Deputy Commissioner of Income Tax, Circle -2(1), Mangalore V. Shri Gopal S Pandith, Bangalore

ITA 159/PAN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7725 (ITAT-PANAJI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: R CHANDRASHEKHAR
• Keywords: Principle of natural justice; Retrospective amendment; Question of law
• Section: 271(1)(c); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI RAM LAL NEGI , J M ITA NO. 15 9 / PAN . / 2018 (ASSESSMENT YEAR: 200 7 - 0 8 ) THE DY. CIT, CIRCLE - 2(1) CR BLDG., ANNEXE, ATTAVAR, MANGALURU - 01 VS. SHRI GOPAL S. PANDITH NO. 201, ND WILLOW, 13 TH MAIN, 12 TH CROSS, BTM II STAGE, BANGALORE - 560 078 PAN/GIR NO. AEQPP 4615 Q ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI Y. V. RAVIRAJ RESPONDENT BY : SHRI R. CHANDRASHEKHAR DATE OF HEARING : 15.11. 201 8 DATE OF PRONOUNCEMENT : 15.01 .2019 O R D E R PER SHAMIM YAHYA, A. M.: TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MANGALURU VIDE ORDER DATED 23.02.2018 AND PERTAINS TO THE ASSESSMENT YEAR 200 7 - 08 . 2. THE ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) AMOUNTING TO RS.20, 36,430/ - . 3. BRIEF FACTS OF THE CASE ARE AS UNDER: A SEARCH U/S 132 OF THE I. T. AC T WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AT ALANGAR, MOODABIDRI ON 13.02.2009. THE ASSESSEE IS A PROFESSIONAL PRIEST AND HIS FATHER WAS AN ASTROLOGER AND 'PANDITH' IS CLAIMED TO BE THE TITLE GIVEN BY COCHIN RULERS TO ONE OF HIS GREAT GRA NDFATHER BECAUSE HE WAS GURU, ASTROLOGER AND POOJA PERFORMER FOR THE COCHIN ROYAL FAMILY. LATER ON THE TITLE 'PANDITH' IS USED BY THE DESCENDANTS OF THE 2 ITA NO . 15 9 /PAN./2018 FAMILY. THE ASSESSEE WAS EARNING CONSIDERABLE INCOME FROM PERFORMING POOJAS, BUT THE SAME WAS NOT DISCL OSED FOR TAXATION IN THE ORIGINAL RETURNS FILED BEFORE THE DATE OF SEARCH. THE ASSESSEE WAS ALSO A LAND DEVELOPER ARID PROMOTER WHO WAS FOUND TO BE HAVING UNDISCLOSED INVESTMENTS IN PROPERTIES AND UNDISCLOSED FIXED DEPOSITS. ASSESSEE WAS CARRYING OUT HIS R EAL ESTATE BUSINESS UNDER THE TRADE NAME M/S. PANDIT DEVELOPERS. THE ASSESSEE HAD CERTAIN CONTRACT RECEIPTS AND ALSO CERTAIN CAPITAL GAIN LIABILITY ON ACCOUNT OF SALE OF A PROPERTY INTENDED TO BE A RESORT IN THE NAME OF M/S. PANDIT'S HEALTH RESORTS & SPA A T MOODABIDRI. 4. DURING THE COURSE OF SEARCH, INCRIMINATING EVIDENCES WERE FOUND WHICH CLEARLY ESTABLISHED THAT THE ASSESSEE HAD NOT DISCLOSED INCOME FROM PERFORMING PUJAS ARID IT WAS ALSO FOUND THAT THE ASSESSEE HAD MADE CERTAIN UNDISCLOSED INVESTMENTS IN THE FORM OF PROPERTIES, FIXED DEPOSITS IN THE NAME OF FAMILY MEMBERS. 5. THE AO COMPLETED THE ASSESSMENTS BY MAKING ADDITIONS AND ALSO RECORDING THE SATISFACTION FOR INITIATING PENALTY PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND ALS O INITIATED PENALTY PROCEEDINGS BY ISSUING SEPARATE NOTICES DATED 27.10.2010 U/S 274 RWS 271(1)(C) IN ALL THE FOUR AYS 2005 - 06, 2006 - 07, 2007 - 08 & 2008 - 09. SUBSEQUENTLY, THE ADDITIONS MADE BY THE AO WERE CONFIRMED BY THE CIT(A) AND THE ITAT. 6. ON THE INCOME DETERMINED AS PER ITAT DIRECTION PENALTY @ 150% OF THE TAX LEVIED W AS DETERMINED AT RS.20, 36,430 / - . 7. BEFORE THE LD. CIT(A), THE ASSESSEE ENCLOSED THE COPIES OF NOTICE DATED 27.12.2010 ISSUED U/S. 274 R.W.S 271 OF THE ACT BY THE A.O. FOR ALL THE F OUR A.YS. 2005 - 06, 2006 - 07, 3 ITA NO . 15 9 /PAN./2018 2007 - 08 AND 2008 - 09 AND SUBMITTED THAT THE NOTICE IS SILENT IN REGARD TO CHARGE, THE NOTICE IS BAD IN LAW AND CONSEQUENTLY THE ORDER OF PENALTY HOLDING CONCEALMENT OF INCOME IS ALSO BAD AND LIABLE TO BE CANCELLED ON THIS GROUND. 8. CONSIDERING THE ABOVE, THE LD. CIT(A) DELETED THE PENALTY PLACING RELIANCE UPON THE HON'BLE JURISDICTIONAL HIGH COURT DECISIONS AND ITAT DECISIONS. THE SAME READS AS UNDER: 5.3 SINCE THE GROUNDS RAISED GO TO THE ROOT OF THE ISSUE, IT IS DECIDED TO CONSIDER THE COMMON GROUNDS NO.2 & 3 RAISED FIRST. THE COPIES OF THE NOTICES U/S. 274 RWS 271(1)(C) DATED 27.12.2010 FOR THE FOUR AYS 2005 - 06, 2006 - 07,2007 - 08& 2008 - 09 WERE PERUSED BY ME. ON PERUSAL, IT IS OBSERVED THAT THE INAPPROPRIATE PORTION OF THE NOT ICE WAS NOT STRUCK OFF. THIS INDICATES THAT THE GROUND ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED WAS NOT CLEARLY SPELT OUT IN THE NOTICE BY THE AO. IT IS OBSERVED THAT THE CORRESPONDING PORTION OF THE NOTICE WAS NOT SPECIFICALLY SELECTED BY THE AO BY STRIKING OFF THE INAPPLICABLE PART WHILE ISSUING THE PENALTY NOTICE. 5.4 ALTHOUGH, IT APPEARS TO BE A PURELY TECHNICAL / CLERICAL MISTAKE IT WAS HELD THAT THE DEFECT IN THE ISSUE OF NOTICE IS NOT CURABLE U/S.292BB OF THE ACT BY THE VARIOUS HON'BLE HIGH CO URTS AND ITAT DISCUSSED BELOW. IN SEVERAL CASES AS DISCUSSED BELOW, IT WAS HELD THAT SUCH NOTICE ISSUED IS DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUND ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED. IN THE CASE OF MUNINAGA REDDY [TS - 6568 - HC - 2016(KARNATAKA) - O], (2017) 396 ITR 398 (KARNATAKA), IT WAS HELD THAT THE RESULTANT EFFECT WOULD BE THAT THE NOTICE IN QUESTION ISSUED UNDER SECTION 271(1)(C) FOR LEVY OF PENALTY AND CONSEQUENTLY THE PENALTY IMPOSED, BOTH WOULD BE UNSUSTAINABLE AND CANNOT STAND IN THE EYE OF LAW. 5.5 IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY 359 ITR 555, THE HON'BLE JURISDICTIO0ALHIGH COURT HELD THAT NOTICE U/S.274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(L)(C). THE ASSESSES SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE ARE OFFENDED. THE RELEVANT PORTION IS REPRODUCED BELOW; 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMERGES IS AS UNDER: (A) TO(O).... (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 27L(L)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME (Q) SENDING PRINTED FORM WHERE ALL (HE GROUND MENTIONED IN SECTION 271 ARE M ENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. (R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE . 5.6 IN THE CASE OF SSA'S EMERALD MEADOWS [2016] 73 TAXMANN.COM 241 (KARNATAKA), THE HON'BLE HIGH COURT OF KARNATAKA DISMISSED THE APPEAL OF THE DEPARTMENT RELYING ON THE DECISION OF THE DIVISION BENCH DECISION IN THE CASE OF CITV. MANJUNATHA COTTON & 4 ITA NO . 15 9 /PAN./2018 GI NNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.). THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW WERE RAISED: '(I) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHI NG OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHE THER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 27L(L)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 27J(1B) WITH RETROSPECTIVE EFFECT AN D BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST T HE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME?' 5.7 THE HON'BLE SUPREME COURT OP INDIA IN TH E CASE OF SSA'S EMERALD MEADOWS[2016] 73 TAXMANN.COM 248 (SC) DISMISSED THE SLP FILED BY THE DEPARTMENT. 5.8 IN THE CASE OF MUNINAGA REDDY [TS - 6568 - HC - 2016(KARNATAKA) - O], (2017) 396 ITR 398 (KARNATAKA) THE HON'BLE HIGH COURT OF KARNATAKA DECIDED THE APPEAL RELYING ON THE DECISION OF THE DIVISION BENCH DECISION IN THE CASE OF CITV. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.). THE RELEVANT PORTION IS REPRODUCED BELOW: 8. WE ARE NOT REQUIRED TO CONSIDER THE OTHER CONTINGENCIES FOR EXAMINATION OF LEGALITY AND VALIDITY OF THE PENALTY UNDER SECTION 27J(L)(C) OF THE ACT, BUT CLAUSES (P), (Q) & (R) OF THE ABOVE REFERRED OBSERVATIONS ARE REQUIRED TO BE CONSIDERED. 9. AS PER THE ABOVE REFERRED DECISION OF THIS COURT, THE NOTICE WOULD HAVE TO SPECIFICALLY STATE THE GROUND MENTIONED IN SECTION 271 (L)(C) OF THE ACT NAMELY AS TO WHETHER IT IS FOR THE CONCEALMENT OF INCOME OR FURNISHING INCORRECT PARTICULARS OF THE INCOME SAID PENALTY PROCEEDINGS IS BEING INITIATED . SECOND ASPECT IS THAT, AS HELD BY THIS COURT, SENDING OF PRINTED FORM WHEREIN THE GROUNDS MENTIONED IN SECTION 271 OF THE ACT WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE THIRD ASPECT FOR WHICH THE OBSERVATIONS ARE MADE BY THIS COURT IS THAT, THE ASSESS EE SHOULD KNOW THE GROUND WHICH HE HAS TO MEET SPECIFICALLY OTHERWISE (HE PRINCIPLES OF NATURAL JUSTICE WOULD BE VIOLATED AND CONSEQUENTLY, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE IF THERE IS NO SPECIFIC GROUND MENTIONED IN THE NOTICE. NO SPECIFIC GROU ND IS MENTIONED IN THE SUBJECT NOTICE AND RESULTANTLY THE PRINCIPLES OF NATURAL JUSTICE COULD BE SAID AS VIOLATED. 10. IN OUR VIEW, IF THE OBSERVATIONS MADE BY THIS COURT IN THE ABOVE REFERRED DECISION AND MORE PARTICULARLY CLAUSES (P), (Q) AND (R) ARE CO NSIDERED, IT WAS A CASE WHEREIN THE DECISION OF THIS COURT WOULD APPLY AND IT CANNOT BE SAID THAT THE DECISION OF THIS COURT IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (TS - 936 - HC - 2QL2(KAR1 - O]_ (SUPRA) WOULD NOT APPLY. 11. IN VIEW OF THE A FORESAID DISCUSSION, IF THE DECISION OF THIS COURT IN CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY [TS - 936 - HC'2Q12(KAR) - O] (SUPRA) IS CONSIDERED, THE RESULTANT EFFECT WOULD BE THAT THE NOTICE IN QUESTION ISSUED UNDER SECTION 271(L)(C) FOR LEVY OF PENALTY AND CONSEQUENTLY THE PENALTY IMPOSED, BOTH WOULD BE UNSUSTAINABLE AND CANNOT STAND IN THE EYE OF LAW. 5 ITA NO . 15 9 /PAN./2018 12. IN THE RECTIFICATION POWER, THE TRIBUNAL AT ONE POINT OF TIME DID OBSERVE THAT SINCE A SPECIFIC CONTENTION WAS NOT RAISED BY THE ASSESSEE BEF ORE THE APPELLATE AUTHORITY, IT IS A MIXED QUESTION OF LAW AND FACT AND THE SAME MAY ALSO BE PERMISSIBLE. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE REFERRED IN THE ORDER PASSED IN M.A.NO.62/BANG/15 FOR RECTIFICATION AND THE TRIBUNAL, HAS NOT ACCEPTED T HE CONTENTION RAISED THEREIN. 13. IT IS HARDLY REQUIRED TO BE STATED THAT IF THE QUESTION OF LAW IS RAISED WHICH GOES TO THE ROOT OF THE MATTER AND FOR WHICH NO UNDERTAKING OF THE FACTUAL EXAMINATION IS REQUIRED, THE SAME COULD BE PERMITTED BY THE TRIBUNA L. HAD IT BEEN A CASE WHERE THE NOTICE FOR PENALLY WAS NOT ON RECORD IN THE PROCEEDINGS OF ASSESSMENT, THE MATTER MIGHT STAND ON A DIFFERENT FOOLING. IN ANY CASE, WHERE NOTICE FOR IMPOSITION OF PENALTY UNDER SECTION 27L(L)(C) OF THE ACT WAS ALREADY THERE O N RECORD AND WHEN THE TRIBUNAL WAS TO EXAMINE THE APPLICABILITY OF THIS COURT DECISION IN THE CASE OF M/S. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) AND THE LAW LAID DOWN, IT WAS A CASE WHERE THE CONTENTION OUGHT TO HAVE BEEN CONSIDERED AND EXAMINED. A S OBSERVED BY US HEREIN ABOVE, THE DECISION IN THE CASE OF M/S.MANJUNATHA COTTON AND GINNING FACTORY (SUPRA), - WOULD APPLY AND IF THE NOTICE IS FOUND TO BE ILLEGAL AND IS FOUND TO BE UNSUSTAINABLE IN LAW AND THE CONSEQUENCES WOULD BE THAT THERE IS BREACH O F NATURAL JUSTICE. HENCE, THE ULTIMATE ORDER FOR IMPOSITION OF PENALTY CANNOT BE SUSTAINED. 14. IN VIEW OF THE AFORESAID OBSERVATIONS AND DISCUSSIONS, THE QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE, AGAINST THE REVENUE. IT IS HELD THAT THE IMPUGNED OR DER OF THE TRIBUNAL IN THE MAIN APPEAL AS WELL AS IN THE M.A.NO.62/BANG/15 INSOFAR AS IT RELATES TO NOT INTERFERING WITH THE ORDER FOR IMPOSITION OF PENALTY IS SET - ASIDE. IT IS FURTHER OBSERVED AND DECLARED (HAT AS THE QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST (LIE REVENUE, THE ORDER FOR IMPOSITION OF PENALTY SHALL REMAIN SET - ASIDE. 5.9 IN THE CASE OF SRI. K. VENKATARAMI REDDY, VS JCIT, DAVANGERE ON 23 NOVEMBER, 2017 (ITA NO.945/BANG/2016(AY 2011 - 12), THE HON'BLE ITAT. BANGALORE BENCH 'C' DECIDED THE APPEAL RELYING ON THE DECISION OF MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.), THE RELEVANT PORTION IS REPRODUCED BELOW: 3.2 PER CONTRA, THE IDDRFOR REVENUE SUPPORTED THE ORDERS OF THE AUTHOR ITIES BELOW. IT SUBMITTED THAT SINCE THE ID CIT(A) HAD NOT CONSIDERED AND DECIDED THE ISSUE OF DEFECTIVE NOTICE U/S 274 R.W.S 271 OF THE ACT FOR INITIATION OF PENALLY PROCEEDINGS U/S 27L(L)(C) OF THE ACT, THEREFORE THE MATTER REQUIRES TO BE SENT BACK TO TH E FILE OF THE CIT(A) FOR ADJUDICATION OF THIS GROUND. RELIANCE WAS PLACED ON (HE DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF JAYSONS INFRASTRUCTURE INDIA PVT. LTD., IN ITA NO.997 '/BANG/2015, 3.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. AT THE OUTSET WE MAY MENTION THAT WHILE THE AFORESAID ISSUE OF DEFECTIVE NOTICE WAS NOT BEFORE THE ID CIT(A), HOWEVER, SINCE THE FACTS OF THE MATTER ON THIS ISSUE ARE APPARENT FROM THE COPY OF THE SAID NOTICE ISSUED U/S 274 R.W.S 271 OF THE ACT DATED 2/1/2014 (FILED BY THE ASSESSES AT PAGE 1 OF PAPER BOOK PAGES I TO 7) AND THE JUDICIAL VIEW OF COURTS AND ITAT CO - ORDINATE BENCHES IN THE MATTER (SUPRA) IN OUR VIEW, NO US EFUL PURPOSE WOULD BE SERVED IN RESTORING THE MATTER TO THE FILE OF THE ID CIT(A) AS PRAYED FOR BY THE ID DRFOR REVENUE. WE HAVE PERUSED THE COPY OF THE NOTICE ISSUED U/S 274 R.W.S 271 OF THE ACT; DATED 2/1/2014 AND FIND (HAT IT REVEALS THAT ITA NO.945/B/1 6 THE AO HAS NOT DELETED THE INAPPROPRIATE WORDS AND 6 ITA NO . 15 9 /PAN./2018 PARTS IN THE RELEVANT PARAGRAPH OF THE NOTICE, WHEREBY IT IS NOT CLEAR AS (O WHICH DEFAULT HAS BEEN COMMITTED BY THE ASSESSEE; I.E WHETHER IT IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONC EAL ING PARTICULARS OF INCOME THAT PENALTY U/S 271(L)(C) OF THE ACT IS SOUGHT TO BE LEVIED. 3.3.2 THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S MANJUNATHA COTTON & GINNING FACTORY IN (359 ITR 565) (KAR) HAS HELD THAT A NOTICE ISSUED U/S 274 R.WS 271 OF THE ACT WITHOUT SPECIFYING THE NATURE OF DEFAULT; I.E; WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME; IS INVALID AND THE CONSEQUENTIAL PENALTY PROCEEDINGS/ORDER ARE ALSO NOT VALI D. THE RELEVANT PORTION OF THE AFORESAID JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT (SUPRA) AT PARAS 59 TO 61 ARE EXTRACTED HEREUNDER: - 3.3.3 THE AFORESAID VIEW TAKEN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTOR Y (SUPRA) WAS FOLLOWED BY THE HON'BLE KARNALAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS IN ITA NO.380 OF 2015 DATED 23/11/2015; WHEREIN THE HON'BLE COURT UPHELD THE ORDER OF CO - ORDINATE BENCH OF (HIS TRIBUNAL, CANCELLING THE PENALTY LEVIED ON THE BA SIS OF THE DEFECTIVE NOTICE ISSUED BY THE AO. REVENUE'S SLP FILED AGAINST HE SAID JUDGMENT OF THE HON'BLE HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) HAS ALSO BEEN DISMISSED BY THE HON'BLE APEX COURF IN CC/1485/2016 DATED 5/8/2016. IN VIEW OF TH E AFORESAID DECISIONS OF HON'BLE KARNALAKA HIGH COURT HOLDING THE GROUND (SUPRA), THE DECISION CITED BY THE ID DR WOULD NOT COME TO REVENUE'S RESCUE. ITA NO.945/B/I6 3.3.4 RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE HON'BLE KARNAKIKA HIGH COURT IN THE CASE S OF M/S MANJUNATHA COTTON & GINNING FACTORY (359 ITR 565( (KAR) AND SSAS EMERALD MEADOWS IN ITA NO:380 OF 2015 DATED 23/11/2015, WE HOLD (LIAR THE NOTICE ISSUED BY THE AO U/S 274 R.W.S 271 OF THE ACT DATED 2/1/2014 FOR INITIALING PENALTY PROCEEDINGS FOR A SST. YEAR 2011 - 12 IS INVALID AND CONSEQUENTLY, THE PENALTY PROCEEDINGS CONDUCTED IN PURSUANCE THEREOF, ARE ALSO INVALID AND WE THEREFORE DELETE THE PENALTY LEVIED II/S 271(L)(C) OF THE ACT FOR ASST. YEAR 201J - 12. CONSEQUENTLY, THE GROUND RAISED BY THE ASSE SSEE AT S.NO. 2 (SUPRA) IS ALLOWED. 5.10 IN THE CASE OF SMT. ROOPA NARAYANAN, THE HON'BLE ITAT, BANGALORE HELD THAT THE DEFECT IN THE ISSUE OF NOTICE IS NOT CURABLE U/S.292BB OF THE ACT. THE FOLLOWING OBSERVATION WAS MADE IN THIS REGARD. 1 7. IT IS CLEAR F ROM THE AFORESAID DECISION THAT ON THE FACTS OF THE PRESENT CASE THAI THE SHOW CAUSE NOTICE U/S 274 OF THE ACT IT DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED. IN OUR VIEW, THEFORESAID DEFECT CANNOT BE SAID T O BE CURABLE U/S 292BB OF THE ACT, AS THE DEFECT CANNOT BE SAID TO BE A NOTICE WHICH IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. FOLLOWING THE DECISION OF THE HON 'BLE KARNATAKA HIGH COURT, WE HOLD (HAT (HE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. 5.11 KEEPING IN VIEW THE BINDING DECISIONS OF THE HON'BLE HIGH COURT AND ITAT (DISCUSSED ABOVE), THE GROUNDS OF APPEAL NO.2 & 3 RAISED BY THE ASSESSEE FOR THE FOUR AYS 2005 - 06. 2006 - 07. 2007 - 08 & 2008 - 09 AGAINST THE PENALTY ORDERS U/S 271(1 HE) ARE ALLOWED. 9. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 7 ITA NO . 15 9 /PAN./2018 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. FROM THE ABOVE FACTS AND CASE LAW, IT IS EVIDENT THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT DECISIONS AS MENTIONED ABOVE. 11. THE LD. DEPARTMENTAL R EPRESENTATIVE (LD. DR FOR SHORT) COULD NOT DISPUTE THIS PROPOSITION. 12. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A). 13. IN THE RESULT, TH IS APPEAL BY THE REVENUE STANDS DISMISSED. O RDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER DATED : 1 5 . 0 1 . 2 0 1 9 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, PANJI CITY CONCERNED; (5) THE DR, ITAT, PANJI ; (6) GUARD FILE . BY ORDER ROSHANI , SR. PS ( SR. P.S. / P.S. ) ITAT