ITO, Ward - 13(1), Kolkata, Kolkata V. M/s. Ambey Retailers Pvt. Ltd., , Kolkata

ITA 2104/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1829 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 25-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CHOWDHURY
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law
• Section: 69

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2104 / KOL / 20 17 ASSESSMENT YEAR :2012-13 INCOME TAX OFFICER WARD-13(1), 9 TH FLOOR, 110, SHANTI PALLY, AAYAKAR BHAWAN (POORVA), KOLKATA-107 V/S . M/S AMBEY RETAILERS PVT. LTD. 29B, RABIDRA SARANI, 3 RD FLOOR, KOLKATA-73 [ PAN NO.AAHCA 8700 F ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI R. CHOWDHURY, ADDL. CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 13-08-2018 /DATE OF PRONOUNCEMENT 05-09-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 C HALLENGES CORRECTNESS OF COMMISSIONER OF INCOME TAX (APPEALS )-5, KOLKATAS ORDER DATED 03.07.2017, PASSED IN CASE NO.472/CIT(A)-5/W- 15(1)/15-16, REVERSING THE ASSESSING OFFICERS ACTION DELETING IMPOSING PE NALTY OF 50,21,837/- INVOLVING PROCEEDINGS U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E ARGUING IN FAVOUR THE ABOVE IMPUGNED PENALTY. CASE FILE PERUSED. IT E MERGES FIRST OF ALL THAT CIT(A)S DETAILED DISCUSSION ON THE ISSUE READS AS UNDER:- 1. BY WAY OF ADDITIONAL GROUND THE OBJECTION RAISED IS THAT THE AO FAILED TO STRIKE OFF THE IRRELEVANT PORTION IN THE NOTICE INITIATING PEN ALTY U/S 271(1)(C)/ SECTION 274. RELYING ON THE DECISION OF MANJUNATHA COTTON AND GINNING FA CTORY & OTHERS [2013] 359 ITR ITA NO.2104/KOL/2017 A.Y. 2012-13 ITO WD-13(1), KOL. VS. M/S AMBEY RETA ILERS PVT. LTD. PAGE 2 565 (KAR), THE GROUND HAS BEEN RAISED FOR CANCELLAT ION OF PENALTY IMPOSED SUBSEQUENT TO THE INITIATION OF THE SAID FAULTY NOT ICE. 1.1 I HAVE PERUSED THE COPY OF THE NOTICE U/S 271(1 )(C)/274 DATED 21.03.2015. THE NOTICE HAS BEEN ISSUED IN A GENERAL PROFORMA WH ICH IS FOR INITIATING PENALTY UNDER VARIUOS CLAUSES OF SECTION 271. HE NO TICE HAS LISTED THREE DIFFERENT CLASSES OF DEFAULTS FOR INITIATING PENALT Y. THE FIRST PARA HAS BEEN NOT BEEN EITHER STRUCK OFF OR TICKED. THE SECOND PARA W HICH IS FOR FAILURE TO COMPLY WITH A NOTICE U/S. 1421)/143(2) OF THE IT ACT HAS B EEN TICKED BY THE AO AS IS APPARENT FRO THE COPY OF THE SAID NOTICE ISSUED TO THE APPELLANT. THE THIRD PARA EARMARKED FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME HAS ALSO BEEN TICKED OR MARKED BY THE AO. THE NOTICE THUS APPEARS TO BE FAULTY IN TO RESPECTS. FR OM THE ORDER OF PENALTY U/S. 271(1)(C) DATED 18.09.2015 IT APPEARS THAT THE SAD NOTICE FOR INITIATION OF PENALTY WAS ISSUED BY THE AO TO SEE WHETHER PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME CAN BE LEVIED. IT IS, THEREFORE, WRONG FOR THE AO TO HAVE MARKED THE SECO ND PARA OF THE SAID NOTICE WHICH APPLIES FOR DEFAULTS OR FAILURES U/S.1 42(1)/143(2). SIMILARLY, THE AO IS IN FURTHER ERROR WHEN HE HAS MARKED OR TICKED OFF THE THIRD PARA WHICH CONTAINS TWO SPECIFIC DEFAULTS ONE FOR CONCEALING THE PARTICULARS OF INCOME AND THE OTHER FOR FURNISHING OF INACCURATE PARTICUL ARS. THE AO HAS THUS NOT STRUCK OFF THE IRRELEVANT PART OF THE SAID THIRD PA RA. IN OTHER WORDS, THE AO HAS NOT SPECIFIED CLEARLY WHETHER THE PENALTY PROCEEDIN G WAS INITIATED FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. 1.2 1.2 VIDE THE SUBMISSION DATED 14.06.2017, THE A /R HAS RELIED ON A NUMBER OF DECISIONS WHEREIN FAILURE TO STRIKE OFF IRRELEVANT PORTION OF THE NOTICE HAS BEEN HELD AS FATAL AND FOR WHICH THE PENALTY LEVIED BY T HE AO HAS BEEN CANCELLED. SPECIFICALLY N THE GROUNDS OF APPEAL RAISED BY WAY OF ADDITIONAL GROUNDS ON 23.06.2017 THE CASE OF MANUJUNATHA COTTON AND GINNI NG FACTORY & OTHERS HAS BEEN RELIED UPON. THE SAID DECISION HAS BEEN FO LLOWED UP BY THE JURISDICTIONAL KOLKATA BENCH OF I.T.A.T. IN ITS VAR IOUS DECISIONS. THE RELEVANT PORTION OF THE DECISION IN THE CASE OF SSAS EMERAL D MEADOWS {[2016] 73 TAXMANN.COM 248(SC)/[2016] 73 TAXMAN.COM 241 KARNAT AKA)}, WHICH HAS BEEN RELIED UPON REPEATEDLY BY THE HON'BLE ITAT, IS REPRODUCED AS UNDER:- THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE A SSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF S ECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF CIT V. MANJUNATHA CO TTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMAN N.COM 250 (KAR.) 1.3 SOME OF THE DECISIONS WHICH HAVE BEEN RELIED UP ON ON THE POINT OF NOT STRIKING OFF THE IRRELEVANT PORTION IN THE PENALTY NOTICE IS LISTED BELOW:- 1. ORDER OF BOMBAY HIGH COURT IN THE CASE OF CIT V S. SHRI SAMSON PERINCHERY. 2. ITAT ORDER, KOLKATA BENCH IN THE CASE OF GAUTAM JHUNJHUNWALA VS. ITO. 3. ORDER OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GRINNING FACTORY. 4. ORDER OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS. 5. ITAT ORDER, KOLKATA BENCH IN THE CASE OF ABU MAN SUR ALI VS. DCIT ITA NO.2104/KOL/2017 A.Y. 2012-13 ITO WD-13(1), KOL. VS. M/S AMBEY RETA ILERS PVT. LTD. PAGE 3 6. ITAT ORDER, KOLKATA BENCH IN THE CASE OF M/S ATM ARAM & CO.V. DCIT. 7. ITAT ORDER, KOLKATA BENCH IN THE CASE OF ITO VS . M/S SWASTIK REFINERY PVT. LTD. 8. ORDER OF SUPREME COURT IN THE CASE OF CIT VS. S SAS EMERALD MEADOWS. 9. ORDER OF SUPREME COURT IN THE CASE OF CIT VS. M/ S V.S. LAD & SONS. 10. ORDER OF SUPREME COURT IN THE CASE OF CIT VS. V EERABHADRAPPA SANGAPPA & CO. 11. ITAT ORDER, KOLKATA BENCH IN THE CASE OF SURES H KARMAKAR VS. DCIT. 1.4 FOLLOWING THE ABOVE CASES AND AS THE RELEVANT N OTICE INITIATING THE PENALTY U/S. 271(1)(C) HAS FAILED TO STRIKE OFF THE IRRELEV ANT PORTIONS, PENALTY ORDER DATED 18.09.2015 AND CHALLENGED IN THE PRESENT APPE AL IS CANCELLED FOR BEING VAGUE AS ABOVE. THE GROUNDS RAISED BY WAY OF REVISI ON OR ADDITION OF GROUNDS ARE THUS ALLOWED. 3. IT THUS EMERGES THAT CIT(A) HAS DELETED THE IMPU GNED PENALTY ON ACCOUNT OF THE FACT THAT ASSESSING OFFICERS SHOW CAUSE NOTICE INITIATING THE PENAL PROCEEDINGS IN MOTION DID NOT SPECIFY AS TO W HETHER THE ASSESSEE HAD CONCEALED OR FURNISHED INACCURATE PARTICULARS OF IN COME OF ITS TAXABLE INCOME SO FAR AS THE QUANTUM ISSUE OF SHARE CAPITAL / PREM IUM ISSUE OF 1,54,78,000 IS CONCERNED. WE FIND THE INSTANT ISSUE TO BE NO MO RE RES INTEGRA CO-ORDINATE BENCHS DECISION IN JEETMAL CHORARIA DATED 01.12.20 17 HAS DECLINED REVENUES SIMILAR SUBSTANTIVE GROUND AS FOLLOWS:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE WRITTEN SUBMISSIONS AND THE CASE LAWS RELIED UPON BY THE LD.DR. WE FIND THE SAME SET OF WRITTEN SUBMISSIONS WERE FILED BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JEETMAL CHORARIA 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 HONBLE HIGH COURTS AT BOMBAY AND PATNA AND PREFERRED TO FOLLOW THE RATIO LAID DOWN BY THE HON BLE HIGH COURT OF KARNATAKA IN THE CASE OF MANJUNATHA COTTON AND GINNING SUPRA BY TAKI NG SUPPORT OF THE ESTABLISHED PRINCIPLE ENUNCIATED BY THE HONBLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS LTD REPORTED IN 88 ITR 192 (SC). WE ARE IN AGREEMENT WI TH THE REASONING OF THE IN ITS ORDER DT:01-12-2017 OF COORDINATE BENCH IN THE CASE OF JEETMAL CHORARIA AND THE SAME IS REPRODUCE D 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) 2 44 CTR 631 (CAL) HAS TAKEN A VIEW THAT SEC.271 DOES NOT MANDAT E THAT THE RECORDING OF SATISFACTION ABOUT CONCEALMENT OF INCO ME MUST BE IN SPECIFIC TERMS AND WORDS AND THAT SATISFACTION OF A O MUST REFLECT FROM THE ORDER EITHER WITH EXPRESSED WORDS RECORDED BY T HE 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 SP ECIFIC CHARGE IN THE MANDATORY SHOW CAUSE NOTICE U/S.274 OF THE ACT. TH EREFORE REFERENCE TO THIS DECISION, IN OUR VIEW IS NOT OF ANY HELP TO THE PLEA OF THE REVENUE BEFORE US. ITA NO.2104/KOL/2017 A.Y. 2012-13 ITO WD-13(1), KOL. VS. M/S AMBEY RETA ILERS PVT. LTD. PAGE 4 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 DATED 21.3.2017; (II) EARTHMOVING EQUIPMENT SERVICE CORPO RATION VS. DCIT 22(2), MUMBAI, (2017) 84 TAXMANN.COM 51 (III) MAHES H M.GANDHI VS. ACIT VS. ACIT ITA NO.2976/MUM/2016 DATED 27.2.2017. RELIANCE WAS PLACED ON TWO DECISIONS OF THE HONBLE BOMBAY H IGH COURT VIZ., (I) CIT VS. KAUSHALYA 216 ITR 660(BOM) AND (II) M/S.MAH ARAJ GARAGE & CO. VS. CIT DATED 22.8.2017. THIS DECISION WAS REF ERRED TO IN THE WRITTEN NOTE GIVEN BY THE LEARNED DR. THIS IS AN U NREPORTED 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, DOES NOT EITHER MANDATE THE GIVING OF NOTICE OR ITS ISSUANCE IN A PARTICULAR FORM. PENALTY PROCEEDINGS ARE QUASI-CRIM INAL 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 TH AT PREJUDICE IS CAUSED TO THE CONCERNED PERSON BY THE PROCEDURE FOL LOWED. THE ISSUANCE OF NOTICE IS AN ADMINISTRATIVE DEVICE FOR INFORMING THE ASSESSEE ABOUT THE PROPOSAL TO LEVY PENALTY IN ORDE R TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DONE. MERE MISTA KE IN THE LANGUAGE USED OR MERE NON-STRIKING OF THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. THE ITAT MUMBAI BENCH IN THE CASE OF DHANRAJ MILLS PVT.LTD. (SUPRA) FOLLOWED THE DECISION RENDER ED BY THE JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CAS E OF KAUSHALYA (SUPRA) AND CHOSE NOT TO FOLLOW DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FA CTORY (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 SHOULD 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 NOTICE WOULD NOT INVALIDATE PENALTY PROCEEDINGS. 10. IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE C ORPORATION (SUPRA), THE ITAT MUMBAI DID NOT FOLLOW THE DECISIO N RENDERED IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA) FOR THE REASON THAT PENALTY IN THAT CASE WAS DELETED FOR SO MANY R EASONS 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.VEERABHADRAPPA SANGAPPA & CO., IN ITA NO.5020 OF 2009 WHICH WAS AN APPEAL BY THE REVENUE. THE TRIBUNAL H ELD 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 AS SESSING AUTHORITY. BEFORE ISSUING THE NOTICE THE INAPPROPRIATE WORDS A ND PARAGRAPHS WERE ITA NO.2104/KOL/2017 A.Y. 2012-13 ITO WD-13(1), KOL. VS. M/S AMBEY RETA ILERS PVT. LTD. PAGE 5 NEITHER STRUCK OFF NOR DELETED. THE ASSESSING AUTHO RITY WAS NOT SURE AS TO WHETHER SHE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR HAS FURNISHED INACCU RATE DETAILS. THE NOTICE IS NOT IN COMPLIANCE WITH THE REQUIREMENT 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 A SSESSING AUTHORITY. FURTHER, IT HELD THAT THE ASSESSING OFFICER HAD MAD E ADDITIONS UNDER SECTION 69 OF THE ACT BEING UNDISCLOSED INVESTMENT. IN THE APPEAL, THE SAID FINDING WAS SET-ASIDE. BUT ADDITION WAS SUSTAI NED ON A NEW GROUND, THAT IS UNDER VALUATION OF CLOSING STOCK. S INCE THE ASSESSING AUTHORITY HAD INITIATED PENALTY PROCEEDINGS BASED O N THE ADDITIONS MADE UNDER SECTION 69 OF THE ACT, WHICH WAS STRUCK DOWN BY THE APPELLATE AUTHORITY, THE INITIATED PENAL PROCEEDING S, NOLONGER EXISTS. IF THE APPELLATE AUTHORITY HAD INITIATED PENAL PROCEED INGS ON THE BASIS OF THE ADDITION SUSTAINED UNDER A NEW GROUND IT HAS A LEGAL SANCTUM. THIS WAS NOT SO IN THIS CASE AND THEREFORE, ON BOTH THE GROUNDS THE IMPUGNED ORDER PASSED BY THE APPELLATE 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 APPE AL BEFORE HIGH COURT. THE HONBLE HIGH COURT FRAMED THE FOLLOWING QUESTION OF LAW IN THE SAID APPEAL 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 CONC EALMENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULA RS IS VALID AND LEGAL? 2. WHETHER THE PROCEEDINGS INITIATED BY THE ASSESSI NG AUTHORITY WAS LEGAL AND VALID? THE HONBLE KARNATAKA HIGH COURT HELD IN THE NEGATIVE AND AGAINST THE REVENUE ON BOTH THE QUESTI ONS. 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 PROPOSITION AS WAS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KAUSHALYA (SUP RA) 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 T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KAUSHALYA (SUP RA). 13. IN THE CASE OF MAHESH M.GANDHI (SUPRA) THE MUM BAI ITAT THE ITAT HELD THAT THE DECISION OF THE HONBLE KARNATAK A HIGH COURT IN THE CASE MANJUNATHA COTTON & GINNING (SUPRA) WILL NOT B E APPLICABLE TO THE FACTS OF THAT CASE BECAUSE THE AO IN THE ASSESSMENT ORDER WHILE INITIATING PENALTY PROCEEDINGS HAS HELD THAT THE AS SESSEE HAD CONCEALED PARTICULARS OF INCOME AND MERELY BECAUSE IN THE SHOW CAUSE NOTICE U/S.274 OF THE ACT, THERE IS NO MENTIO N WHETHER THE PROCEEDINGS ARE FOR FURNISHING INACCURATE PARTICULA RS OR CONCEALING PARTICULARS OF INCOME, THAT WILL NOT VITIATE THE PE NALTY PROCEEDINGS. IN THE PRESENT CASE THERE IS NO WHISPHER IN THE ORDER OF ASSESSMENT ON THIS ASPECT. WE HAVE POINTED OUT THIS ASPECT IN TH E EARLIER PART OF THIS ITA NO.2104/KOL/2017 A.Y. 2012-13 ITO WD-13(1), KOL. VS. M/S AMBEY RETA ILERS PVT. LTD. PAGE 6 ORDER. HENCE, THIS DECISION WILL NOT BE OF ANY ASS ISTANCE 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 MUCH AS T HE 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 P ROPOSITION THAT THE DEFECT IN THE SHOW CAUSE NOTICE WILL STAND CURED IF THE INTENTION OF THE CHARGE U/S.271(1) (C ) IS DISCERNIBLE FROM A READIN G 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 HIGH COURT IS THAT ISSUANCE OF NOTICE IS AN ADMINIS TRATIVE DEVICE FOR INFORMING THE ASSESSEE ABOUT THE PROPOSAL TO LEVY P ENALTY 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 INACC URATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. THE TRIBUN AL BENCHES AT MUMBAI AND PATNA BEING SUBORDINATE TO THE HONBLE BOMBAY H IGH COURT AND PATNA 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 TRIBUN AL IN OTHER JURISDICTIONS ARE CONCERNED, THERE ARE TWO VIEWS ON THE ISSUE, ONE IN FAVOUR OF THE ASSESSEE RENDERED BY THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA) AND OTHER OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.KAUSHA LYA. IT IS SETTLED LEGAL POSITION THAT WHERE TWO VIEWS ARE AVAILABLE O N 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). 15. WE HAVE ALREADY OBSERVED THAT THE SHOW CAUSE N OTICE ISSUED IN THE PRESENT CASE U/S 274 OF THE ACT DOES NOT SPECIF Y THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEALING PAR TICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SH OW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT STRIKE OUT THE INAPPROPRIAT E WORDS. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSITION O F PENALTY CANNOT BE SUSTAINED. THE PLEA OF THE LD. COUNSEL FOR THE ASSE SSEE WHICH IS BASED ON THE DECISIONS REFERRED TO IN THE EARLIER PART 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 T O BE CANCELLED. 7.WE FIND THAT THE NOTICE DT. 27-03-2014 ISSUED U/S 274 R.W.S 271 OF THE ACT DOES NOT SPECIFY THE CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE VIZ WHETHER HAD CONCEALED THE PARTICULARS OF INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HENCE THE SAID N OTICE IS TO BE HELD AS DEFECTIVE. 8. FURTHER, WE FIND THAT THE REVENUE HAD PREFERRE D A SLP BEFORE THE HONBLE SUPREME COURT AGAINST THIS JUDGMENT WHICH W AS DISMISSED 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. ITA NO.2104/KOL/2017 A.Y. 2012-13 ITO WD-13(1), KOL. VS. M/S AMBEY RETA ILERS PVT. LTD. PAGE 7 WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPE CIAL LEAVE PETITION IS, ACCORDINGLY DISMISSED. PENDING APPLICATION, IF ANY, STANDS DISPOSED OF. 4. LEARNED DEPARTMENTAL REPRESENTATIVE AT THIS STAG E REFERS TO HON'BLE KERALA HIGH COURTS DECISION IN CIT VS. K.P. MADHUSUDANAN (2000) 246 ITR 218 (KER) IN SUPPORT OF THE ASSESSING OFFICERS ACT ION. WE FIND THAT MUCH WATER HAS FLOWN DOWN THE STREAM SINCE THEN. THE CIT(A) HA S RELIED UPON A CATENA CASE LAW COMING MUCH AFTER HON'BLE KERALA HIGH COUR TS DECISION. LEARNED DEPARTMENTAL REPRESENTATIVE HAS FAILED TO REBUT THE FACT THAT THE SAME VIEW STAND DULY CONSIDERED IN LATTER JUDICIAL PRECEDENTS (SUPRA). WE THUS CONCLUDE THAT CIT(A) HAS RIGHTLY DELETED THE IMPUGNED PENALT Y IN LOWER APPELLATE PROCEEDINGS. 5. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 05/09/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 05 / 09 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO, WARD-13(1), 9 TH FLOOR, 110, SHANTI PALLY, AAYAKAR BHAWAN (POORVA), KOLKAT -107 2. /RESPONDENT-M/S AMBEY RETAILERS PVT. LTD., 29B, RAB INDRA SARANI, 3 RD FL. KOL-73 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,