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TMI Blog2020 (6) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that if the penalty notice is vague, then the penalty order is also bad in the eyes of law. - Appeal of assessee is allowed. - I.T.A. No. 135/Gau/2019 - - - Dated:- 10-6-2020 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For the Appellant : None For the Respondent : Shri M. C. Omi Ningshen, Addl. CIT, Sr. DR ORDER PER SHRI A.T.VARKEY, JM This is an appeal preferred by the assessee against the order of Ld. CIT(Appeals), Dibrugarh dated 27-02-.2019 for the AY 2015-16, confirming the penalty levied u/s. 271(1) ( c) read with section 274 of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. None appeared for the assessee. However, after hearing the learned DR and having carefully gone through the penalty order passed by the AO dated 29-11-2018, we note from para 1 of the said penalty order the AO has stated in his own words A show cause notice under section 274 read with sections 271(1) ( c) of the Act was issued for concealment of particulars of income and furnishing of inaccurate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inning factory (2013) 359 ITR 565 took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. Further we note that as against the decision of the Hon ble Karnataka High Court, the revenue preferred an appeal before the Hon ble Supreme Court [SLP in CC No.11485 of 2016] and the Apex Court by its order dated 05.08.2016 dismissed the SLP preferred by the department. Further we note 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. We also note the decision of ITAT in the case of Suvaprasanna Bhattacharya vs ACIT in ITA No.1303/Kol/2010 dated 06.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mula. 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 not to follow decision of Hon ble Karnataka High 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 noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 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 of M/S. Maharaj Garage Co. Vs. CIT dated 22.8.2017 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha 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 these circumstances, we are of the view that imposition 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. 5. Respectfully following the aforesaid order of the coordinate bench of this Tribunal, we, therefore, hold that imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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