TMI Blog2018 (7) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... alaganesh, Accountant Member And Shri S.S. Viswanethra Ravi, Judicial Member For The Appellant : Ms. Pinki Shaw, ld. AR For The Respondent : Shri A.Bhattacharjee, Addl.CIT, ld. Sr. DR ORDER PER BENCH All the above appeals by the Assessee are directed against the separate orders of the Commissioner of Income Tax (Appeals), XX, Kolkata dt. 28-04-2017 30-05-2014 for the A. Ys 2002-03 to 2006- 07 respectively, wherein he confirmed the penalties of ₹ 18, 081/-, ₹ 21, 266/-, ₹ 17, 052/-, ₹ 56, 100/- ₹ 64, 926/- imposed u/s. 271(1)(c) of the Act by the AO. 2. Since the facts in all the above cases are identical and issues raised by the assessee therein are similar to each other and with the consent of both the parties, we proceed to hear all the cases together and dispose of the same by a consolidated order for the sake of convenience. 3. First we shall take up the appeal in ITA No. 1509/Kol/2017 A. Y 2002-03. 4. The ld. AR submits that it was contended before the CIT-A the notice dt. 30-06-2014 issued by the AO U/Sec 274 of the Act is defective for not mentioning the specific charge and placed reliance on the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Kaushalya (1992) wherein it was held that mere not striking off specific limb cannot by itself invalidate notice issued u/ s . 274 of the Act . The language of the section does not speak about the issuance of notice . All that is required that the assessee be given an opportunity of show cause . . 4 . The Hon'ble Bombay High Court (Nagpur Bench) in the case of M/s . Maharaj Garage Company Vs . CIT in its judgement Dt . 22-08-2017, has also held that 15 . The requirement of Section 274 of the Income Tax Act for granting reasonable opportunity of being heard in the matter cannot be stretched to the extent of framing a specific charge or asking the assessee an explanation in respect of the quantum of penalty proposed to be imposed, as has been urged . . . . . It further observed that: 16 . It is not in dispute that a reasonable opportunity of being heard in the matter, as required by Section 274 of the said Act was given to the assessee before imposing the penalty by the Income Tax Officer . 5 . Honble Mumbai E Bench in the case of Earthmoving Equipment Service Corporation vs DCIT 22(2), Mumbai (2017) 84 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Apex Court, vide SLP (CC No . 11485/2016) on 05/08/2016 . The judgment of Hon'ble Jurisdictional High Court in CIT Vs Kaushalya (supra) is still having a binding force on us . Thus, with utmost regards to the judgment of Karnataka High Court in CIT Vs Manjunatha Cotton Ginning Factory (supra) we are bound to follow the judgment of jurisdictional High Court in CIT Vs Kaushalya (supra) . Our view also find support from a decision of the Mumbai Bench of the Tribunal in the case of Dhawal K . Jain vs Income Tax Officer (ITA No . 996/Mum/2014) order dated 30/09/2016 . With these observations, the argument of Id . counsel of the assessee on the legal/technical ground is rejected . Thus, all these four appeals are, therefore, dismissed and the stand of the Ld . Commissioner of Income Tax (Appeal) is affirmed . 8 . Therefore, it is submitted that service of notice ujs . 274 for initiating penalty proceedings ujs . 271(1)(c) of the IT . Act, would constitute valid initiation of penalty proceedings and the case may be heard on merits . 7. In view of above, the Ld. DR prayed to dismiss the grounds raised in appeal and to confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(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 heard before levying penalty . Rules of natural justice cannot be imprisoned in any straight-jacket formula . 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 enabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, nolonger 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 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 of the Assessee rendered by the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning (supra) and other of the Hon ble Bombay High Court in the case of Smt . Kaushalya ..... X X X X Extracts X X X X X X X X Extracts X X X X
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