- 2013 and the imposition of penalty on defective notice is not maintainable in the eye of law. 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 and adopted detailed written submission dt. 11-01-2018 filed in similar cases, which is extracted as under:- 1. The Hon ble ITAT, 'D' bench, Kolkata, in the course of hearing of appeal of M/s. Zenith Life Style Pvt. Limited Vs. CIT (Appeals), -3, Kolkata for the A.Y 2010-11 , at the request of the DR, allowed the department to make a written submission, on the issue of whether non mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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. The Mumbai bench of !TAT in a recent decision in the case of Mahesh M Gandhi vs ACIT [TS-5465-ITAT-2017(MUMBAI)-O] also dealt with this aspect. The taxpayer had not offered Director's fees and income from short term capital gains to tax in the return of income. During the course of assessment proceedings when these incomes were picked up by the tax officer, the taxpayer admitted earning of the incomes and filed a revised computation of income. Based on this finding, the tax officer mentioned in the KHC in the case of CIT vs Manjunatha Cotton and Ginning Factory (supra), the CIT(A) ruled in favour of the revenue. Aggrieved the taxpayer preferred an appeal before the ITAT. The ITAT after observing the facts of the case held that the tax officer had recorded satisfaction in the assessment order in relation to invoking penalty provisions. The tax officer had applied his mind while detailing the reasons for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne in the favouring of assessee should be adopted, which enunciated by the Hon ble Supreme Court in the case of Vegetable Products ltd reported in 88 ITR 192 (SC). We are in agreement with the reasoning of the Co-ordinate Bench in its order dt: 01-12-2017 in the case of Jeetmal Choraria and the same is reproduced herein below for ready reference: 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. In our view this decision is on the question of recording satisfaction and not in the context of specific charge in the mandatory show cause notice u/s.274 of the Act. Therefore reference to this decision, in our view is not of any help to the plea of the Revenue before us. 8. The learned DR relied on three decisions of Mumbai ITAT viz., (i) Dhanraj Mills Pvt. Ltd. Vs. ACIT ITA No.3830 3833/Mum/2009 dated 21.3.2017; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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)(c) of the Act, it is clear that it is a standard proforma used by the Assessing Authority. Before issuing the notice the inappropriate words and paragraphs were neither struck off nor deleted. The Assessing Authority was not sure as to whether she had proceeded on the basis that the assessee had either concealed its income or has furnished inaccurate details. The notice is not in compliance with the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 to the plea of the revenue before us. Even otherwise this decision does not follow the ratio laid down by the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning (supra) in as much as the ratio laid down in the said case was only with reference to show cause notice u/s.274 of the Act. The Hon ble Court did not lay down a proposition that the defect in the show cause notice will stand cu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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