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2020 (2) TMI 1045 - AT - Income TaxPenalty u/s. 271(1)(c) - Defective notice - assessee’s omission to offer interest income on Income Tax refund - According to CIT(A), the assessee cannot be held guilty of concealment of income warranting levy of penalty - whether an inadvertent and bona fide error and no contumacious conduct has been established by the AO? - HELD THAT:- Show cause notices issued u/s 274 of the Act r.w.s. 271 of the Act dated 29.12.2016 issued by the AO before imposing penalty does not contain the specific charge against the assessee namely as to whether the assessee was being proceeded against for “having concealed particulars of income” or “having furnished inaccurate particulars of income”. A copy of the show cause notice u/s 274 of the Act dated 29.12.2016 was filed before us and perusal of the same reveals that AO has not struck out the irrelevant portion in the show cause notice and, therefore, the show cause notice does not specify the charge against the assessee as to whether the charge is for “concealment of particulars of income” or “furnishing of inaccurate particulars of income”. M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] 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. Imposition of penalty on defective show cause notice without specifying the charge against the assessee cannot be sustained. - Decided against revenue. Unclaimed credit balances - Relevant assessment year - HELD THAT:- CIT(A) taking note that the liability was pertaining to AY 1983-84 when the assessee/entity’s income was not taxable and the liability of ₹ 1.75 cr. pertained to AY 1983-84 which was never allowed as deduction in the year in which it was debited/created so, the reversal of the same in the relevant assessment year cannot be brought to tax, which action of the Ld. CIT(A) cannot be found fault with. The judgments cited by the Ld. CIT, DR is distinguishable on the facts of this case and, therefore, we do not find any infirmity in the order of the Ld. CIT(A) and so, we confirm the same and dismiss the appeal of the revenue. Disallowing the contribution made by the assessee to Kolkata Port Trust officer’s Club - HELD THAT:- We note that the assessee Port Trust has been contributing every year for more than four decades annual contribution to this Officers club for the welfare of the employees and this annual contribution has been consistently allowed by the AO in earlier assessment years after scrutiny u/s. 143(3) of the Act. Therefore, based on the principles of consistency since the facts permeating in the earlier years are the same, and there is no change in the facts and law the disallowance was not warranted and, therefore, relying on the decision of CIT Vs. Radhasoami Satsang [1992 (9) TMI 71 - ALLAHABAD HIGH COURT] as well as the case law referred to above, we are inclined to allow the ground of appeal raised by the assessee Disallowing the compensation claimed - AR submitted that this compensation claim has got two parts (i) unrealised portion of the compensation and (ii) realised portion - main arguments of the assessee is that the unrealised portion of the compensation of ₹ 101 cr.(approx) is capital in nature and, therefore, not taxable in the hands of the assessee - HELD THAT:- Since the receipt of the portion of the compensation of ₹ 101 cr. in question is from the properties of the assessee held unauthorised by various parties, the receipt received by the assessee whether it is called compensation, damages etc. which is towards the loss of income is a revenue receipt and cannot be termed as a capital receipt since there is no loss of source of income. Therefore, this argument of the Ld. AR of the assessee is bereft of any merit and, therefore not accepted. Then coming to the taxability in respect of the unrealised portion of compensation, we are of the opinion that the quantum of amount towards loss of income respect of the property of the assessee has not been finalised since it is lis-pendence. Therefore, the amount in question has not reached finality and, therefore, not crystallised in the year under consideration, so when it gets crystallised/finalised, then it will be treated as a revenue receipt and taxed in accordance to law. Coming to this conclusion, we also apply the real income theory which is propounded in CIT Vs. M/s. Shoorji Vallabhdas & Co. [1962 (3) TMI 6 - SUPREME COURT] and Godhra Electricity Co. Ltd. Vs. CIT [1997 (4) TMI 4 - SUPREME COURT] and since no real income has arisen for the assessee in the year under consideration in respect of the sum of ₹ 101 cr. (unrealised portion of the compensation) this amount need not be taxed in this assessment year, and we order accordingly. For this, we also rely on the decision of the Hon’ble Bombay High Court in the case of DSL Enterprises (P) Ltd. Vs. Mrs. N.C. Chandratre, Income-tax Officer [2013 (3) TMI 440 - BOMBAY HIGH COURT].
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