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TMI Blog2020 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... for concealment of particulars of income or furnishing of inaccurate particulars of income. Imposition of penalty and subsequently confirmed by the Ld. CIT(A) in the present cases cannot be sustained and the same is hereby deleted. Therefore, the appeals of assessee are allowed. - I.T.A. Nos. 1678 & 1679/Kol/2019 - - - Dated:- 6-11-2020 - Shri P. M. Jagtap, Vice-President And Shri A. T. Varkey, JM For the Appellant : Shri S. K. Tulsiyan, CA For the Respondent : Shri Dhrubajyoti Roy, JCIT ORDER PER SHRI A.T. VARKEY, JM: These are the appeals preferred by the assessee against the orders of Ld.CIT(A)-15, Kolkata dated 08.10.2018 for 2011-12 and order dated 05.11.2018 for AY 2012-13 confirming the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 ( in short the Act). 2. We note that there is a delay of 17 days for filing this appeal. After going through the application for condonation of delay and Affidavit filed by the assessee we are of the opinion that the cause for delay was reasonable and not an intentional act of assessee. So we condone the delay and proceed to hear the appeal. 3. At the outset, the ld. A.R of the assessee drew our at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an SLP was preferred by the revenue which was dismissed by the Hon ble Supreme court as well as Hon ble jurisdictional Calcutta High Court in PCIT vs. Dr. Murari Mohan Koley in ITAT No. 306 of 2017 G.A No. 2968 of 2017 dated 18.07.2018 which will be discussed in detail infra. 5. As discussed above, a reading of the penalty notice, we note that the AO has not stricken out the irrelevant portion of the fault/charge which would have spelt out the specific fault/charge against the assessee as per section 271(1) (c) of the Act. Since the proposed notice itself is defective, all subsequent proceedings are bad in law and the penalty imposed by the AO u/s. 271(1)(c) of the Act and confirmed by the Ld. CIT(A) should be cancelled. For coming to such a conclusion we rely on the decision of the Hon ble Karnataka High Court in the case of CIT vs. SSA s Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 wherein the Hon ble Karnataka High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three decisions of Mumbai ITAT viz., (i) Dhanraj Mills Pvt. Ltd. Vs. ACIT ITA No.3830 3833/Mum/2009 dated 21.3.2017; (ii) Earthmoving Equipment Service Corporation Vs. DCIT 22(2), Mumbai, (2017) 84 taxmann.com 51 (iii) Mahesh M.Gandhi Vs. ACIT Vs. ACIT ITA No.2976/Mum/2016 dated 27.2.2017. Reliance was placed on two decisions of the Hon ble Bombay High Court viz., (i) CIT Vs. Kaushalya 216 ITR 660(Bom) and (ii) M/S.Maharaj Garage Co. Vs. CIT dated 22.8.2017. This decision was referred to in the written note given by the learned DR. This is an unreported decision and a copy of the same was not furnished. However a gist of the ratio laid down in the decision has been given in the written note 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 quasicriminal 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. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had either concealed its income or has furnished inaccurate details. The notice is not in compliance with the requirement of the particular section and therefore it is a vague notice, which is attributable to a patent non application of mind on the part of the Assessing authority. Further, it held that the Assessing Officer had made additions under Section 69 of the Act being undisclosed investment. In the appeal, the said finding was set-aside. But addition was sustained on a new ground, that is under valuation of closing stock. Since the Assessing Authority had initiated penalty proceedings based on the additions made under Section 69 of the Act, which was struck down by the Appellate Authority, the initiated penal proceedings, no longer 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 Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cured if the intention of the charge u/s.271(1) (c ) is discernible from a reading of the Assessment order in which the penalty was initiated. 14. From the aforesaid discussion it can be seen that the line of reasoning of the Hon ble Bombay High Court and the Hon ble Patna High Court is that 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 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 Benches 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 G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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