M/s Akanksha Viniyog Limited, Kolkata V. I.T.O., Ward -1(4), Kolkata

ITA 1555/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1679 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 28-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACH ARJEEADDL
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Question of law
• Section: 69

Judgement Text

1 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH D KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.1555/KOL/2016 ASSESSMENT YEAR : 2006-07 AKANKSHA VINIYOG LTD. -VERSUS- I.T.O., WARD-1 (4 ), KOLKATA KOLKATA (PAN:AACCA 8186 C) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI SIDDHARTH AGARWAL, ADVO CATE FOR THE RESPONDENT: SHRI ARINDAM BHATTACHARJEE, ADD L. CIT DATE OF HEARING : 05.02.2018. DATE OF PRONOUNCEMENT : 09.02.2018. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 05.05.2016 OF C.I.T- (A)-1, KOLKATA RELATING TO A.Y.2006-07. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED TH E ORDER OF CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF AO IMPOSING PENALTY U /S 271(1)(C) OF THE INCOME TAX ACT, 1961 (ACT). 3. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED ON THE ASSESSEE ARE AS FOLLOWS :- THE ASSESSEE IS COMPANY. IT CARRIES ON THE BUSINESS OF PROFIT ON SALE OF DERIVATIVES. THE ASSESSEE ALSO HAS INCOME UNDER TH E HEAD INCOME FROM PROPERTY AND INCOME IN THE FORM OF INTEREST. IN THE COURSE OF AS SESSMENT PROCEEDINGS THE ASSESSEE HAD CREDITED RENTAL INCOME OF RS.14,1L,820/- AND OT HER INCOME OF RS.2,53,119/- IN ITS PROFIT & LOSS A/C FOR THE YEAR ENDED ON 31.03.2006. IN THE COMPUTATION OF THE INCOME THE RENTAL INCOME HAS BEEN OFFERED FOR TAXATION UND ER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE 'OTHER INCOME' COMPRISED OF INTEREST , DIVIDEND AND PROFIT ON SALE OF 2 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07 MUTUAL FUNDS AND DERIVATIVES. THE EXAMINATION OF TH E SCHEDULE-6 TO THE BALANCE SHEET REVEALED THAT THE ASSESSEE HAD CLAIMED ITS HOLDING OF SHARES, MUTUAL FUNDS, & DERIVATIVES AS INVESTMENT AND NOT AS STOCK-IN-TRADE . THE AO THEREFORE CAME TO THE CONCLUSION THAT THE ASSESSEE HAD NO BUSINESS DURING THE YEAR AND AS SUCH, DEDUCTIONS ON ACCOUNT OF KEYMAN INSURANCE AND DEPRECIATION ARE NOT ALLOWABLE EXPENSES FOR THE INSTANT ASSESSMENT YEAR. 4. FOR THE REASONS DISCUSSED ABOVE IN THE ORDER OF ASSESSMENT THE AO DISALLOWED AND ADDED THE DEPRECIATION AND INSURANCE EXPENSES TO THE TOTAL INCOME OF THE ASSESSEE. IN RESPECT OF THE ADDITION MADE IN THE CO URSE OF ASSESSMENT PROCEEDINGS THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF T HE ACT AND IMPOSED PENALTY ON THE ASSESSEE HOLDING THAT THE ASSESSEE CONCEALED ITS IN COME AND FURNISHED INACCURATE PARTICULARS OF INCOME. 5. ON APPEAL BY THE ASSESSEE THE ASSESSEE CONFIRMED THE ORDER OF THE AO. THE APPEAL BEFORE CIT(A) WAS DECIDED EXPARTE. IN THE GR OUNDS OF APPEAL BEFORE THE TRIBUNAL IN GROUND NO.L THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN PROCEEDINGS TO DECIDE THE APPEAL OF THE ASSESSEE EX PARTE WITHOUT AFFORDING OPPORTUNITY OF BEING HEARD. IN GROUND NO.2 THE ASSESSEE HAS ALS O CHALLENGED THE VALIDITY OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE SHOW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT SPECIFY THE CHARGE AGAI NST THE ASSESSEE. A COPY OF THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT WAS FIL ED BEFORE US. A PERUSAL OF THE SAME SHOWS THAT THE AO HAS NOT SPECIFIED AS TO WHET HER PENALTY PROCEEDINGS ARE BEING INITIATED FOR CONCEALING PARTICULARS OF INCOME OR F URNISHING INACCURATE PARTICULARS OF INCOME. THE IRRELEVANT PORTION IN THE SHOW CAUSE NO TICE HAS NOT BEEN STRUCK OUT. 3 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07 7. 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 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 MA NJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 TOOK A VIEW THAT IMPOSIN G OF PENALTY U/S 271(1)(C) OF THE ACT IS BAD IN LAW AND INVALID FOR THE REASON THAT T HE SHOW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSE E AS TO WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTI CE THAT AS AGAINST THE DECISION OF THE HONBLE KARNATAKA HIGH COURT THE REVENUE PREFER RED AN APPEAL IN SLP IN CC NO.11485 OF 2016 AND THE HONBLE SUPREME COURT BY I TS ORDER DATED 05.08.2016 DISMISSED THE SLP PREFERRED BY THE DEPARTMENT. THE LD. COUNSEL ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE BOMBAY HIGH COUR T 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 FA CTORY (SUPRA) CAME TO THE CONCLUSION THAT IMPOSITION OF PENALTY ON DEFECTIVE SHOW CAUSE NOTICE WITHOUT SPECIFYING THE CHARGE AGAINST THE ASSESSEE CANNOT B E SUSTAINED. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF ITAT IN THE CASE OF SUVAPR ASANNA BHATTACHARYA VS ACIT IN ITA NO.1303/KOL/2010 DATED 06.11.2015 WHEREIN IDENT ICAL PROPOSITION HAS BEEN FOLLOWED BY THE TRIBUNAL. 8. THE LD. DR SUBMITTED THAT IT IS NOT MANDATORY TO SPECIFY THE CHARGE IN THE SHOW CAUSE NOTICE U/S 274 OF THE ACT. IN THIS REGARD HE PLACED RELIANCE ON CERTAIN JUDICIAL PRONOUNCEMENTS. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SIMILA R SUBMISSIONS MADE BY THE LD. DR IN THE CASE OF SHRI JEETMAL CHORARIA VS ACIT IN ITA NO.956/KOL/2016 ORDER DATED 01.12.2017 AND THIS TRIBUNAL DEALT WITH THIS SIMILAR ARGUMENTS OF THE LD. DR IN THE FOLLOWING MANNER : 4 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07 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 63 1 (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 AO MUST REFLECT FROM THE ORDER EITHER WITH EXPRE SSED WORDS RECORDED BY THE AO OR BY HIS OVERT ACT AND ACTION. IN OUR VIEW THI S DECISION IS ON THE QUESTION OF RECORDING SATISFACTION AND NOT IN THE CONTEXT OF SP ECIFIC CHARGE IN THE MANDATORY SHOW CAUSE NOTICE U/S.274 OF THE ACT. THEREFORE RE FERENCE 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/200 9 DATED 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 . ACIT ITA NO.2976/MUM/2016 DATED 27.2.2017. RELIANCE WAS PLA CED ON TWO DECISIONS OF THE HONBLE BOMBAY HIGH COURT VIZ., (I) CIT VS. KAU SHALYA 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 WRI TTEN 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 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 STRAIGH T-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 ESTA BLISHED THAT PREJUDICE IS CAUSED TO THE CONCERNED PERSON BY THE PROCEDURE FOL LOWED. THE 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 A S TO WHY IT SHOULD NOT BE DONE. MERE MISTAKE IN THE LANGUAGE USED OR MERE NON-STRIK ING OF THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. THE ITAT MU MBAI BENCH IN THE CASE OF DHANRAJ MILLS PVT.LTD. (SUPRA) FOLLOWED THE DECISIO N RENDERED BY THE JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CAS E OF KAUSHALYA (SUPRA) AND CHOSE NOT TO FOLLOW DECISION OF HONBLE KARNATAKA H IGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA). RELIA NCE WAS ALSO PLACED BY THE ITAT MUMBAI IN THIS DECISION ON THE DECISION OF HON BLE 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, I T IS SUFFICIENT IF THE ASSESSEE 5 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07 WAS AWARE OF THE CHARGES HE HAD TO MEET AND WAS GIV EN AN OPPORTUNITY OF BEING HEARD. A MISTAKE IN THE NOTICE 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 THA T PENALTY IN THAT CASE WAS DELETED FOR SO MANY REASONS AND NOT SOLELY ON THE B ASIS OF DEFECT IN SHOW CAUSE NOTICE U/S.274 OF THE ACT. THIS IS NOT FACTUALLY CO RRECT. ONE OF THE PARTIES BEFORE THE GROUP OF ASSESSEES BEFORE THE KARNATAKA HIGH CO URT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA) WAS AN ASSESSEE BY NAME M/S.VEERABHADRAPPA SANGAPPA & CO., IN ITA NO.5020 OF 2009 WHICH WAS AN APPEAL BY THE REVENUE. THE TRIBUNAL HELD THAT ON P ERUSAL OF THE NOTICE ISSUED UNDER SECTION 271(1)(C) OF THE ACT, IT IS CLEAR THA T IT IS A STANDARD PROFORMA USED BY THE ASSESSING AUTHORITY. BEFORE ISSUING THE NOTI CE 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 T HAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR HAS FURNISHED INACCURATE DE TAILS. 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 OF MIND ON THE PART OF THE ASSESSING AUTHORITY. FURTHER, IT HELD T HAT THE ASSESSING OFFICER HAD MADE ADDITIONS UNDER SECTION 69 OF THE ACT BEING UN DISCLOSED INVESTMENT. IN THE APPEAL, THE SAID FINDING WAS SET-ASIDE. BUT ADDITIO N WAS SUSTAINED ON A NEW GROUND, THAT IS UNDER VALUATION OF CLOSING STOCK. S INCE THE ASSESSING AUTHORITY HAD INITIATED PENALTY PROCEEDINGS BASED ON THE ADDI TIONS 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 GROUND IT HAS A LEGAL SANCTUM. THIS WAS NOT SO IN THIS CASE AND THE REFORE, 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 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 AP PEAL 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 HONBLE KARNATAKA HIGH COURT HELD I N THE NEGATIVE AND AGAINST THE REVENUE ON BOTH THE QUESTIONS. THEREFORE THE D ECISION 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. CI T DATED 22.8.2017 REFERRED TO IN THE WRITTEN NOTE GIVEN BY THE LEARNED DR, WH ICH IS AN UNREPORTED DECISION AND A COPY OF THE SAME WAS NOT FURNISHED, THE SAME PROPOSITION AS WAS LAID DOWN 6 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07 BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT .KAUSHALYA (SUPRA) APPEARS TO HAVE BEEN REITERATED, AS IS EVIDENT FROM THE EXTRACTS 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 COU RT 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 PEN ALTY PROCEEDINGS HAS HELD THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME AN D MERELY BECAUSE IN THE SHOW CAUSE NOTICE U/S.274 OF THE ACT, THERE IS NO M ENTION WHETHER THE PROCEEDINGS ARE FOR FURNISHING INACCURATE PARTICULA RS OR CONCEALING PARTICULARS OF INCOME, THAT WILL NOT VITIATE THE PENALTY PROCEE DINGS. IN THE PRESENT CASE THERE IS NO WHISPHER IN THE ORDER OF ASSESSMENT ON THIS A SPECT. WE HAVE POINTED OUT THIS ASPECT IN THE EARLIER PART OF THIS ORDER. HEN CE, 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 CASE OF MANJUNATHA COTTON & GINNING (SUPRA) IN AS M UCH AS THE RATIO LAID DOWN IN THE SAID CASE WAS ONLY WITH REFERENCE TO SHOW CA USE NOTICE U/S.274 OF THE ACT. THE HONBLE COURT DID NOT LAY DOWN A PROPOSITION TH AT THE DEFECT IN THE SHOW CAUSE NOTICE WILL STAND CURED IF THE INTENTION OF T HE 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 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 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 HONBL E 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 JURISDICTION S ARE CONCERNED, THERE ARE TWO VIEWS ON THE ISSUE, ONE IN FAVOUR OF THE ASSESSEE R ENDERED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTT ON & GINNING (SUPRA) AND OTHER OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KAUSHALYA. IT IS SETTLED LEGAL POSITION THAT WHERE TWO VIEWS ARE AVA ILABLE ON AN ISSUE, THE VIEW FAVOURABLE TO THE ASSESSEE HAS TO BE FOLLOWED. WE THEREFORE PREFER TO FOLLOW THE VIEW EXPRESSED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA). 10. 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 7 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07 IT IS FOR CONCEALING PARTICULARS OF INCOME OR FURNI SHING INACCURATE PARTICULARS OF INCOME. THE SHOW CAUSE NOTICE U/S 274 OF THE ACT DO ES 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 PARAGRAPH-6 OF T HIS ORDER HAS TO BE ACCEPTED. WE THEREFORE HOLD THAT IMPOSITION OF PENALTY IN THE PR ESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELLED. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 09.02.2018. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09.02.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1AKANKSHA VINIYOG LTD., 1/1A, BIPLABI ANUKUL CHANDR A STREET, KOLKATA-700072. 2 I.T.O., WARD-1(4), KOLKATA. 3. C.I.T.(A)-1, KOLKATA 4. C.I.T.-1 , KOLKATA.. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES 8 ITA NO.1555/KOL/2016 AKANKSHA VINIYOG LTD. A.Y.2006 -07