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2019 (5) TMI 417

..... ING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. Also see DR. MURARI MOHAN KOLEY [2018 (9) TMI 1 - CALCUTTA HIGH COURT] - Decided in favour of assessee. - I.T.A. No. 337/Kol/2018 - 1-5-2019 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For the Appellant : Shri K.M. Roy, FCA For the Respondent : Shri N.B. Som, Addl. CIT (DR) ORDER PER SHRI A.T.VARKEY, JM This is an appeal preferred by the Assessee against the action of Ld. CIT(A) - 22 Kolkata dated 29.12.2017 in confirming the penalty levied by A.O u/s 271(1)(c) of the Income Tax Act (hereinafter referred to as the Act ) for Assessment Year 2001-02. 2. At the outset itself, the learned AR drew our attention to the defective notice dated 06.03.2006 wherein the show cause notice reveals that the AO has not stricken down either of the limbs that is for which specific fault the assessee is being procee .....

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..... aw prevalent for the AY 2001-02. Therefore, the AO had correctly imposed penalty as per provisions of the law. 5. The matter was agitated before the Ld. ClT(A)-22, Kolkata who upon analysis of the factual and legal implications, confirmed the action of the Assessing Officer. The operative part of his decision vide page-S of the order is reproduced as below : "1. I have carefully considered the action of the Ld. AO in imposing a penalty of ₹ 1,49,70,591/- on the assessee on grounds of filing of "inaccurate particulars of income". It is seen that for the year under appeal, the appellant has not preferred appeal before the Hon'ble ITAT against the order of the Ld.AO which had been confirmed by the 1st Appellate Authority. I am not inclined to agree with the Ld. AR for the assessee that the factual and legal matrix being the same as the other years that were set aside by the Hon'ble ITAT, the appeal ought to be dropped. 2. By the appellant's own admission if does not have any documents relating to the impugned A.Y. 2001-02 for which the Ld.AO has imposed the penalty. I am also not in agreement with the plea that the Ld.AO will need to adjudicate afresh, .....

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..... sustainable in the absence of satisfaction in the order. 3. That appellant craves to raise, additional grounds during hearing. 7. It is found that the 1st ground of appeal is factually incorrect since the assessment order has not been set aside and it has attained finality after being confirmed by the Ld. CIT(A), since the assessee has preferred not to file any appeal against the order of the First Appellate Authority. 8. As for the 2nd ground of appeal regarding absence of satisfaction of the assessment order the same is again factually not correct since the Assessing Officer had in clear terms mentioned that there is a prima facie case for initiation of penalty proceedings u/s 271(1)(c) of the IT Act, 1961. Without prejudice to the above, it may be mentioned that Hon ble Jurisdictional High Court in the case of Dr. Shyamal Baran Mondal vs CIT (2011 244 CTR 631) held that Section 271 nowhere mandates that recording of satisfaction about concealment of assessee s income must be in specific terms and words; satisfaction of Assessing Officer must reflect from order either with expressed words recorded by the Assessing Officer himself or by overt act and action. 9. In this case, the s .....

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..... Dr. Murari Mohan Koley, ITAT No. 306 of 2017, GA No.2968 of 2017 dated 18.07.2018 wherein also the Hon ble High Court has upheld the above proposition of law and dismissed the appeal of the revenue. 5. We note that all the case laws cited before us by the Ld. DR has been dealt with elaborately by the Coordinate Bench of this Tribunal in the case of Jeetmal Choraria Vs. ACIT, ITA No. 956/Kol/2016 for AY 2010-11 dated 01.12.2017, wherein the Tribunal has noted as under: 7. The learned DR submitted that the Hon ble Calcutta High Court in the case of Dr.Syamal Baran Mondal Vs. CIT (2011) 244 CTR 631 (Cal) has taken a view that Sec.271 does not mandate that the recording 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 .....

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..... his 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 show cause notice u/s.274 of the Act. This is not factually correct. One of the parties before the group of Assessees before the Karnataka High Court in the case of Manjunatha 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 h .....

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..... 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 cause notice u/s.274 of the Act, there is no mention whether the proceedings are for furnishing inaccurate particulars or concealing particulars of income, that will not vitiate the penalty proceedings. In the present case there is no whisper 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 .....

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