TMI Blog2018 (3) TMI 1708X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer is cancelled. - Decided in favour of assessee - I.T.A. Nos.2987 & 2988/CHNY/2017 /Assessment years : 2008-09 & 2010-2011 - - - Dated:- 5-3-2018 - Shri Abraham P.George And Shri George Mathan, JJ. Appellant by : Shri. R. Vijayaraghavan, Adv. Respondent by : Ms. D. Kumutha, IRS, JCIT. ORDER Abraham P. George, Assessee though these appeals assails levy of penalty for the impugned assessment years which was confirmed by the ld. Commissioner of Income Tax (Appeals)-2, Chennai through his order dated 29.09.2017. 2. Ld. Counsel for the assessee at the outset submitted that the notice issued by the ld. Assessing Officer u/s.274 r.w.s.271 of the Income Tax Act, 1961 (in short the Act ) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o her, the notice u/s.274 r.w.s. 271 of the Act did not suffer any infirmity. As per the ld. DR, the ld. Assessing Officer had intentionally not scored of any portion from such notice since assessee was guilty of both the offences. 4. We have considered the rival contentions and perused the orders of the authorities below. Validity of a notice issued under Section 274 r.w.s. 271 of the Act goes to the root of the jurisdiction to levy a penalty under Section 271 (1) (c) of the Act and can therefore be considered at any stage of the appellate proceedings. Notice issued to the assessee under these Sections is reproduced hereunder:- NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME-TAX ACT, 1961 (Notice u/s 271(1)(c) P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in writing on or before that date when shall be considered before any such order is made under section 271 (1) ( c) of the Act. Sd/- (T.M. SUGANTHAMALA) Deputy Commissioner of Income Tax, Business Circle II, Chennai. Contention of the ld. DR as well as the view taken by the ld. Commissioner of Income Tax (Appeals) were that assessee was guilty of both concealment of income as well as furnishing of inaccurate particulars of income. However, a reading of the above notice clearly show that the word used for linking the two portions is or and not and . An assessee in our opinion has every right to know which alleged default he has to explain. If it is both, it is necessary to mention so, in the notice. Without knowing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short the Act ) to be bad 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 vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared invalid in the penalty proceedings . View taken by the Hon ble Karnataka High Court in the above judgment was indirectly affirmed by the Hon ble Apex Court, when it dismissed an SLP filed by the Revenue against the judgment in the case of SSA s Emerald Meadows (supra), specifically observing that there was no merits in the petition filed by the Revenue. Considering the above cited judgments, we hold that notices issued u/s.274 r.w.s. 271 of the Act, reproduced by us at para 4 were not valid. Exconsequenti, the penalty orders for the impugned assessment years are set aside. 5. In the result, the appeals of the assessee for b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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