TMI Blog2019 (7) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) exparte of assessee. 2. The above said appeal is listed under the caption of early hearing and the ld.AR 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 r.w.s 271(1)(c) of the Act on 26.03.2013, copy of the same is placed on record, and in view of the decision supra the imposition on defective notice is not maintainable. 3. He prayed to dispose off the main appeal itself in view of the legal issue raised which is covered by the decision of Hon ble Supreme Court. The Ld. DR reported no objection. Therefore, with the content of both the parties we proceed to hear the main appeal. 4. The ld.AR submits that the statutory notice dt. 26.03.2013 issued by the AO [I.T.O, Kolkata] U/Sec.274 r.w.s 271 of the Act is defective. In support of his contention, he placed reliance on the decision of the Hon'ble Karnataka High Court in the case of CIT vs SSA'S Emerald Meadows supra in ITA No. 380 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for granting reasonable 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. Hon ble 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 assessee s appeal was allowed by the Hon ble 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. Therefore, it is submitted that service of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 been given in the written note filed before us. 9. In the case of CIT Vs. Kaushalya (supra), the Hon'ble Bombay High Court held that section 274 or any other provision in the Act or the Rules, does not either mandate the giving of notice or its issuance in a particular form. Penalty proceedings are quasi-criminal in nature. Section 274 contains the principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the Principles of natural justice on the ground of absence of opportunity, it has to be established that prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Appellate Authority, the initiated penal proceedings, no longer exists. If the Appellate Authority had initiated penal proceedings on the basis of the addition sustained under a new ground it has a legal sanctum. This was not so in this case and therefore, on both the grounds the impugned order passed by the Appellate Authority as well as the Assessing Authority was set-aside by its order dated 9th April, 2009. Aggrieved by the said order, the revenue filed appeal before High Court. The Hon'ble High Court framed the following question of law in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how 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 portion cannot by itself invalidate the notice. The Tribunal Benches at Mumbai and Patna being subordinate to the Hon'ble Bombay High Court and Patna High Court are bound to follow the aforesaid view. The Tribunal Benchs at Bangalore have to follow the decision of the Hon'ble Karnataka High Court. As far as benches of Tribunal in other jurisdictions are concerned, there are two views on the issue, one in favour of the Assessee rendered by the Hon'ble Karnataka High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
