Jetex Parcel System Pvt. Ltd., Kolkata V. ITO, WD-12(3), KOLKATA, Kolkata

ITA 1060/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0718 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 17-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D S DAMLE
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law; Initiation of penalty proceedings
• Section: 69; 274; 271(1)(c)

Judgement Text

1 ITA NOS. 1060 & 1061/KOL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA BEFORE: SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUD ICIAL MEMBER I.T.A NO. 1060 KOL/201 6 A.Y: 2006-07 I.T.A NO. 1061 KOL/201 6 A.Y: 2006-07 JETEX PARCEL SYSTEM VS. INCOME-TAX OFFICER PVT. LTD. WARD 12(3), KOLKATA PAN: AAACJ 6333N [APPELLANT] [RESPONDEN T] FOR THE APPELLANT : SHRI D.S.DAMLE, FCA, LD.AR FOR THE RESPONDENT : SHRI SALLONG YADEN, ADDL. C IT,LD.SR.DR DATE OF HEARING : 26-10-2017 DATE OF PRONOUNCEMENT : 13-12-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), 10, KOLKATA BOTH DT. 23-02-2016, WHEREIN HE CONFIRMED THE PENALTIES OF RS. 6,22,468/- IMPOSED U/S. 271(1)( C) OF THE ACT & RS.2,14,284/- U/S. 271(1)( D) OF THE ACT BY THE AO BOTH FOR THE A .Y 2006-07. 2. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO. 10 60/KOL/2016 FILED CHALLENGING THE ORDER U/S. 271(1)(C) OF THE A CT. ITA NO. 1060/KOL/2016 A.Y 2066-07 3. AT THE OUTSET, THE LD.AR SUBMITS THAT THE ISSUE RAISED IN THE APPEAL IS COVERED BY THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF SSAS 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 31-12-2008 AND IN VIEW OF THE DECISIO N SUPRA THE IMPOSITION OF PENALTY ON DEFECTIVE NOTICE IS NOT MA INTAINABLE. 2 ITA NOS. 1060 & 1061/KOL/2016 4. THE LD.AR OF THE ASSESSEE FURTHER SUBMITS THAT T HE STATUTORY NOTICE DT. 31-12-2008 ISSUED BY THE AO [ I.T.O] U/ S. 274 R.W.S 271 OF THE ACT IS DEFECTIVE, COPY OF THE SAME IS ON REC ORD. HE FURTHER ARGUED THAT THE ISSUE IN HAND AS RAISED BY THE ASSE SSEE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS. IN SUPP ORT OF HIS CONTENTION, PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEAD OWS SUPRA IN ITA NO. 380 OF 2015 DATED 23.11.2015 WHICH WAS APPR OVED BY THE HONBLE SUPREME COURT BY DISMISSAL OF SPECIAL LEAVE PETITION (SLP) FILED BY THE REVENUE IN CC NO. 11485/2016 DATED 5.8 .2016. 5. ON THE OTHER HAND, THE LD.DR RELIED ON THE OR DER OF THE CIT-A IN CONFIRMING THE IMPUGNED PENALTIES IMPOSED U/S. 271( 1)(C) OF THE ACT. IN SUPPORT OF HIS CONTENTION, HE ALSO FILED A DETAI LED WRITTEN SUBMISSION DT. 26-10-2017 ALONG WITH CASE LAWS, WHI CH EXTRACTED AS UNDER:- 1. THE JUDGEMENT OF THE HON 'BLE CALCUTTA HIGH COUR T IN THE CASE DR.SYAMAL BARAN MONDAL VS. CIT (2011) 244 CTR631 STATES THAT 'SECTI ON 271 NOWHERE MANDATES THAT RECORDING OF SATISFACTION ABOUT CONCEALMENT OF ASSE SSEE'S INCOME MUST BE IN SPECIFIC TERMS AND WORDS, SATISFACTION OF AO MUST REFLECT FR OM THE ORDER EITHER WITH EXPRESSED WORDS RECORDED BY THE ASSESSING OFFICER HIMSELF OR BY HIS OVERT ACT AND ACTION.' 2. THE LD. ITAT MUMBAI IN ITS ORDER THE CASE OF TRI SHUL ENTERPRISES VS. DCIT (ITA NOS.384 & 385/MUM/2014 FOR A.YRS.2006-07 & 2007-08) , DT.10-02-2017 DISMISSED THE CONTENTION OF THE ASSESSEE REGARDING FAILURE OF THE AO TO STRIKE OFF THE RELEVANT PART OF THE NOTICE U/S.274 FOR INITIATING PROCEEDINGS U/S.2 71(1)(C). THE ITAT RELIED UPON THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. SMT.KAUSHALYA (1992) WHEREIN IT WAS HELD THAT 'MERE NOT STRIKING OFF SPECIFIC LIMB CANNOT BY ITSELF INVALIDATE NOTICE ISSUED U/ S.274 OF THE ACT. THE L ANGUAGE OF THE SECTION DOES NOT SPEAK ABOUT THE ISSUANCE OF NOTICE. ALL THAT IS REQUIRED THAT THE ASSESSEE BE GIVEN AN OPPORTUNITY OF SHOW CAUSE ' 3. THE HON'BLE BOMBAY HIGH COURT (NAGPUR BENCH) IN THE CASE OF M/S.MAHARAJ GARAGE & COMPANY VS. CIT IN ITS JUDGEMENT DT.22-08-2017, HAS ALSO HELD THAT '15. THE REQUIREMENT OF SECTION 274 OF THE INCOME TAX ACT FO R GRANTING REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER CANNOT BE STRETCHED TO TH E 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 OB SERVED 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 IM POSING THE PENALTY BY THE INCOME TAX OFFICER.' 6. IN VIEW OF ABOVE, HE ALSO SUBMITTED THE SERVICE OF NOTICE U/S. 274 FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271( 1)(C ) OF THE I.T ACT WOULD CONSTITUTE VALID INITIATION OF PENALTY PROCEE DINGS AND ALSO 3 ITA NOS. 1060 & 1061/KOL/2016 PRAYED TO DISMISS THE GROUNDS RAISED IN APPEAL OF A SSESSEE BY CONFIRMING THE PENALTIES IMPOSED AND SUSTAINED BY T HE AO AND CIT-A RESPECTIVELY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THE WRITTEN SUBMISSIONS AND THE CASE LAWS RELIED UPON BY THE LD .DR. WE FIND THE SAME SET OF WRITTEN SUBMISSIONS WERE FILED BEFORE T HE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JEETMAL CHORA RIA 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 PRINCIPLE LAID DOWN BY THE RESPECTIVE HO NBLE HIGH COURTS AT BOMBAY AND PATNA AND PREFERRED TO FOLLOW THE RAT IO LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF MANJUNATHA COTTON AND GINNING SUPRA BY TAKING SUPPORT OF THE ESTABLIS HED PRINCIPLE ENUNCIATED BY THE HONBLE SUPREME COURT IN THE CAS E OF VEGETABLE PRODUCTS LTD REPORTED IN 88 ITR 192 (SC). WE ARE IN AGREEMENT WITH THE REASONING OF THE IN ITS ORDER DT : 01-12- 2017 OF COORDINATE BENCH IN THE CASE OF JEETMAL CHO RARIA AND THE SAME IS REPRODUCED FOR READY REFERENCE: 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 SATI SFACTION 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 QU ESTION OF RECORDING SATISFACTION AND NOT IN THE CONTEXT OF SPECIFIC CHARGE IN THE MA NDATORY SHOW CAUSE NOTICE U/S.274 OF THE ACT. THEREFORE REFERENCE TO THIS DE CISION, 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 DATE D 21.3.2017; (II) EARTHMOVING EQUIPMENT SERVICE CORPORATION VS. DCIT 22(2), MUMBAI, (2017) 84 TAXMANN.COM 51 (III) MAHESH M.GANDHI VS. ACIT VS. A CIT ITA NO.2976/MUM/2016 DATED 27.2.2017. RELIANCE WAS PLACED ON TWO DECISI ONS OF THE HONBLE 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 DECISIO N WAS REFERRED TO IN THE WRITTEN NOTE GIVEN BY THE LEARNED DR. THIS IS AN UNREPORTE D DECISION AND A COPY OF THE SAME WAS NOT FURNISHED. HOWEVER A GIST OF THE RATI O 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 P ARTICULAR 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 J USTICE ON THE GROUND OF ABSENCE OF OPPORTUNITY, IT HAS TO BE ESTABLISHED THAT PREJUDIC E 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 PROPOSA L TO LEVY PENALTY IN ORDER TO 4 ITA NOS. 1060 & 1061/KOL/2016 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 INACCURAT E 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 JURIS DICTIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF KAUSHALYA (SUPRA) AND CHOSE NO T TO FOLLOW DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTT ON & 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 SHO ULD 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 NOT ICE WOULD NOT INVALIDATE PENALTY PROCEEDINGS. 10. IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE C ORPORATION (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 CA SE OF MANJUNATHA COTTON & GINNING (SUPRA) WAS AN ASSESSEE BY NAME M/S.VEERABH ADRAPPA SANGAPPA & CO., IN ITA NO.5020 OF 2009 WHICH WAS AN APPEAL BY THE REVE NUE. 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 AUTHOR ITY. 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 HAD EITHER CONCEALED ITS INCOME O R HAS FURNISHED INACCURATE DETAILS. THE NOTICE IS NOT IN COMPLIANCE WITH THE R EQUIREMENT OF THE PARTICULAR SECTION AND THEREFORE IT IS A VAGUE NOTICE, WHICH I S ATTRIBUTABLE TO A PATENT NON APPLICATION OF MIND ON THE PART OF THE ASSESSING AU THORITY. 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 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, NOLONGER EXISTS. IF TH E APPELLATE AUTHORITY HAD INITIATED PENAL PROCEEDINGS ON THE BASIS OF THE ADDITION SUST AINED UNDER A NEW GROUND IT HAS A LEGAL SANCTUM. THIS WAS NOT SO IN THIS CASE AND T HEREFORE, ON BOTH THE GROUNDS THE IMPUGNED ORDER PASSED BY THE APPELLATE AUTHORIT Y AS WELL AS THE ASSESSING AUTHORITY WAS SET-ASIDE BY ITS ORDER DATED 9TH APRI L, 2009. AGGRIEVED BY THE SAID ORDER, THE REVENUE FILED APPEAL BEFORE HIGH COURT. THE HONBLE HIGH COURT FRAMED THE FOLLOWING QUESTION OF LAW IN THE SAID APPEAL VI Z., 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 CONC EALMENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS IS VALID AN D LEGAL? 2. WHETHER THE PROCEEDINGS INITIATED BY THE ASSESSING AUTHORITY WAS LEGAL AND VALID? THE HONBLE KARNATAKA HIGH COURT HELD IN THE NEGATIVE AND AGAINST THE REV ENUE ON BOTH THE QUESTIONS. THEREFORE THE DECISION RENDERED BY THE ITAT MUMBAI IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATION (SUPRA) IS OF NO ASSI STANCE 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 PROP OSITION AS WAS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KA USHALYA (SUPRA) APPEARS TO HAVE BEEN REITERATED, AS IS EVIDENT FROM THE EXTRAC TS 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 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 PROCE EDINGS HAS HELD THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME AND ME RELY BECAUSE IN THE SHOW CAUSE NOTICE U/S.274 OF THE ACT, THERE IS NO MENTIO N 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 WHISPHER IN THE ORDER OF ASSESSMENT ON THIS ASPECT. WE HAVE POINTE D OUT THIS ASPECT IN THE EARLIER 5 ITA NOS. 1060 & 1061/KOL/2016 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 HONBLE KARNATAKA HIGH COURT IN THE CAS E OF MANJUNATHA COTTON & GINNING (SUPRA) IN AS MUCH AS THE RATIO LAID DOWN I N THE SAID CASE WAS ONLY WITH REFERENCE TO SHOW CAUSE NOTICE U/S.274 OF THE ACT. THE HONBLE COURT DID NOT LAY DOWN A PROPOSITION THAT THE DEFECT IN THE SHOW CAUS E NOTICE WILL STAND CURED IF THE INTENTION OF THE CHARGE U/S.271(1) (C ) IS DISCERNI BLE FROM A READING OF THE ASSESSMENT ORDER IN WHICH THE PENALTY 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 HIG H COURT IS THAT ISSUANCE OF NOTICE IS AN ADMINISTRATIVE DEVICE FOR INFORMING TH E ASSESSEE ABOUT THE PROPOSAL TO LEVY PENALTY IN ORDER TO ENABLE HIM TO EXPLAIN AS T O WHY IT SHOULD NOT BE DONE. MERE MISTAKE IN THE LANGUAGE USED OR MERE NON-STRIKING O F THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. THE TRIBUNAL BENC HES AT MUMBAI AND PATNA BEING SUBORDINATE TO THE HONBLE BOMBAY HIGH COURT AND PA TNA HIGH COURT ARE BOUND TO FOLLOW THE AFORESAID VIEW. THE TRIBUNAL BENCHS AT BANGALORE HAVE TO FOLLOW THE DECISION OF THE HONBLE KARNATAKA HIGH COURT. AS FAR AS BENCHES OF TRIBUNAL IN OTHER JURISDICTIONS ARE CONCERNED, THERE ARE TWO VI EWS ON THE ISSUE, ONE IN FAVOUR OF THE ASSESSEE RENDERED BY THE HONBLE KARNATAKA 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 POSITION THAT WHERE TWO VIEWS ARE AVAILABLE ON AN ISSUE, THE VIEW FAVOURABLE TO THE A SSESSEE HAS TO BE FOLLOWED. WE THEREFORE PREFER TO FOLLOW THE VIEW EXPRESSED BY TH E HONBLE KARNATAKA HIGH COURT 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 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. CO UNSEL FOR THE ASSESSEE WHICH IS BASED ON THE DECISIONS REFERRED TO IN THE EARLIER P ART 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 CANCELL ED. 8. WE FIND THAT THE NOTICE DT. 31-12-2008 ISSUED U/S 274 R.W.S 271 OF THE ACT DOES NOT SPECIFY THE CHARGE OF OFFEN CE COMMITTED BY THE ASSESSEE VIZ WHETHER HAD CONCEALED THE PARTICUL ARS OF INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HE NCE THE SAID NOTICE IS TO BE HELD AS DEFECTIVE. 9. WE FIND THAT THE REVENUE HAD PREFERRED A SLP B EFORE THE HONBLE SUPREME COURT AGAINST THIS JUDGMENT WHICH WAS DISMI SSED IN CC NO. 11485/2016 DATED 5.8.2016 BY OBSERVING AS UNDER:- UPON HEARING THE COUNSEL, THE COURT MADE THE FOLLOW ING ORDER DELAY CONDONED. WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPE CIAL LEAVE PETITION IS , ACCORDINGLY DISMISSED. PENDING APPLICATION, IF ANY, STANDS DISPOSED OF. 10. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS, WE CANCEL THE PENALTIES LEVIED OF RS.6,22,468/- BY TH E AO U/SEC.271(1)( C) OF THE ACT AND CONFIRMED BY THE CIT-A. ACCORDIN GLY, THE GROUNDS 6 ITA NOS. 1060 & 1061/KOL/2016 RAISED BY THE ASSESSEE IN THE APPEAL FOR THE A.Y UN DER CONSIDERATION ARE ALLOWED. 11. NOW, WE SHALL TAKE UP THE APPEAL IN ITA NO. 106 1/KOL/2016 FILED THE CHALLENGING THE ORDER PASSED U/S. 271(1)( D) OF THE ACT. ITA NO. 1061/KOL/2016 A.Y 2006-07 12. THE LD.AR SUBMITS THAT THE CIT-A HAS PASSED AN ORDER EXPARTE AND PRAYED TO AFFORD AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND URGED TO REMAND THE ISSUE TO THE FILE OF THE CI T-A FOR HIS CONSIDERATION AND HAS UNDERTAKEN THAT THE ASSESSEE SHALL PRODUCE ALL REQUIRED EVIDENCES REGARDING THE ISSUE INVOLVED THE REIN. 13. THE LD.DR VEHEMENTLY OPPOSED TO THE SUBMISSIONS OF THE LD.AR AND PRAYER MADE THEREIN AND REFERRED TO CONCLUSION PARA OF THE IMPUGNED ORDER AND ARGUED THAT THERE WAS NO REPRESE NTATION ON BEHALF OF ASSESSEE EITHER BY ANY REPRESENTATIVE OR THE ASSESSEE TO SUPPORT ITS GROUNDS OF APPEAL RAISED BEFORE THE CIT -A. FURTHER, THE LD.DR REFERRED TO ORDER OF THE AO AND ARGUED THAT T HERE WAS NO REPRESENTATION AT LEAST BY FILING OF WRITTEN SUBMIS SION. THE LD.DR, IN THESE CIRCUMSTANCES, SUBMITS THAT THE GROUNDS RAISE D BY THE ASSESSEE MAY BE DISMISSED AND CONFIRMED THE ORDER OF THE CIT -A. 14. HEARD THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW , SINCE IT IS A PENALTY PROCEEDINGS, IN THE INTEREST OF JUSTICE, TH E ASSESSEE SHALL GET AN OPPORTUNITY OF BEING HEARD AND ACCORDINGLY, THE MATTER IS REMANDED TO THE FILE OF CIT-A FOR HIS CONSIDERATION AND THE ASSESSEE SHALL COOPERATE IN THE FIRST APPELLATE PROCEEDINGS FOR SPEEDY DISPOSAL OF THE CASE WITHOUT SEEKING ANY ADJOURNMENT. THE AS SESSEE IS AT LIBERTY TO FILE EVIDENCES, IF ANY, IN SUPPORT OF I TS CLAIM. THUS, THE GROUNDS RAISED IN THIS APPEAL ARE ALLOWED FOR STATI STICAL PURPOSE. 15. IN THE RESULT, THE APPEAL IN ITA NO. 1060/K OL/2016 FOR THE A.Y 2006-07 OF THE ASSESSEES IS ALLOWED AND THE APPEAL IN ITA NO. 7 ITA NOS. 1060 & 1061/KOL/2016 1061/KOL/2016 FOR THE A.Y 2006-07 OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 13-1 2-2017 SD/- SD/- WASEEM AHMED S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 -12-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ASSESSEE: M/S. JETEX PARCEL SYSTEM PVT. L TD 10N, BLOCK A, NEW ALIPORE, KOLKATA-53. 2 RESPONDENT/DEPARTMENT : INCOME TAX OFFICER, WARD 12 (3), AAYKAR BHAWAN, P-7 CHOWRINGHEE SQUARE, KOLKATA-69. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR.PS/H.O.O ITAT KOLKAT A