TMI Blog2017 (12) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... ri S.S.Viswanethra Ravi, JM: This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), 21, Kolkata dt. 24-02-2016 for the A.Y 2011-12, wherein he deleted the penalty of ₹ 11,68,082/- imposed u/s. 271(1)(c) of the Act by the AO. 2. The ld.DR relied on the order of the AO and opposed to the order of the CIT-A in deleting the impugned penalty imposed u/s. 271(1)(c) of the Act. He also argued that the CIT-A was not justified in deleting the same. In support of his contention, he also submitted a detailed submission along with case laws, which extracted as under:- 1. The Hon ble ITAT, 'D' bench, Kolkata, in the course of hearing of appeal of DCIT,CC- 4(3), Kol Vs. M/s. Jai Loknath Oil Extraction (P) Ltd for the A.Y 2011-12, at the request of the DR, allowed the department to make a written submission, on the issue of whether non marking upon concerned detail in the notice u/s.274, outlining the type of default would constitute grounds for rejection of satisfaction and levy of penalty u/s.271(1)(c) of the IT. Act. 2. The judgement of the Hon'ble Calcutta High Court in the case Dr.Syamal Baran Mondal Vs. CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that service of notice u/s.274 for initiating penalty proceedings u/ s.271 (l)(c) of the I.T. Act, would constitute valid initiation of penalty proceedings and the case may be heard on merits. 3. In view of above, Ld. DR prayed to allow the grounds raised in appeal of revenue by confirming the penalty imposed by the AO u/s. 271(1)(c) of the Act. 4. On the other hand, the ld.AR submits that the issue raised in the appeal is covered in favour of assessee by the decision of the Hon ble Supreme Court in the case of SSA s Emerald Meadows. He also submits that the AO imposed penalty on defective notice issued u/s. 274 r.w.s 271(1)(c) of the Act on 27-03-2014 and in view of the decision supra the imposition of penalty on defective notice is not maintainable. 5. The ld.AR of the assessee further submits that the statutory notice dt. 27-03-2014 issued by the AO [ DCIT,CC-XXVII, Kolkata ] u/s. 274 r.w.s 271 of the Act is defective, copy of the same is on record. He further argued that the issue in hand as raised by the assessee is squarely covered in favour of assessee by the decision of the Hon ble Supreme Court in the case of SSA s Emerald Meadows. In support of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 enable hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal? 2. Whether the proceedings initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It is settled legal position that where two views are available on an issue, the view favourable to the Assessee has to be followed. We therefore prefer to follow the view expressed by the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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