TMI Blog2018 (9) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... ember This Revenue s appeal for assessment year 2012-13 challenges correctness of Commissioner of Income Tax (Appeals)-5, Kolkata s order dated 03.07.2017, passed in case No.472/CIT(A)-5/W-15(1)/15-16, reversing the Assessing Officer s action deleting imposing penalty of ₹50,21,837/- involving proceedings u/s. 271(1)(c) of the Income Tax Act, 1961; in short the Act . 2. We have heard Learned Departmental Representative arguing in favour the above impugned penalty. Case file perused. It emerges first of all that CIT(A) s detailed discussion on the issue reads as under:- 1. By way of additional ground the objection raised is that the AO failed to strike off the irrelevant portion in the notice initiating penalty u/s 271(1)(c)/ section 274. Relying on the decision of Manjunatha Cotton and Ginning Factory Others [2013] 359 ITR 565 (Kar), the ground has been raised for cancellation of penalty imposed subsequent to the initiation of the said faulty notice. 1.1 I have perused the copy of the notice u/s 271(1)(c)/274 dated 21.03.2015. The notice has been issued in a general proforma which is for initiating penalty under variuos clauses of section 271. He notice ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law as it did not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. the Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT v. Manjunatha Cotton Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.) 1.3 Some of the decisions which have been relied upon on the point of not striking off the irrelevant portion in the penalty notice is listed below:- 1. Order of Bombay High Court in the case of CIT vs. Shri Samson Perinchery. 2. ITAT Order, Kolkata Bench in the case of Gautam Jhunjhunwala vs. ITO. 3. Order of Karnataka High Court in the case of CIT vs. Manjunatha Cotton Grinning Factory. 4. Order of Karnataka High Court in the case of CIT vs. SSA S Emerald Meadows. 5. ITAT Order, Kolkata Bench in the case of Abu Mansur Ali vs. DCIT 6. ITAT Order, Kolkata Bench in the case of M/s Atmaram Co.v. DCIT. 7. ITAT Order, Kolkata Bench in the case of ITO vs. M/s Swastik Refi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of satisfaction about concealment of income must be in specific terms and words and that satisfaction of AO must reflect from the order either with expressed words recorded by the AO or by his overt act and action. In our view this decision is on the question of recording satisfaction and not in the context of specific charge in the mandatory show cause notice u/s.274 of the Act. Therefore reference to 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unatha Cotton Ginning (supra) was an Assessee by name M/s.Veerabhadrappa Sangappa Co., in ITA NO.5020 OF 2009 which was an appeal by the revenue. The Tribunal held that on perusal of the notice issued under Section 271(1)(c) of the Act, it is clear that it is a standard proforma used by the Assessing Authority. Before issuing the notice the inappropriate words and paragraphs were neither struck off nor 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not vitiate the penalty proceedings. In the present case there is no whispher in the order of assessment on this aspect. We have pointed out this aspect in the earlier part of this order. Hence, this decision will not be of any assistance to the plea of the revenue before us. Even otherwise this decision does not follow the ratio laid down by the Hon ble Karnataka High Court in the case of Manjunatha Cotton 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 port ..... X X X X Extracts X X X X X X X X Extracts X X X X
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