TMI Blog2018 (5) TMI 1581X X X X Extracts X X X X X X X X Extracts X X X X ..... enue and the Cross Objection filed by the assessee is against the order of Ld. CIT(A)-20, Kolkata dated 13.01.2017 for AY 2011-12. The revenue is against the action of Ld. CIT(A) for deleting penalty of ₹ 42,83,199/- imposed u/s. 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) and assessee has filed this cross objection against the order of Ld. CIT(A) in not appreciating the fact that initiation of penalty proceedings u/s. 271(1)(c) of the Act without specifying the limb as to whether the assessee has concealed his income or has furnished any inaccurate particulars. 2. In this appeal the revenue has challenged the order of Ld. CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act. The facts and circumstances under which penalty u/s 271(1)(c) of the Act was imposed on the assessee by the AO are that in this case a search and seizure operation was carried out in respect of Rupa Group of cases on 07.11.2013 and on subsequent dates. Late Baijnath Agarwal was one of the assessee of this group. The assessee filed his original return of income on 29.07.2011 declaring total income of ₹ 12,216/-. Subsequently, in pursuance to notice u/s. 153C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice issued u/s 274 of the Act r.w.s. 271 of the Act dated 22.03.2016 before imposing penalty does not contain the specific charge against the assessee namely as to whether the assessee was guilty of 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 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 of concealment of particulars of income or furnishing of inaccurate particulars of income. The same is reproduced for the purpose of ready reference: Whereas in the course of proceedings before me for the assessment year 2011-12 it appears that you have concealed the particulars or furnished inaccurate particulars of such income. 4. The ld. Counsel for the assessee drew our attention to 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 decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this decision, in our view is not of any help to the plea of the Revenue before us. 8. The learned DR relied on 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 quasi-criminal in nature. Section 274 contains the principle of natural justice of the assessee being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deleted. The Assessing Authority was not sure as to whether she had proceeded on the basis that the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ginning (supra) in as much as the ratio laid down in the said case was only with reference to 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 Benchs 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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