TMI Blog2018 (2) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... g penalty u/s 271(1)(c) of the Income Tax Act, 1961 (Act). 3. The facts and circumstances under which penalty u/s 271(1)(c) of the Act was imposed on the assessee are as follows :- The Assessee is company. It carries on the business of profit on sale of derivatives. The assessee also has income under the head income from property and income in the form of interest. In the course of assessment proceedings the assessee had credited rental income of ₹ 14,1l,820/- and other income of ₹ 2,53,119/- in its Profit Loss A/c for the year ended on 31.03.2006. In the computation of the income the rental income has been offered for taxation under the head 'Income from House Property'. The 'Other Income' comprised of interest, dividend and profit on sale of mutual funds and derivatives. The examination of the Schedule-6 to the Balance Sheet revealed that the assessee had claimed its holding of shares, mutual funds, derivatives as Investment and not as Stock-in-Trade. The AO therefore came to the conclusion that the assessee had no business during the year and as such, deductions on account of Keyman insurance and Depreciation are not allowable expenses for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision 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. Our attention was also drawn to the decision of ITAT in the case of Suvaprasanna Bhattacharya vs ACIT in ITA No.1303/Kol/2010 dated 06.11.2015 wherein identical proposition has been followed by the Tribunal. 8. The ld. DR submitted that it is not mandatory to specify the charge in the show cause notice u/s 274 of the Act. In this regard he placed reliance on certain judicial pronouncements. 9. We have considered the rival submissions. Similar submissions made by the ld. DR in the case of Shri Jeetmal Choraria vs ACIT in ITA No.956/Kol/2016 order dated 01.12.2017 and this tribunal dealt with this similar arguments of the ld. DR in the following manner : 7. The learned DR submitted that the Hon ble Calcutta High Court in the case of Dr.Sya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t.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 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 factu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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