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TMI Blog2018 (12) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the learned ACIT, Circle-24, Kolkata [in short the ld AO] u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 16.09.2014 for the assessment year 2011-12. 2. The ld. AR submits that the notice dated 25.03.2014 issued by the AO u/s 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 25.03.2014 and the imposition/confirmation of penalty on defective notice is not maintainable in the eye of law. 4. On the other hand, the ld. DR stated that the written submission filed by the Department on earlier occasions with regard to this issue may kindly be taken on record which is reproduced hereunder:- 1. The Hon ble ITAT, 'D' bench, Kolkata, in the course of hearing of appeal of M/s. Dadheech Furniture Pvt. Limited Vs.ITO, Ward 7(3), Kolkata for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered 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. 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 assessment order that penalty proceedings under section 271(1)(c) of the Act will be initiated for furnishing of inaccurate particulars of income. Subsequently the tax officer issued a notice under section 274 read with section 271(1)(c) of the Act wherein the reason for penalty wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions were filed before the Coordinate Bench of this Tribunal in the case of Jeetmal Choraria in ITA 956/KOL/16 for AY 2010-11, wherein the Coordinate Bench elaborately discussed the facts in the decisions as relied upon by the Ld.DR and the principle laid down by the respective Hon ble High Courts at Bombay and Patna and preferred to follow the ratio laid down by the Hon ble High Court of Karnataka in the case of Manjunatha Cotton and Ginning supra by taking support of the established principle for a proposition when there are two views on the issue, one 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 wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Manjunatha Cotton Ginning Factory (supra). Reliance was also placed by the ITAT Mumbai in this decision on the decision of Hon 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.Veera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017 referred to in the written note given by the learned DR, which is an unreported decision and a copy of the same was not furnished, the same proposition as was laid 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. 7. We find the notice dated 25.03.2014 issued u/s. 274 r.w.s 271 of the Act, placed on record, does not specify the charge of offence committed by the assessee viz. whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. 8. Further, we find that Revenue had preferred a SLP before the Hon ble Supreme Court against this judgment which was dismissed in CC No. 11485/2016 dated 5.8.2016 by observing as under:- UPON hearing the counsel, the Court made the following ORDER Delay condoned. We do not find any merit in this petition. The special leave petition is , accordingly dismissed. Pending application, if any, stands disposed of. We also find that the Hon ble Jurisdictional High Court in its recent decision in the case of PCIT vs. Dr. Murari Mohan Koley in ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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