TMI Blog2019 (5) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 26-4-2019 - Shri S.S. Viswanethra Ravi, JM And Dr. A.L.Saini, AM For the Appellant : Shri Harshbardhan Bhardwaj, Advocate For the Revenue : Shri Radhey Shyam, CIT DR ORDER PER DR. ARJUN LAL SAINI, AM: The captioned appeal filed by the Assessee, pertaining to assessment year 2013-14, is directed against the orders passed by the Commissioner of Income Tax (Appeal)-25, Kolkata, which in turn arises out of penalty order passed by the Assessing Officer u/s 271(1)(c ) of the Income Tax Act, 1961 (in short the Act ) dated 29.09.2016. 2. The ld. AR submits that the notice dated 16/03/2016 issued by the AO u/s 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 covered 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 of the Act on 16/03/2016 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 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 ITAT in a recent decision in the case of Mahesh M Gandhi vs ACIT [TS-5465-ITAT-2017(MUMBAI)-O] also dealt with this aspect. The taxpayer had not off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e four appeals are, therefore, dismissed and the stand of the Ld. Commissioner of Income Tax (Appeal) is affirmed. 8. Hon ble Madras High Court in the case of Sundaram Finance Ltd. vs. ACIT in [2018] 93 taxmann.com 250 (Madras) wherein it was held as under: 16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessee's case, as it is purely a question of fact. Apart from that, the assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put to prejudice. All violations will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at service of notice u/s.274 for initiating penalty proceedings u/s.271(1)(c) of the IT. Act, would constitute valid initiation of penalty proceedings and the case may be heard on merits. 5. In view of above, the Ld. DR prayed the Bench to dismiss the grounds 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned 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 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 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 woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically 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 initiated by the Assessing Authority was legal and valid? The Hon ble Karnataka High Court held in the negative and against the revenue on both the questions. Therefore 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). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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). 15. We have already observed that the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether 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 dated 16/03/2016 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 furn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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