Late Baijnath Agarwal L/H Shri Kunj Bihari Agarwal, Kolkata V. ACIT, Cent. Circle-2(3), Kolkata, Kolkata

CO 18/KOL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3803 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Keywords: Search and seizure; Principle of natural justice; Question of law; Initiation of penalty proceedings
• Section: 69; 27

Judgement Text

1 ITA NO.476/KOL/2017 & CO NO.18/KOL/ 2017 LATE BAIJNATH AGARWAL, AY- 2011-12 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 476/KOL/2017 ASSESSMENT YEAR: 2011-12 ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(3), KOLKATA. VS. LATE BAIJNATH AGARWAL, L/H SHRI KUNJ BIHARI AGARWAL (PAN: ACTPA4174A) APPELLANT RESPONDENT & C.O. NO. 18/KOL/2017 IN I.T.A. NO. 476/KOL/2017 ASSESSMENT YEAR: 2011-12 LATE BAIJNATH AGARWAL L/H SHRI KUNJ BIHARI AGARWAL VS. ASSISTANT COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-2(3), KOLKATA. CROSS OBJECTOR RESPONDENT DATE OF HEARING 15.05.2018 DATE OF PRONOUNCEMENT 23.05.2018 FOR THE REVENUE SHRI G. HANGSHING, CIT FOR THE ASSESSEE/CROSS OBJECTOR SHRI A. K. TULSIYAN , FCA ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJEC TION FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A)-20, KOLKATA DATED 1 3.01.2017 FOR AY 2011-12. THE REVENUE IS AGAINST THE ACTION OF LD. CIT(A) FOR DEL ETING PENALTY OF RS.42,83,199/- IMPOSED U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT) AND ASSESSEE HAS FILED THIS CROSS OBJECTION AGAINST THE ORDER OF LD. CIT(A) IN NOT APPRECIATING THE 2 ITA NO.476/KOL/2017 & CO NO.18/KOL/ 2017 LATE BAIJNATH AGARWAL, AY- 2011-12 FACT THAT INITIATION OF PENALTY PROCEEDINGS U/S. 27 1(1)(C) OF THE ACT WITHOUT SPECIFYING THE LIMB AS TO WHETHER THE ASSESSEE HAS CONCEALED HIS I NCOME OR HAS FURNISHED ANY INACCURATE PARTICULARS. 2. IN THIS APPEAL THE REVENUE HAS CHALLENGED THE OR DER OF LD. CIT(A) IN DELETING THE PENALTY U/S. 271(1)(C) OF THE ACT. THE FACTS AND CI RCUMSTANCES UNDER WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED ON THE ASSESSEE BY THE AO ARE THAT IN THIS CASE A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN RESPECT OF RUPA GROUP OF CASES ON 07.11.2013 AND ON SUBSEQUENT DATES. LATE BAIJNATH AGARWAL WAS ONE OF THE ASSESSEE OF THIS GROUP. THE ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME ON 29.07.2011 DECLARING TOTAL INCOME OF RS.12,216/-. SUBSEQUENTLY, IN PURSUANCE TO NOTICE U/S. 153C OF THE ACT DATED 09.11.2015, THE ASSESSEE FILED HIS RETURN ON 12.01.2016 SHOWING TOTAL INCOME OF RS.1,43,74,816/-. THE RETURN WAS SELECTED FOR COMPULSORY SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S. 153C/143(3) OF THE ACT ON 22.03.2016 AT A TOTAL INC OME OF RS.1,43,74,820/-. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION A LARGE NUMB ER OF BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED AND IMPOUNDED. FURTHER, A NUMBER OF PE N DRIVE, COMPUTER HARD DISKS AND OTHER ELECTRONIC STORAGE DEVICES HAVE BEEN SEIZED AND THE IR EXTRACT WAS TAKEN AND IT WAS FOUND THAT THE HUGE CASH PAYMENT WAS MADE BY THE GROUP FO R HOUSE CONSTRUCTION, PAYMENT MADE FOR CAR PARKING SPACE, PROFIT FROM SALE OF LAND AT RAJARHAT INVESTMENT MADE TO VARIOUS PARTIES ON INTEREST ETC. ACCORDING TO AO, THE ASSE SSEE HAS, IN HIS ORIGINAL RETURN OF INCOME, NOT DISCLOSED FLATS AND PARKING ALONG WITH CASH PAY MENT FOR PURCHASE OF IMMOVABLE ASSETS. WHEN THE L/H OF THE ASSESSEE CONFRONTED WITH THE SE IZED AFOREMENTIONED MATERIALS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ACCEPTED THAT AND ACCORDINGLY, DISCLOSED IT IN THE RETURN FILED IN COMPLIANCE TO T HE NOTICE U/S 153C. MOST OF THE PROPERTIES HAVE BEEN PURCHASED IN THE NAME OF THE RUPA & COMPA NY WHICH WAS MAINLY REPRESENTED BY SHRI KUNJ BEHARI AGARWAL. FROM THE STATEMENT OF AFFAIRS OF THE CAPITAL OF THE ASSESSEE SUBMITTED WITH ORIGINAL RETURN OF INCOME REFLECTS T HAT THE ASSESSEE HAS NOT SUFFICIENT FUND TO INVEST IN SUCH PROPERTIES. HOWEVER, ON THE DISCLOSU RE OF SUCH CONCEALED INCOME IN THE RETURN FILED U/S 153C, THE ASSESSMENT WAS COMPLETED ACCEPTING THE INCOME OFFERED UNDER THE HEAD INCOME FROM OTHER SOURCE. BEING SATISFIED BY THE AO THAT THE ASSESSEE HAS CONCEALED HIS INCOME OF RS. 1,43,62,600/-, PENALTY PROCEEDING U/S. 274 READ WITH SEC. 3 ITA NO.476/KOL/2017 & CO NO.18/KOL/ 2017 LATE BAIJNATH AGARWAL, AY- 2011-12 271(1)(C) OF THE ACT WAS INITIATED. IN COMPLIANCE TO THE SAID NOTICE THE ASSESSEE HAS SUBMITTED REPLY AND THE SAME WAS REPRODUCED BY AO I N HIS ORDER PASSED U/S. 271(1)(C) OF THE ACT. THE SAID SUBMISSION WAS NOT ACCEPTABLE TO THE AO AND HE CONSIDERED THAT IT IS A FIT CASE TO BE APPLIED THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT AND HE IMPOSED A PENALTY OF RS.42,83,199/-. AGGRIEVED, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A), WHO DELETED THE PENALTY IMPOSED BY THE AO. AGGRIEVED, REVENUE IS BEFORE US. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE S UBMITTED BEFORE US THAT THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT R.W.S. 271 OF THE ACT DATED 22.03.2016 BEFORE IMPOSING PENALTY DOES NOT CONTAIN THE SPECIFIC CHARGE AGAINS T THE ASSESSEE NAMELY AS TO WHETHER THE ASSESSEE WAS GUILTY OF HAVING CONCEALED PARTICULARS OF INCOME OR HAVING FURNISHED INACCURATE PARTICULARS OF INCOME. A COPY OF THE SHO W CAUSE NOTICE U/S 274 OF THE ACT WAS FILED BEFORE US AND PERUSAL OF THE SAME REVEALS THA T AO HAS NOT STRUCK OUT THE IRRELEVANT PORTION IN THE SHOW CAUSE NOTICE AND, THEREFORE, TH E SHOW CAUSE NOTICE DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER THE CHARG E IS OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE SAME IS REPRODUCED FOR THE PURPOSE OF READY REFERENCE: WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2011-12 IT APPEARS THAT YOU HAVE CONCEALED THE PARTICULARS OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 4. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTE NTION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS E MERALD MEADOWS IN ITA NO.380 OF 2015 DATED 23.11.2015 WHEREIN THE HONBLE KARNATAKA HIGH COURT FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON AN D 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 TH E 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. THE LD. COUNSEL F URTHER BROUGHT TO OUR NOTICE THAT AS AGAINST THE DECISION OF THE HONBLE KARNATAKA HIGH COURT THE REVENUE PREFERRED AN APPEAL IN SLP IN CC NO.11485 OF 2016 AND THE HONBLE SUPRE ME COURT BY ITS ORDER DATED 4 ITA NO.476/KOL/2017 & CO NO.18/KOL/ 2017 LATE BAIJNATH AGARWAL, AY- 2011-12 05.08.2016 DISMISSED THE SLP PREFERRED BY THE DEPAR TMENT. THE LD. COUNSEL ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SHRI SAMSON PERINCHERY IN ITA NO.1154 OF 2014 DATED 05.0 1.2017 WHEREIN THE HONBLE BOMBAY HIGH COURT FOLLOWING THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTOR Y (SUPRA) CAME TO THE CONCLUSION THAT IMPOSITION OF PENALTY ON DEFECTIVE SHOW CAUSE NOTIC E WITHOUT SPECIFYING THE CHARGE AGAINST THE ASSESSEE CANNOT BE SUSTAINED. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF ITAT IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS ACIT IN IT A NO.1303/KOL/2010 DATED 06.11.2015 WHEREIN IDENTICAL PROPOSITION HAS BEEN F OLLOWED BY THE TRIBUNAL. 5. LD. DR VEHEMENTLY OPPOSED THE SUBMISSION OF THE LD. AR AND HAS CITED VARIOUS CASE LAWS TO OPPOSE THE CASE LAWS SUGGESTED BY THE LD. AR. WE NOTE THAT ALL THE CASE LAWS CITED BEFORE US BY THE LD. DR HAS BEEN DEALT WITH E LABORATELY BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JEETMAL CHORARIA VS. A CIT, 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 HONBLE CA LCUTTA 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 A O 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 NO T IN THE CONTEXT OF SPECIFIC CHARGE IN THE MANDATORY SHOW CAUSE NOTICE U/S.274 OF THE ACT. TH EREFORE 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 DECISIONS OF MU MBAI ITAT VIZ., (I) DHANRAJ MILLS PVT. LTD. VS. ACIT ITA NO.3830 & 3833/MUM/2009 DATED 21.3.201 7; (II) EARTHMOVING EQUIPMENT SERVICE CORPORATION VS. DCIT 22(2), MUMBAI, (2017) 84 TAXMANN.COM 51 (III) MAHESH M.GANDHI VS. ACIT VS. ACIT ITA NO.2976/MUM/2016 DAT ED 27.2.2017. RELIANCE WAS PLACED ON TWO DECISIONS OF THE HONBLE BOMBAY HIGH COURT V IZ., (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 LEARNE D 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 H ONBLE BOMBAY HIGH COURT HELD THAT SECTION 274 OR ANY OTHER PROVISION IN THE ACT OR THE RULES, DO ES NOT EITHER MANDATE THE GIVING OF NOTICE OR ITS ISSUANCE IN A PARTICULAR FO RM. PENALTY PROCEEDINGS ARE QUASI-CRIMINAL IN NATURE. SECTION 274 CONTAINS THE PRINCIPLE OF NATURAL JUSTICE OF THE A SSESSEE 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 PRINCI PLES OF NATURAL JUSTICE ON THE GROUND OF 5 ITA NO.476/KOL/2017 & CO NO.18/KOL/ 2017 LATE BAIJNATH AGARWAL, AY- 2011-12 ABSENCE OF OPPORTUNITY, IT HAS TO BE ESTABLISHED TH AT PREJUDICE IS CAUSED TO THE CONCERNED PERSON BY THE PROCEDURE FOLLOWED. THE ISSUANCE OF N OTICE IS AN ADMINISTRATIVE DEVICE FOR INFORMING THE ASSESSEE ABOUT THE PROPOSAL TO LEVY P ENALTY IN ORDER TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DONE. MERE MISTAKE IN THE L ANGUAGE 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 DECI SION RENDERED BY THE JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF KAUSHALYA (SUPRA) AND CHOSE NOT TO FOLLOW DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON & GINNING FACTORY (SUPRA). RELIANCE WAS ALSO PLACED BY THE ITAT MUMBAI IN THIS DECISION ON THE DECISION OF HONBLE 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 H EARD. A MISTAKE IN THE NOTICE WOULD NOT INVALIDATE PENALTY PROCEEDINGS. 10. IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CO RPORATION (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 WA S 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 BE FORE THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA) WAS AN ASSES SEE BY NAME M/S.VEERABHADRAPPA SANGAPPA & CO., IN ITA NO.5020 OF 2009 WHICH WAS A N 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 ASSESSIN G AUTHORITY. BEFORE ISSUING THE NOTICE THE INAPPROPRIATE WORDS AND PARAGRAPHS WERE NEITHER STR UCK OFF NOR DELETED. THE ASSESSING AUTHORITY WAS NOT SURE AS TO WHETHER SHE HAD PROCEE DED ON THE BASIS THAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR HAS FURNISHED INACCU RATE DETAILS. THE NOTICE IS NOT IN COMPLIANCE WITH THE REQUIREMENT OF THE PARTICULAR S ECTION AND THEREFORE IT IS A VAGUE NOTICE, WHICH IS ATTRIBUTABLE TO A PATENT NON APPLICATION O F MIND ON THE PART OF THE ASSESSING AUTHORITY. FURTHER, IT HELD THAT THE ASSESSING OFFI CER 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 UND ER VALUATION OF CLOSING STOCK. SINCE THE ASSESSING AUTHORITY HAD INITIATED PENALTY PROCEEDIN GS 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 AUT HORITY HAD INITIATED PENAL PROCEEDINGS ON THE BASIS OF THE ADDITION SUSTAINED UNDER A NEW GRO UND 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 SE T-ASIDE BY ITS ORDER DATED 9TH APRIL, 2009. AGGRIEVED BY THE SAID ORDER, THE REVENUE FILED APPE AL BEFORE HIGH COURT. THE HONBLE HIGH COURT FRAMED THE FOLLOWING QUESTION OF LAW IN THE S AID 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 CONCEALM ENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS IS VALID AND LEGAL? 2. WH ETHER THE PROCEEDINGS INITIATED BY THE ASSESSING AUTHORITY WAS LEGAL AND VALID? THE HONB LE KARNATAKA HIGH COURT HELD IN THE NEGATIVE AND AGAINST THE REVENUE ON BOTH THE QUESTI ONS. THEREFORE THE DECISION RENDERED BY THE ITAT MUMBAI IN THE CASE OF EARTHMOVING EQUIPMEN T 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. CI T 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 HONBLE BOMBAY HIGH 6 ITA NO.476/KOL/2017 & CO NO.18/KOL/ 2017 LATE BAIJNATH AGARWAL, AY- 2011-12 COURT IN THE CASE OF SMT.KAUSHALYA (SUPRA) APPEARS TO HAVE BEEN REITERATED, AS IS EVIDENT FROM THE EXTRACTS FURNISHED IN THE WRITTEN NOTE FURNISHE D 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 HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KAUSHALYA (SUPRA). 13. IN THE CASE OF MAHESH M.GANDHI (SUPRA) THE MUM BAI ITAT THE ITAT HELD THAT THE DECISION OF THE HONBLE 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 INACCURA TE PARTICULARS OR CONCEALING PARTICULARS OF INCOME, THAT WILL NOT VITIATE THE PENALTY PROCEEDIN GS. IN THE PRESENT CASE THERE IS NO WHISPHER 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 FO LLOW THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTT ON & GINNING (SUPRA) IN AS MUCH AS THE RATIO LAID DOWN IN THE SAID CASE WAS ONLY WITH REFE RENCE TO SHOW CAUSE NOTICE U/S.274 OF THE ACT. THE HONBLE COURT DID NOT LAY DOWN A PROPOSIT ION THAT THE DEFECT IN THE SHOW CAUSE NOTICE WILL STAND CURED IF THE INTENTION OF THE CHA RGE U/S.271(1) (C ) IS DISCERNIBLE FROM A READING OF THE ASSESSMENT ORDER IN WHICH THE PENALT Y WAS INITIATED. 14. FROM THE AFORESAID DISCUSSION IT CAN BE SEEN T HAT THE LINE OF REASONING OF THE HONBLE BOMBAY HIGH COURT AND THE HONBLE PATNA HIGH COURT IS THAT ISSUANCE OF NOTICE IS AN ADMINISTRATIVE DEVICE FOR INFORMING THE ASSESSEE AB OUT THE PROPOSAL TO LEVY PENALTY IN ORDER TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DO NE. 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 SUBORDIN ATE TO THE HONBLE BOMBAY HIGH COURT AND PATNA HIGH COURT ARE BOUND TO FOLLOW THE AFORES AID VIEW. THE TRIBUNAL BENCHS AT BANGALORE HAVE TO FOLLOW THE DECISION OF THE HONBL E KARNATAKA HIGH COURT. AS FAR AS BENCHES OF TRIBUNAL IN OTHER JURISDICTIONS ARE CONC ERNED, THERE ARE TWO VIEWS ON THE ISSUE, ONE IN FAVOUR OF THE ASSESSEE RENDERED BY THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA) AND OTHER OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KAUSHALYA. IT IS SETTLED LEGAL POSITI ON THAT WHERE TWO VIEWS ARE AVAILABLE ON AN ISSUE, THE VIEW FAVOURABLE TO THE ASSESSEE HAS TO B E FOLLOWED. WE THEREFORE PREFER TO FOLLOW THE VIEW EXPRESSED BY THE HONBLE KARNATAKA HIGH CO URT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA). 15. WE HAVE ALREADY OBSERVED THAT THE SHOW CAUSE N OTICE ISSUED IN THE PRESENT CASE U/S 274 OF THE ACT DOES NOT SPECIFY THE CHARGE AGAINST THE ASS ESSEE AS TO WHETHER IT IS FOR CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THE SHOW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT STRIKE OUT THE INAPPROP RIATE WORDS. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSITION OF PENALTY CANNOT BE SU STAINED. THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE WHICH IS BASED ON THE DECISIONS REFERRED T O IN THE EARLIER PART OF THIS ORDER HAS TO BE ACCEPTED. WE THEREFORE HOLD THAT IMPOSITION OF PENA LTY IN THE PRESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELLED. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE C OORDINATE BENCH OF THIS TRIBUNAL, WE, THEREFORE, HOLD THAT DELETION OF PENALTY BY THE LD. CIT(A) AGAINST THE IMPOSITION OF PENALTY BY THE AO IN THE PRESENT CASE IS TO BE SUSTAINED. T HE ORDER OF LD. CIT(A) IS HEREBY 7 ITA NO.476/KOL/2017 & CO NO.18/KOL/ 2017 LATE BAIJNATH AGARWAL, AY- 2011-12 CONFIRMED. THE APPEALS OF REVENUE IS DISMISSED. TH E CROSS OBJECTION FILED BY THE ASSESSEE IS INFRUCTUOUS AND HENCE, THE SAME IS DISMISSED BEING INFRUCTUOUS. 6. IN THE RESULT, BOTH THE APPEAL OF REVENUE AS WEL L AS THE CROSS OBJECTION OF ASSESSEE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 23.05.2018 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23RD MAY, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ACIT, CENTRAL CIRCLE-2(3), KOLKATA. 2 RESPONDENT LATE BAIJNATH AGARWAL, L/H SRI KUNJ BEHARI AGARWAL, 8A/4, 8 TH FLOOR, 3-ALIPORE ROAD, SATYAM TOWER, ALIPORE, KOLK ATA-700 027. 3. THE CIT(A) KOLKATA. 4. 5. CIT KOLKATA. DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SR. PVT. SECRETARY