M/s S R Construction Company , Bangalore V. Deputy Commissioner of Income Tax Circle-7(2)(1), Bangalore

ITA 2111/BANG/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1471 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 02-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIDHI DAS
• Assessee Lawyers: V SRINIVASAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I.T . A. NO. 2111 /BANG/20 18 (ASSESSMENT YEAR : 20 14 - 15 ) M/S. S.R. CONSTRUCTION COMPANY, CH. NAGARATHNAMMA, NO.41, 1 ST FLOOR, 30 TH CROSS, KANAKAPURA ROAD, JAYANAGAR, 7 TH BLOCK, BANGALORE - 560 070 . . APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 7(2)(1), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI V. SRINIVASAN, ADVOCATE. R E SPONDENT BY : SMT. SRINIDHI DAS, ADDL. CIT (D.R) DATE OF H EARING : 19.11.2018. DATE OF P RONOUNCEMENT : 27 .11 .201 8 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 7 , BANGALORE DT.12.06.2018 UPHOLDING THE ORDERS OF THE ACIT, CIRCLE 7(2)(1), BANGALORE DT.30.05.2017 2 IT A NO. 21 11 /BANG/201 8 LEVYING PENALTY OF RS.26,37,567 UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') FOR THE ASSESSMENT YEAR 20 14 - 15. 2.1 AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) 7, BANGAL ORE DT.12.6.2018 FOR ASSESSMENT YEAR 2014 - 15 UPHOLDING THE LEVY OF PENALTY OF RS.26,37,567 UNDER SECTION 271(1)(C) OF THE ACT, THE A. HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS : - 3 IT A NO. 21 11 /BANG/201 8 2.2 SUBSEQUENTLY, THE ASSESSEE FILED ADDITIONAL GROUND NOS.1 & 2 WHICH IS EXTRACTED HEREUNDER : - 2 . 3 I N S U P P O R T O F T H E A DD I T I ON A L G R O U N D R A I S E D ( S U P R A ) T H E AS S E S S E E S U B M ITT E D T H A T T HE S A I D G R O U ND I S A PU R E L E G A L G R O U ND T H A T G O E S T O T H E R OOT O F T H E M A TTE R A N D C A N BE D E C I D E D ON T H E B A S I S OF M ATE R IA L AL R E A D Y O N T H E RE C O R D S . A CC O R D I N G T O T H E AS S E S S E E T HE O M I S S I O N T O R A I S E S P E C I F I C G R OU N D S T O T H I S E F F E C T W A S N E I T H E R I N TE N T I ON A L N OR D E L I B E R A T E A N D P R A Y E D T H A T T HE A D D I T I O N A L G R O U N D R A IS E D BE A D M ITT E D F OR A D J U D IC A T I O N I N T H E I N TER ES T OF E Q U I T Y A ND J U S T IC E . I N T H I S RE G A R D R E LI A N C E W A S P L A C E D O N T HE D E C I S I ON O F T HE H O N B L E A P E X C OU R T I N T H E CA S E OF N TPC L T D . , V S . C I T ( 2 29 I TR 3 8 3 ) ( S C ) . 2 . 4 W E H A V E H E A R D T H E RI V A L CO N T EN T I ONS AN D P E R U S E D A N D CA R E F U L L Y C O N S I D E R E D T H E M ATE R I A L O N R E C O R D AN D T H E L E G A L P REC E D E N T S I N T H I S R E G A R D . I N O U R V IE W T H E L E G A L I S S U E I N T HE A D D I T I O N A L G R OUND R A I SE D 4 IT A NO. 21 11 /BANG/201 8 ( SU P R A ) W O U L D G O T O T HE R O O T O F T HE M ATTE R A N D C A N BE D E CI D E D O N T HE B A S I S O F M ATE R I A L A L R EA D Y O N R EC O R D. F O LL O WI NG T HE R A T I O OF T HE D EC I S I ON OF T HE H O N B L E A P E X C OU R T I N T HE C AS E O F N TPC L T D ; ( S U P R A ) , W E A D M I T T HE A D D I T I O N A L G R O U ND ( SUP RA ) F O R A D J UD I C A T I O N . 3 ADDL. G R O UND N O S. 1 & 2 3 . 1 I N T H ESE G R O U N D S ( S UP R A ) , T H E S U M A ND S UB S T A N C E OF T H E ASS E SS E E S C O N T EN T I O N S AR E T H A T T H E P E N A L T Y P R O C E E D I N G S I N I TI A T E D B Y T HE A O F OR AS S T . Y E A R 2 0 14 - 15 V I DE N O TI C E I S S U E D U / S 274 R . W . S 2 7 1 O F T H E A C T D A T E D 24/11/2016 F O R L E V Y O F P E N A L T Y U / S 2 71 ( 1 )( C ) O F T H E A C T , I S D EFE C T I V E . (A COPY OF THE SAID NOTICE IS PLACED ON RECORD). A PERUSAL THEREOF REVEALS THA T THE ASSESSING OFFICER HAS NOT STRUCK OFF THE RELEVANT PORTION IN THE SHOW CAUSE NOTICE AND THEREFORE THE SHOW CAUSE NOTICE DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER THE CHARGE IS OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. I N T H I S R E G A R D T HE L D A R F O R T HE A S S E S S E E H A S P L A C E D R E L IA N C E ON T H E D E C I S I ON OF T HE H O N B L E K A R N A T A KA H I G H C O U R T I N T HE CAS E O F M A N J UN A T H A C O TT O N & G I NN I NG F AC T O R Y ( 3 5 9 I T R 5 6 5) ( K A R ) A N D T HE R E JE C T I ON O F T H E R E V EN U E S SLP B Y T H E H O N B L E A P E X C OU R T I N T HE C A S E O F SS A S E M ERA L D M EA D O W S I N S L P: (C C 1148 5 / 201 6 ) D A T E D 5 / 8 / 2 0 1 6. THE L D A R A L S O P LAC E D R E LI A N C E ON T HE D E C I S I O N OF T H E C O - O R D I N A T E B E N C H O F T H I S T R I B U N A L I N T H E F O L L O W I N G C A SE S O F - (I ) C R A M AIA H R E D D Y I N I TA N O . 9 7 7 / B A N G / 2017 D A T E D 22 / 9 / 2 0 1 7 . 5 IT A NO. 21 11 /BANG/201 8 ( II ) A R U N K U M A R I N I TA N O . 1 17 / B A N G / 20 1 6 D A T E D 1 6 / 12 / 2 106 AND (III) A. NAGARAJU IN ITA NO.2196/BANG/2016 DT.6.4.2018 I N S U P P O R T OF T H E A S S E S S E E S C A S E . I T I S C ON T E ND E D T H A T I N S I M ILA R CI R C U M S TA N C E S , A S I N T H E C A S E ON H A N D , T HE C O - O R D I N A T E B E N C H E S OF T H I S T R I BUN A L H A VE H E L D T H A T T HE P E N A L T Y P R O CE E D I NGS I N I TI A T E D O N T H E B A S I S OF D E F E C T I V E NO T I C E HA S T O BE C A N C E L L E D. 3 . 2 P E R C O N TR A , T HE L D D R F O R R E V E NUE S U P PO R T E D T HE O R D ER S OF T HE A U T HO R I T IE S B E L O W . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF P.M. ABDULLAH VS. ITO IN ITA NO.1223 & 1224/BANG/2012 DT.17.10.2016, WHEREIN THE BENCH HELD THAT THE DECISION OF THE HON'BLE KARNATAKA HI GH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) WAS RENDERED WITHOUT CONSIDERING THE PROVISIONS OF SEC.292B OF THE ACT AND PREFERRED TO HOLD THAT THE DEFECT IN THE SHOW CAUSE NOTICE UNDER SECTION 274 R.W.S. 271 OF THE ACT IS NOT FATAL TO THE SUSTAINABILITY OF THE ORDER IMPOSING PENALTY. 6 IT A NO. 21 11 /BANG/201 8 3 . 3 . 1 W E H A V E H E A R D T H E RI V A L CO N T EN T I ONS AN D P E R U S E D A N D CA R E F U L L Y C O N S I D E R E D T H E M ATE R I A L ON R E C O R D; I N C L UD I NG T HE J UD I C I A L P R O NOUN C E M E N T S C I T E D . A T T HE O U T SE T W E M A Y M E N T I O N T H A T W H IL E T HE A F O R E S A I D I SS U E OF D E F EC TI V E N O TI C E W A S NOT B EF O R E T H E L D C I T (A ) , H O W E V E R , S I N C E T HE F AC T S OF T H E M ATTE R ON T H I S I S S UE AR E A P P A R E NT F R O M T HE C O P Y O F T HE SA I D NO T I C E I SS U E D U / S 2 74 R. W . S 2 7 1 OF T H E A C T D A T E D 24/11/2016 AN D T H E J U D I C IA L V I E W OF C OU R T S A ND I T A T C O - O R D I N A T E B E N C H E S I N T H E M ATT E R ( S U P R A ) I N O U R V IE W , NO U S EF U L P U R P O S E W OU L D BE S E R V E D I N R ES T O RI N G T HE M ATT E R T O T HE FI L E OF T H E L D C I T ( A ) A S P R A Y E D F O R B Y T HE L D D R F O R R E V EN U E . W E H AV E P E R U S E D T HE C O P Y O F T HE NO T I C E I S S U E D U / S 2 74 R. W . S 271 OF T HE A C T ; D A T E D 24/11/2016 A ND FI ND T H A T I T R E V E A L S T H A T T H E A O H A S N O T D EL E T E D T HE I N A P P R OP R I AT E W O R DS A N D P A R T S I N T H E R E L E V A N T P AR A G R A PH O F T H E N O T I C E , W H ER E B Y I T I S N OT CLE A R A S T O W H I C H D E F A U L T H A S B E E N C O MM ITTE D B Y T HE A SSE SS EE ; I . E W H E T H E R I T I S F OR F U R N I S H I N G OF I N A C C U R A T E P A RT I C U L AR S OF I N C O M E OR C O N C EA L I NG P A RT I C U LA R S O F I N C O M E T H A T P EN AL T Y U / S 271 ( 1 )( C ) OF T H E A C T I S S O UGHT T O B E L E V I E D . 7 IT A NO. 21 11 /BANG/201 8 3 . 3 . 2 THE H O N B L E K AR N A T A K A H I GH C O U R T I N T H E C A S E OF M / S M A N J UN A T H A C O T T O N & G I N N I NG F A C T O R Y I N ( 3 5 9 I TR 5 65) ( K A R ) H A S H E L D T H A T A NO T I C E I S S U E D U / S 2 7 4 R . W S 271 OF T H E A C T W I T H O UT S P E CI F Y I NG T H E N A T U R E OF D E F A U L T ; I . E . W H E T H E R T HE N O T IC E I S I SS U E D F OR C O N C EA L M E NT OF P A RTI C U L A R S OF I N C O M E O R F U R N I S H I N G O F I N AC C U R A T E P A R TI CU LA R S OF I N CO M E ; I S I N V A L I D A ND T H E C ON S E Q U EN T I A L P E N A L T Y P R O CE E D I N G S / O R D E R A R E AL S O N O T V A L I D . THE RE L E V AN T PO R TI ON OF T HE A F O R E S A I D J UD G M E NT O F T H E H O N B L E K A R N A T A K A HI GH C O U R T ( S U P RA ) A T P AR A S 59 T O 6 1 A R E E X TR ACT E D H ER E UND E R : - 5 9 AS T HE P R O V I S I O N S T AND S , T HE P E NA L T Y P R O C E E D I N G S C AN BE I N IT I A T E D O N V AR I O US G R O UND SE T OUT T H E R E I N, I F T HE O R D E R PA S S E D B Y T HE AU T HO R I T Y CA T E G O R I CA L L Y R E C O R DS A F I N D I NG RE G A R D I NG T H E E X I S T E N C E OF A N Y S A I D G R O U N DS M E N TI O N E D T H E R E I N A ND T H E N P E NA L T Y P R O C E E D I N G S I S I N I T I A T E D, I N T HE NO T I C E T O BE I S S U E D UND E R S E C T I ON 2 7 4 , T H E Y C O U L D C O N V E N I E N TL Y RE F E R T O T H E S A I D O R D E R W H I C H C ON T A I N S T H E S A T I S F A C T I O N O F T HE A U T H O R I T Y W H I C H H A S P A SS E D T HE O R D E R . H O W EV E R , I F T H E E X I S T E N C E O F T HE C O ND I T I O N S C O U L D NOT BE D ISC ER N E D F R O M T HE SA I D O R D E R AND I F I T I S A C A S E OF R EL Y I N G ON D EE MI N G P R O V ISI O N CO N T A I N E D I N E X P L AN A T I O N - I OR I N E X P L ANA T I O N - L ( B ) , T H E N T H O U G H P E NA L T Y P R O CEE D I NGS A R E I N T HE N A T U R E O F C I V I L L I A B I L I T Y , I N F A C T , I T I S ' P E NAL I N NA T U R E . I N E I T H E R EV E N T , T H E P E R S ON W HO I S A C C U S E D O F T HE 8 IT A NO. 21 11 /BANG/201 8 C O N D IT I ONS M EN T I O NE D I N S EC TI O N 2 7 1 S H O U L D B E M ADE K N O W N A BOUT T H E G R OUN D S ON W H I C H T H E Y I N T EN D I M PO S I NG P E N A LT Y O I L A S T HE S E C TI ON 274 M A K E S I T C L E A R T HAT A SSE S SE E HAS A R I GHT T O C O N T E S T S U C H P R O CEE D I NGS AND S HOU L D HA V E F U L L O P PO R T UN IT Y T O M EE T T H E C A S E OF T HE D E PA RT M E NT AND S HOW T HAT T HE C O N D IT I O N S S T I P U L A T E D I N S E CT I ON 2 7 1 ( I) ( C ) C/ A NOT EX I S T A S S U C H HE I S NOT L I A B L E T O P AY P E NA L T Y . T H E P R A C T I C E OF T H E D E P A R T M E NT S E N D I N G A PR I N T E D F A R M W H ER E A L L T HE G R OUND M E N TI O N E D I N S E C T I ON 2 7 1 A R E M E N T I ON E D W OU L D NOT S A TI SF Y RE Q U IRE M E NT OF L A W W H E N T H E C O N S E QU E N C E S OF T HE A SS E SSE E NOT R EB U TT I N G T HE I N I TI A L P R ES U M P T I ON I S S E R I OUS I N N A T U R E A ND H E H AD T O PAY P E N A LT Y F R OM 10 0 % T O 3 0 0 % O F T AX L I AB IL IT Y . AS T HE S A I D P R O V IS I ONS H A V E T O BE H E L D T O BE ST A NDBY C O N ST R U E D NO T I C E I S S U E D UND E R S E C T I ON 2 7 4 SH O U L D S A T I S F Y T H E G R O UNDS W H I C H HE HAS T O M E E T S P E C I F I C A LL Y . OT H ER W I S E , P R I N C I P L E S OF N A T U R A L J U S T I C E I S O F F E ND E D I F T HE S H O W C A U S E N O TI C E I S V A G U E . O N T H E BA S I S OF S U C H P R O CE E D I N G S , NO P E N A L T Y C O U L D BE I M P O S E D ON T HE A SS ES S E E . 60. CL AU S E ( C ) D E A L S W I T H T W O S P EC I FI C O F F E N C ES , T HAT I S T O S A Y , C ON C EA L I N G P A R TI C U L A R S O F I N C O M E OR F U R N I S H I NG I NA C CU R A T E P A R T IC U L A R S OF I N C O M E . N O DO U B T , T H E F A C T S OF S O M E C A S E S M A Y A T T R A C T BO T H T H E O F FE N CE S A ND I N S O M E C A SE S T H E R E M AY B E O VE R L A P P I NG OF T HE T W O O F F E N C E S B U T I N S U C H C A S E S T H E I N I T I A T I O N OF T H E P E N A L T Y P R O C E E D I N G S A L S O M U S T BE F OR B O T H T H E O F FE N CE S . B UT D R A WI NG UP P E NA L T Y P R O C E E D I NGS F OR ONE O FF E N C E A N D F I N D I N G T HE A S S E SS E E GU I L T Y OF A N O T H E R O FF E N C E OR F I ND I N G H I M GU I L T Y F OR E I T H E R T H E ONE O R T HE O T H E R C A NNOT B E S U ST A I N E D I N L A W . I T I S N E E D L E S S T O P O I N T 9 IT A NO. 21 11 /BANG/201 8 OUT S A T I S F A C TI ON OF T HE E XI S T E N C E O F T H E G R O U N D S M E N T I ON E D I N S EC T I O N 2 7 1 ( 1 ) ( C ) W H E N I T I S A S I NE QUA N O N F OR I N I TI A T I O N O R P R O C E E D I N G S , T H E P E N A L T Y P R O C E E D I NGS S HO U L D BE C O N FI N E D O N L Y T O T HO S E G R O UNDS AND T H E SA I D G R O U N DS H A V E T O B E S P EC IFI C A L L Y S T A T E D S O T HAT T HE A S S ESSE E W O U L D H A V E T HE OPP O R T U N I T Y T O M E E T T H O S E G R OUN D S . A F T ER , H E P L A C E S H I S V E RSI O N AND T R I E S T O S U B S T AN T I A T E H I S C L A IM , I F A T A LL , P E N A LT Y I S T O BE I M P O S E D, I T S HOU L D B E I M PO S E D ON L Y O N T H E G R OUN D S ON W H I C H H E I S C A L L E D UPON T O A N S W E R . I T I S NOT O P E N T O T HE A U T H O RIT Y , AT T H E TI M E O F I M P O S I N G P E NA L T Y T O I M PO S E P E NA L T Y O N T HE G R O U N D S O T H E R T HAN W HAT AS S E S SE E W AS C A L L E D U PON T O M EE T . O T H ER WI S E T H O UGH T H E I N IT I A T I O N OF P E N A L T Y P R O C E E D I NGS M AY BE V A L I D A N D L EG A L , T H E F I NAL O R D E R I M PO S I NG P E N A L T Y W O U L D O FF EN D P R I N C I P L E S O F N A T UR A L J U S T IC E A N D C ANN O T BE S U S T A I N ED . T HUS O N C E T H E P R O C E E D I NGS A R E I N IT I A T E D O N ONE G R O U N D , T H E P E N A LT Y S H O U L D A L S O BE I M P O SE D O N T HE S A M E G R O UND. W H ER E T HE BA S I S O F T HE I N IT I A TI O N O F P EN A L T Y P R O CE E D I N GS I S N OT I D E N T I C A L WI T H T H E G R O U N D ON W H I C H T HE P E NA L T Y W AS I M PO S E D, T HE I M P O S I T I ON O F P E NA L T Y I S N O T V A L I D . T H E V A L I D I T Y O F T HE O R D E R OF P E NA L T Y M U S T B E D E T E R MI N E D WI T H RE F ER E N C E T O T HE I N F O R M A T I O N , F A C T S A N D M A T E RI A L S I N T H E HANDS O F T H E AU T HO R I T Y I M P O S I N G T H E P E N A LT Y A T T H E T I M E T H E O R D E R W A S P A SS E D AND F U R T H E R D I SC O V E R Y OF F A C T S S U B S E QU E NT T O T HE I M P O SI T I O N O F P E NA L T Y C A N NOT V A L I DA T E T H E O R D E R O F P E NA LT Y W H IC H , W H E N P AS S E D , W A S N O T S U S T A I N AB L E . 61. T H E A SSE S S I NG OF FI C E R I S E M PO W E R E D UND E R T HE A C T T O I N I TI A T E P E N A L T Y P R O C EE D I N GS O N C E H E I S S A TI S F IE D I N T HE C O U R S E OF A N Y P R O C E E D I N G S T HAT 10 IT A NO. 21 11 /BANG/201 8 T H E R E I S C O N CE A L M E NT OF I N C O M E O R F U R N I S H I NG OF I N A C CU R A T E P A R T IC U L A R S OF T O T AL I N C O M E UND E R C L A U S E ( C ) . C O N C E A L M E N T , F U R N I S H I N G I NA C CU R A T E PA R T IC U L A R S OF I N C O M E A R E D I FF E R E N T . TH U S T H E A SS E SS I NG O F F IC E R W H I L E I S S U I N G NO T IC E H A S T O C O M E T O T HE C O N C L U S I ON T H A T W H E T H E R I S I T A C A S E OF C ON CE A L M E NT OF I N C O M E OR I S I T A C A S E O F F U R N I S H I N G OF I NA C C U R A T E PA R TI C U L A R S . THE AP E X C OU R T I N T H E C A S E OF A S H OK P AI RE P O RT E D I N 2 9 2 I T R 1 1 A T P AGE 19 HAS H E L D T H A T C O N C E A L M E N T OF I N C O M E AND F U R N I S H I N G I NA CC U R A T E PA R TI C U L A R S O F I N C O M E C A R R Y D I FF E R EN T C O N N O T A T I O N S . T H E G U J A R A T HI GH C OU R T I N T H E C A S E OF M 4 N U E NG I N EE R I N G RE P O RT E D I N 122 I TR 3 06 AND T HE D E L HI H I GH C OU R T I N T HE C A S E O F V I R G O IV L4R K ET I N G RE P O RT E D I N 171 T A X M AN 15 6 , H AS H E L D T H A T P E NA L T Y HAS T O BE C L E AR AS T O T H E LI M B F OR W H IC H I T I S LE V I E D A N D T H E A C T I ON B E I NG UN C LE AR P E NA L T Y I S N O T S U S T A I N AB L E . T H E R E F O R E , W H E N T HE A SS ES S I NG O FF I C E R P R OPO S E S T O I N V O K E T HE F IRS T LI M B B E I N G C O N CE A LM E N T , T H E N T H E NO T I C E HAS T O BE APP R O P R I A T EL Y M A R K E D. S I MIL A R I S T HE C A S E F OR F U R N I S H I NG I NA C CU R A T E PA R T I C U L A R S O F I N C O M E . T HE S T ANDA R D P R O F O R M A W I T HOUT S T R I K I NG O F . T H E R E LE V AN T 1 C L AU S E S W I L L L E AD T O A N I N F E R E N C E AS T O N O N - APP L I C A T I ON O F MI N D . ' 3 . 3 . 3 THE AF O R ES A I D V I E W T A K E N B Y T H E H O N B L E K A R N A T A KA H I G H C OU R T I N T H E C A S E OF M A N J U N A T H A C O TT O N & GI N N I N G F A C T O R Y ( SU P R A ) W A S F O LL O W E D B Y T H E H O N B L E K AR N AT A K A H I GH C OU R T I N T H E C A S E OF SS A S E M ERAL D ME A D O W S I N I T A N O . 380 O F 2015 D A T E D 23 / 1 1 / 20 1 5 ; W H ER E I N T HE H ON B L E C OU R T U P H E L D T H E O R D E R OF C O - O R D I N A T E B E N C H O F 11 IT A NO. 21 11 /BANG/201 8 T H I S T R I B U N A L , C A N C E L L I N G T HE P E N A L T Y L E V I E D O N T H E B A S I S OF T HE D EFE C T I VE N O T IC E I S S U E D B Y T HE AO . R E V E N U E S S L P F IL E D A G A I N S T HE SA I D J U D G M E NT O F T H E H O N B L E H I G H C OU R T I N T HE CA S E OF SS A S E M ERAL D ME AD O W S ( S U P RA ) H A S A L S O B EE N D I S M ISSE D B Y T H E H O N B L E A P E X C O U R T I N CC / 1 485 / 2 016 D A T E D 5 / 8 / 2 0 1 6 . I N V I E W OF T HE A F O R E S A I D D E C I S I O N S O F H O N B L E K A R N A T AK A H I GH C OU R T H O L D I N G T H E G R O UND ( S U P RA ) , T HE D E C I S I ON C I T E D B Y T HE L D D R IN THE CASE OF P.M. ABDULLAH (SUPRA) W O U L D N O T C O M E T O R E V E NU E S RE S C U E AS IN OUR CONSIDERED OPINION THE SAME IS CONTRARY TO THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA). 3 . 3 . 4 R ES P ECT F U LL Y F O L L O W I NG T HE J U D G M E N T S O F T HE H O N B L E K A R N A TA K A HI GH C O U R T I N T H E CA S E S O F M/ S M A N J UN A T HA C O T T O N & G I N N I N G F AC T O R Y ( 3 5 9 I TR 565 ) ( K AR ) A N D S S A S E M E R AL D M E A D O W S I N I TA N O : 3 8 0 OF 2015 D A T E D 23 / 11 / 2015, W E H O L D T H A T T HE N O T I C E I S S U E D B Y T HE A O U / S 2 7 4 R. W . S 2 7 1 OF T H E A C T D A T E D 24/11/2016 F OR I N I T I A T I NG P E N A L T Y P R O CEE D I N G S F OR A S S T . Y E A R 2 0 1 4 - 15 I S I NV A LI D A ND C O N S EQ U E N T L Y , T HE P E N A L T Y P R O C EE D I N G S C O NDU CT E D I N 12 IT A NO. 21 11 /BANG/201 8 PU R S U A N C E T H E RE O F , AR E A L S O I N V A L I D A ND W E T H ER E F O R E D EL E T E T HE P E N A L T Y LE V I E D U / S . 271 ( 1 )(C ) O F T HE A C T F O R A SS T . Y EA R 2 0 1 4 - 15 . C O N SE QU E N T L Y , T HE A D D I T I O N A L G R OU N D R AI S E D B Y T H E A SSE SS E E A T S . N O. 1 & 2 ( S UP R A ) ARE AL L O W E D . 4. S I N C E T HE V E R Y B AS I S F O R L E V Y O F P E N A L T Y U / S 271 ( 1 )(C ) O F T HE A C T H A S B EE N H E L D B Y US T O B E I NV A L I D A S D IS CU SSE D I N P A R A S 3 . 1 T O 3 . 3 . 4 OF T H I S O R D E R ( S UP RA ) , T H E O T H E R G R OUNDS OF AP P E A L A T S . N O S . 1 T O 5 R A I S E D ON T H E M ERIT S OF T H E L E V Y O F P E N A L T Y U / S 2 7 1 ( 1 ) ( C ) OF T H E A C T R E Q U IR E NO AD J U D I CA T I O N B Y US A T T H I S ST A G E . 5. I N T HE R E S U L T , A S S E S SEE S A PP E A L F OR A S ST . YEAR 2 0 14 - 15 I S AL L O W E D A S I N D IC A T E D A B O V E . ORDER PRONOUNCED IN THE OPEN COURT ON THE 27TH DAY OF NOV., 201 8 . SD/ - (N.V. VASUDEVAN) JUDICIAL MEMBER SD/ - (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE, DT. 27 .11.2018. *REDDY GP 13 IT A NO. 21 11 /BANG/201 8 COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDEN T 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE CERTIFIED TRUE COPY ASST. REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.