M/s Baba Lokenath Rice Mill, Kolkata V. DCIT, CC-XXVII, KOLKATA, Kolkata

ITA 1746/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1803 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 31-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Keywords: Search and seizure; Principle of natural justice; Question of law
• Section: 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & HONBLE SHRI M.BALAGANESH, AM ] I.T.A NO. 1746/KOL/20 16 ASSESSMENT YEAR : 2010-1 1 M/S BABA LOKNATH RICE MILL -VS- DC IT, CC-XXVII, KOLKATA [PAN: AACF 8831 C] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWAL , ADVOCATE FOR THE REVENUE : SHRI G.HANGSHING, CIT DATE OF HEARING : 09.01.2018 DATE OF PRONOUNCEMENT : 12.01.2018 ORDER PER M.BALAGANESH, AM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 17.12.2014 OF C.I.T- (A)-21, KOLKATA RELATING TO A.Y.2010-11. 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 ASSESSEE IS A PARTNERSHIP FIRM. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT IN THE PREMISES OF THE PAUL GRO UP OF CASES ON 17.1.2012. THE ASSESSEE IS ONE OF THE ENTITIES IN THE SAID GROUP. NOTICE U/S 153A OF THE ACT WAS ISSUED ON THE ASSESSEE FOR VARIOUS ASSESSMENT YEARS INCLUD ING THE YEAR UNDER APPEAL. THE ASSESSEE FILED ITS RETURN OF INCOME U/S 139(1) OF T HE ACT ON 22.3.2011 DECLARING TOTAL 2 ITA NO.1746/KOL/2016 M/S BABA LOKNATH RICE MILL A.YR.2010-11 2 INCOME OF RS 7,61,060/- FOR THE ASST YEAR 2010-11. THE LD AO OBSERVED THAT THE ASSESSEE HAD UNRECORDED SALES OF RS 73,601/- AND MA DE AN ADDITION TO THAT EFFECT. THE LD AO PASSED AN ORDER U/S 153A/143(3) OF THE ACT ON 28.3.2014. THE LD AO INITIATED PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT. 4. THE EXPLANATION GIVEN BY THE ASSESSEE FOR THE AF ORESAID ADDITION WAS NOT ACCEPTED BY THE LD AO IN THE PENALTY PROCEEDINGS AND THE LD AO IMPOSED PENALTY U/S 271(1)(C ) OF THE ACT IN THE SUM OF RS 22,743/- . A SPECIFIC OBJECTION WAS ALSO RAISED BEFORE THE LD CITA THAT THE LD AO HAD NOT SPECIFIED THE CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE I.E WHETHER IT HAD CONCEALED PARTICULARS OF INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 (KAR). THE LD CITA HOWEVER DID NOT H EED TO THE SAID ARGUMENT OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY OF THE L D AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. FOR THAT ON THE FACT AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE PENALTY OF RS. 22,743/- IMPOSED BY THE AO U/S 271(1)(C ). 2. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT PENALTY PROCEEDINGS ARE INDEPE NDENT OF THE ASSESSMENT PROCEEDINGS. 3. FOR THAT THE LD. CIT(A) OUGHT TO HAVE QUASHED TH E PENALTY PROCEEDINGS U/S 271(1)(C ) SINCE THE SHOW CAUSE NOTICE U/S 274 IS D EFECTIVE AS IT DOES NOT SPELL OUT THE SPECIFIC CHARGE ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 5. BEFORE US, THE LD AR PLACED ON RECORD A COPY OF THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT. A PERUSAL OF THE SAME SHOWS TH AT THE LD AO HAS NOT SPECIFIED AS TO WHETHER PENALTY PROCEEDINGS ARE BEING INITIATED FOR CONCEALING PARTICULARS OF INCOME OR 3 ITA NO.1746/KOL/2016 M/S BABA LOKNATH RICE MILL A.YR.2010-11 3 FURNISHING INACCURATE PARTICULARS OF INCOME. THE IR RELEVANT PORTION IN THE SHOW CAUSE NOTICE HAS NOT BEEN STRUCK OUT. THE LD AR DREW OUR ATTENTION 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 HONBLE KARNATAKA HIGH COURT FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS MANJUNATHA C OTTON AND 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 NOTI CE U/S 274 OF THE 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 I NCOME. THE LD AR FURTHER BROUGHT TO OUR NOTICE THAT AS AGAINST THE DECISION OF THE HON BLE KARNATAKA HIGH COURT THE REVENUE PREFERRED AN APPEAL IN SLP IN CC NO.11485 OF 2016 A ND THE HONBLE SUPREME COURT BY ITS ORDER DATED 05.08.2016 DISMISSED THE SLP PREFER RED BY THE DEPARTMENT. THE LD AR ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SHRI SAMSON PERINCHERY IN ITA NO.1154 OF 201 4 DATED 05.01.2017 WHEREIN THE HONBLE BOMBAY HIGH COURT FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON AND G INNING FACTORY (SUPRA) CAME TO THE CONCLUSION THAT IMPOSITION OF PENALTY ON DEFECTIVE SHOW CAUSE NOTICE 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 BHATTA CHARYA VS ACIT IN ITA NO.1303/KOL/2010 DATED 06.11.2015 WHEREIN IDENTICAL PROPOSITION HAS BEEN FOLLOWED BY THE TRIBUNAL. 6. 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. 7. 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 4 ITA NO.1746/KOL/2016 M/S BABA LOKNATH RICE MILL A.YR.2010-11 4 01.12.2017 AND THIS TRIBUNAL DEALT WITH THIS SIMILA R ARGUMENTS OF THE LD. DR IN THE FOLLOWING PARAGRAPHS : 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 T HAT 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 QUESTION OF RECORDING SATISFACTION AND NOT IN THE CONTEXT OF SPECIFIC CHA RGE IN THE MANDATORY SHOW CAUSE NOTICE U/S.274 OF THE ACT. THEREFORE 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/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. A CIT 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. KAUSHAL YA 216 ITR 660(BOM) AND (II) M/S.MAHARAJ GARAGE & CO. VS. CIT DATED 22.8.20 17. 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 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 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 JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF KAUSHALYA (SUPRA) AND CHOSE NOT TO FOLLOW DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA). RELIANCE WAS ALSO PLACED BY THE ITAT MUMBAI IN THIS DECISION ON THE DECISION OF HONBLE PATNA HIGH COUR T IN THE CASE OF CIT V. MITHILA 5 ITA NO.1746/KOL/2016 M/S BABA LOKNATH RICE MILL A.YR.2010-11 5 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 CAU SE. NO STATUTORY NOTICE HAS BEEN PRESCRIBED IN THIS BEHALF. HENCE, IT IS SUFFIC IENT IF THE ASSESSEE WAS AWARE OF THE CHARGES HE HAD TO MEET AND WAS GIVEN AN OPPORTU NITY OF BEING HEARD. A MISTAKE IN THE NOTICE WOULD NOT INVALIDATE PENALTY PROCEEDI NGS. 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 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 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 FIN DING WAS SET-ASIDE. BUT ADDITION WAS SUSTAINED ON A NEW GROUND, THAT IS UNDER VALUAT ION 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 T HE APPELLATE AUTHORITY HAD INITIATED PENAL PROCEEDINGS ON THE BASIS OF THE ADD ITION SUSTAINED UNDER A NEW GROUND IT HAS A LEGAL SANCTUM. THIS WAS NOT SO IN T HIS CASE AND THEREFORE, ON BOTH THE GROUNDS THE IMPUGNED ORDER PASSED BY THE APPELL ATE AUTHORITY AS WELL AS THE ASSESSING AUTHORITY WAS SET-ASIDE BY ITS ORDER DATE D 9TH APRIL, 2009. AGGRIEVED BY THE SAID ORDER, THE REVENUE FILED APPEAL BEFORE HIG H 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 PRINTE D FORM WITHOUT SPECIFICALLY MENTIONING WHETHER THE PROCEEDINGS ARE INITIATED ON THE GROUND OF CONCEALMENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PA RTICULARS IS VALID AND LEGAL? 2. WHETHER THE PROCEEDINGS INITIATED BY THE ASSESSING AUTHORITY WAS LEGAL AND VALID? THE HONBLE KARNATAKA HIGH COURT HELD IN THE NEGATI VE AND AGAINST THE REVENUE ON BOTH THE QUESTIONS. THEREFORE THE DECISION REND ERED BY THE ITAT MUMBAI IN THE 6 ITA NO.1746/KOL/2016 M/S BABA LOKNATH RICE MILL A.YR.2010-11 6 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 BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT .KAUSHALYA (SUPRA) APPEARS TO HAVE BEEN REITERATED, AS IS EVIDENT FROM THE EXT RACTS 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 FAC TS OF THAT CASE BECAUSE THE AO IN THE ASSESSMENT ORDER WHILE INITIATING PENALTY PR OCEEDINGS 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 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-STRIK ING OF THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. THE TRIBUN AL BENCHES AT MUMBAI AND PATNA BEING SUBORDINATE TO THE HONBLE BOMBAY HIGH COURT AND PATNA HIGH COURT ARE BOUND TO FOLLOW THE AFORESAID VIEW. THE TRIBUNAL B ENCHS AT BANGALORE HAVE TO FOLLOW THE DECISION OF THE HONBLE KARNATAKA HIGH C OURT. AS FAR AS BENCHES OF TRIBUNAL IN OTHER JURISDICTIONS ARE CONCERNED, THER E 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 OTH ER OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KAUSHALYA. IT IS SE TTLED LEGAL POSITION THAT WHERE 7 ITA NO.1746/KOL/2016 M/S BABA LOKNATH RICE MILL A.YR.2010-11 7 TWO VIEWS ARE AVAILABLE ON AN ISSUE, THE VIEW FAVOU RABLE TO THE ASSESSEE HAS TO BE FOLLOWED. WE THEREFORE PREFER TO FOLLOW THE VIEW E XPRESSED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTT ON & GINNING (SUPRA). 8. WE HAVE ALREADY OBSERVED THAT THE SHOW CAUSE NO TICE 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 INAC CURATE PARTICULARS OF INCOME. THE SHOW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT STRIK E OUT THE INAPPROPRIATE WORDS. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSI TION OF PENALTY CANNOT BE SUSTAINED. THE PLEA OF THE LD AR WHICH IS BASED ON THE DECISIO NS REFERRED TO IN THE EARLIER PART OF THIS ORDER HAS TO BE ACCEPTED. WE THEREFORE HOLD TH AT IMPOSITION OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DI RECTED TO BE CANCELLED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 12.01.2018 SD/- SD/- [N.V. VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 12.01.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. M/S BABA LOKNATH RICE MILL, P.O.-HILI, DIST.-DAK SHIN DINAJPUR, PIN-733124. 2. DCIT, CC-XXVII, KOLKATA, AAYAKAR BHAWAN, 110, SH ANTIPALLI, E.M.BY-PASS, KOLKATA-700107. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 8 ITA NO.1746/KOL/2016 M/S BABA LOKNATH RICE MILL A.YR.2010-11 8