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2018 (8) TMI 676

274 r.w.s 271 of the Act, placed on record does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - No penalty - Decided in favor of assessee. - I.T.A No. 1928/Kol/2017 - 10-8-2018 - Shri M. Balaganesh, Accountant Member And Shri S.S. Viswanethra Ravi, Judicial Member For The Appellant : Varsha Jalan,, Advocate, ld.AR For The Respondent : Shri S. Mukherjee, Addl.CIT, ld.Sr.DR ORDER Shri S.S. Viswanethra Ravi The above appeal by the Assessee is directed against the order of the Commissioner of Income Tax (Appeals), 3, Kolkata dt. 31-07- 2017 for the A.Y 2010-11, wherein he confirmed the penalty of ₹ 1, 15, 671/- imposed u/s. 271(1)(c) of the Act by the AO. 2. The ld. AR submits that the notice dt. 14-03-2013 issued by the AO [ITO, Ward 7(2), Kolkata U/Sec 274 r.w.s 271(1) ( c) of the Act is defective for not mentioning the specific charge and placed reliance on the decision of the Hon ble Supreme Court in the case of SSA s Emerald Meadows. 3. The ld.AR further submits that the issue raised in the appeal is covere .....

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nable 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.com 51 looked into the issue very closely and opined that after perusing the ratio of the judgement rendered in Manjunatha Coton and Ginning Factory we find that the assessees appeal was allowed by the Honble High Court after considering the multiple factors and not solely on the basis of defect in notice u/s 274. Therefore we are of the opinion that the penalty could not be deleted merely on the basis of defect pointed by the Ld AR in the notice and therefore the legal grounds raised are rejected. 6. The Mumbai bench of !TAT in a recent decision in the case of Mahesh M Gandhi vs ACIT .....

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raised in appeal and to confirm the penalty imposed by the AO and confirmed by the CIT-A respectively. 6. We have heard the rival submissions and considered the written submissions and the case laws relied upon by the Ld.DR. We find the same set of written submissions were filed before the Coordinate Bench of this Tribunal in the case of Jeetmal Choraria in ITA 956/KOL/16 for AY 2010-11, wherein the Coordinate Bench elaborately discussed the facts in the decisions as relied upon by the Ld.DR and the principle laid down by the respective Hon ble High Courts at Bombay and Patna and preferred to follow the ratio laid down by the Hon ble High Court of Karnataka in the case of Manjunatha Cotton and Ginning supra by taking support of the established principle for a proposition when there are two views on the issue, one in the favouring of assessee should be adopted, which enunciated by the Hon ble Supreme Court in the case of Vegetable Products ltd reported in 88 ITR 192 (SC). We are in agreement with the reasoning of the Co-ordinate Bench in its order dt: 01-12-2017 in the case of Jeetmal Choraria and the same is reproduced herein below for ready reference: 7. The learned DR submitted t .....

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The ITAT Mumbai Bench in the case of Dhanraj Mills Pvt.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 .....

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efore the decision rendered by the ITAT Mumbai in the case of 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 .....

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r it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. 7. We find the notice dt. 14-03-2013 issued u/s. 274 r.w.s 271 of the Act, placed on record does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. 8. Further, we find that Revenue had preferred a SLP before the Hon ble Supreme Court against this judgment which was dismissed in CC No. 11485/2016 dated 5.8.2016 by observing as under:- UPON hearing the counsel, the Court made the following ORDER Delay condoned. We do not find any merit in this petition. The special leave petition is , accordingl .....

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