Shri.Indudhar Seetharam , Bangalore V. Income Tax Officer Ward-5(2)(4), Bangalore

ITA 1279/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1417 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-08-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S T SESHADRI
• Assessee Lawyers: VENKATESH KUMAR
• Keywords: Principle of natural justice
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1 2 7 9 /BANG/201 8 ASSESSMENT YEAR :20 09 - 10 SHRI INDUDHAR SEETHARAM, 82, 2 ND CROSS, 4 TH BLOCK, THYAGARAJANAGAR, BANGALORE 560 019. PAN: AAJPI6529D VS. THE INCOME TAX OFFICER, WARD 5 (2) (4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI VENKATESH KUMAR, ADVOCATE RESPONDENT BY : SHRI S.T. SESHADRI, JCIT (DR) DATE OF HEARING : 23.08.2018 DATE OF PRONOUNCEMENT : 07 .09.2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A)-5, BANGALORE DATED 19.02.2018 FOR ASS ESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMI NG THE LEVY OF PENALTY WHEN, ADMITTEDLY THE NOTICE OF THE RESPONDE NT UNDER SECTION 271(1) (C) OF THE ACT DATED 28.12.2011 WAS CLEARLY CONTRARY TO THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA REP ORTED IN CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 IT R 565 (KAR.). 2. WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT WIL L BE ABLE TO PRODUCE THE SOURCE FOR THE ADDITIONS MADE IN THE ASSESSMENT ORDER AND HENCE THE PENALTY IS LIABLE TO BE CANCELLED. 3. FOR THIS OR ANY OTHER GROUNDS THAT MAY BE URGED DURING THE APPEAL PROCEEDINGS IT IS PRAYED THAT THIS APPEAL MAY BE AL LOWED IN THE INTEREST OF EQUITY AND JUSTICE. ITA NO. 1279/BANG/2018 PAGE 2 OF 4 3. THE LD. AR OF ASSESSEE SUBMITTED THAT THE NOTICE ISSUED BY THE AO U/S. 274 R.W.S. 271 (1) (C) OF IT ACT ON 28.12.2011 HAS BEEN SUBMITTED ALONG WITH THE APPEAL MEMO AND AS PER THE SAME, THE AO HAD NOT MAD E IT CLEAR AS TO WHETHER THE ALLEGATION IS REGARDING CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE PLACED RELIANCE ON THE J UDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . MANJUNATHA COTTON AND GINNING FACTORY AS REPORTED IN (2013) 359 ITR 565. 4. AS AGAINST THIS, THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND PLACED RELIANCE ON THE JUDGMENT OF HON'BLE KARN ATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SRI DURGA ENTERPRISES AS REP ORTED IN [2015] 231 TAXMAN 886 (KARNATAKA) AND SUBMITTED THAT IN THIS CASE, IT WAS HELD BY HON'BLE KARNATAKA HIGH COURT THAT SECTION 292B OF THE IT AC T REMOVES THE DEFECT IN A NOTICE ISSUED BY THE AO. HE SUBMITTED THAT THIS JU DGEMENT OF HON'BLE KARNATAKA HIGH COURT SHOULD BE FOLLOWED IN PREFEREN CE TO OTHER JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) CITED BY LD. AR OF ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA), THE ISSUE INVOLVED WAS REGARDING VALIDITY OF NOTICE ISSUED BY THE AO U/S. 274 R.W.S. 271 WHEREAS IN THE CASE OF CIT VS. SRI DURGA ENTERPRISES (SUPRA), THE ISSUE INVOLVED WAS REGARDING VALIDITY OF NOTICE U/S. 148 OF IT ACT. WHEN A DIRE CT JUDGEMENT IS AVAILABLE REGARDING VALIDITY OF NOTICE ISSUED U/S. 274 R.W.S. 271, WE ARE NOT SUPPOSED TO CONSIDER THE OTHER JUDGEMENT OF HON'BLE KARNATAKA H IGH COURT RENDERED IN THE CASE OF CIT VS. SRI DURGA ENTERPRISES (SUPRA) IN WH ICH, THE ISSUE INVOLVED WAS NOT REGARDING PENALTY PROCEEDINGS BUT REGARDING REA SSESSMENT PROCEEDINGS. WE ALSO FIND THAT THE JUDGEMENT OF HON'BLE KARNATAK A HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING F ACTORY (SUPRA) IS DATED 13.12.2012 WHEREAS THE JUDGEMENT OF HON'BLE KARNATA KA HIGH COURT RENDERED IN THE CASE OF CIT VS. SRI DURGA ENTERPRISES (SUPRA ) IS DATED 11.02.2014. ALTHOUGH THE SECOND JUDGMENT IS OF A LATER DATE BUT STILL, THERE IS NO REFERENCE TO THIS EARLIER JUDGEMENT OF HON'BLE KARNATAKA HIGH CO URT RENDERED IN THE CASE OF ITA NO. 1279/BANG/2018 PAGE 3 OF 4 CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPR A) IN THIS LATER JUDGMENT DATED 11.02.2014 RENDERED IN THE CASE OF CIT VS. SR I DURGA ENTERPRISES (SUPRA). IN OUR CONSIDERED OPINION, THIS IS SO BEC AUSE EVEN AS PER THE HON'BLE KARNATAKA HIGH COURT ALSO, THE FACTS IN DISPUTE IN BOTH THE JUDGEMENTS ARE DIFFERENT AND THEREFORE, IT WAS NOT CONSIDERED NECE SSARY TO REFER THE EARLIER JUDGEMENT IN THE LATER JUDGEMENT. MOREOVER WE ALSO FIND THAT AS PER SECTION 292B OF IT ACT WHICH HAS BEEN CONSIDERED BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SRI DURGA ENTERPRISES (SUPRA), IT IS SPECIFIED THAT IF SUCH NOTICE IS IN SUBSTANCE AND EFFECT IN CONFORMITY WIT H OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. WHEN THE JUDGEMENT OF HON 'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON A ND GINNING FACTORY (SUPRA) IS EXAMINED ON THIS PRETEXT, IT IS FOUND THAT AS PE R THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT, IT WAS HELD THAT NOTICE U/S. 274 OF IT ACT HAS SPECIFICALLY STATED THAT THE GROUNDS MENTIONED IN SECTION 271 AS TO WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. IT IS ALSO HELD THAT SENDING PRINTED FORM WHERE ALL TH E GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQ UIREMENT OF LAW BECAUSE THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS T O MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D IF THE SHOW CAUSE NOTICE IS VAGUE AND ON THE BASIS OF SUCH PROCEEDINGS, NO PENA LTY COULD BE IMPOSED ON THE ASSESSEE. IN VIEW OF THIS FINDING OF HON'BLE K ARNATAKA HIGH COURT IT IS APPARENT THAT SUCH DEFECTIVE NOTICE ISSUED BY THE A O IS NOT SATISFYING THIS REQUIREMENT THAT IT IS IN SUBSTANCE AND EFFECT IN C ONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF IT ACT. IN THE FACTS OF PRESENT CASE, IN OUR CONSIDERED OPINION, THE JUDGMENT OF HON'BLE KARNATAKA HIGH COU RT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPR A) IS APPLICABLE AND NOT THE LATER JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SRI DURGA ENTERPRISES (SUPRA). RESPECTFULL Y FOLLOWING THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA), WE HOLD THAT IN THE FACTS OF PRESENT CASE, PENALTY IMPOSED BY THE AO ON THE BASIS OF THE DEFEC TIVE NOTICE IS NOT VALID AND WE THEREFORE, CANCEL THE SAME. ITA NO. 1279/BANG/2018 PAGE 4 OF 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 07 TH SEPTEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.