TMI Blog2020 (6) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... view that imposition of penalty cannot be sustained. - Decided in favour of assessee. - I.T.A. No. 262/Gau/2018 - - - Dated:- 5-6-2020 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For the Appellant : None For the Respondent : Shri M. K. Das, Addl. CIT ORDER PER SHRI A.T.VARKEY, JM This appeal preferred by the assessee is against the order of the Ld. CIT(A), Shillong dated 24.07.2018 for AY 2014-15 against the confirmation of penalty imposed u/s. 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. Though none appeared for the assessee at the time of hearing in the midst of Covid - 19 Pandemic we note that the first ground of appeal of the assessee is against the order of the AO passed u/s. 271(1)(c) of the Act dated 29.12.2017 for AY 2014-15 is bad and irregular in law. While going through the penalty order passed by AO with the assistance of the Ld. DR appearing for the revenue, it has come to our notice that the AO at page 2 of the impugned penalty order second para (not numbered) reads as under: A notice u/s. 271(1)(c) of the I. T. Act, 1961 was issued to the assessee initiating penalty proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by not striking out which is applicable, therefore, in the light of the decision of the Hon ble Karnataka High Court in the case of CIT vs. SSA s Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 wherein the Hon ble Karnataka High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory (2013) 359 ITR 565 took a view that 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. We also note that as against the decision of the Hon ble Karnataka High Court the revenue preferred an appeal in SLP in CC No.11485 of 2016 and the Hon ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department. We also note that the decision of the Hon ble Bombay High Court in the case of CIT vs Shri Samson Perinchery in ITA No.1154 of 2014 dated 05.01.2017 wherein the Hon ble Bombay High Court following the decision of the Hon ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Gin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 prejudice is caused to the concerned 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 appeal viz., 1. Whether the notice issued under Section 271(1)(c) in the printed form without specifically 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the case of Manjunatha Cotton Ginning (supra) and other of the Hon ble Bombay High Court in the case of Smt.Kaushalya. It is settled legal position that 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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