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04-09-2019, Samanthu Business Forms, Section 271(1)(c), 133A, Tribunal Bangalore
This appeal by the assessee is directed against the order dated 22.02.2019 of CIT(A) - 11, Bangalore, relating to Assessment Year 2012-13 whereby the CIT(A) confirmed the order of the Assessing Officer (AO) dated 31.08.2015 imposing penalty of Rs.14,04,106/- on the assessee under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).
2. Briefly stated, the facts relevant for disposal of this appeal are as under:-
2.1 The assessee company, engaged in business of manufacturing of stationery products, filed its return for Assessment Year 2012-13 on 29.09.2012 declaring income of Rs.74,843/-, and subsequently filed a revised return declaring Nil income. A survey under section 133A of the Act was conducted at the assessee’s business premises on 20.03.2014. The case was taken up for scrutiny for this Assessment Year and the assessment was concluded under section 143(3) of the Act vide order dated 16.02.2015 and the AO simultaneously initiated proceedings under section 274 r.w.s. 271 of the Act. Subsequently, the AO passed an order dated 31.08.2015 levying penalty of Rs 14,04,106/- under section 271(1)(c) of the Act which was upheld by the CIT(A) vide an ex-parte order dated 22.02.2019; without the benefit of the assessee’s submissions in the matter.
3. Aggrieved by the ex-parte order of CIT(A) - 11, Bangalore, dated 22.02.2019, upholding the AO’s action in levying penalty of Rs.14,04,106/- under section 271(1)(c) of the Act for Assessment Year 2012-13, the assessee has filed this appeal wherein it has raised the following grounds:
1. The Order of the Learned Commissioner of Income Tax (Appeals) - 11, Bangalore, rCIT(A)1 to the extent prejudicial to the Appellant is bad in law and on facts; against the provisions of the Income-tax, Act, 1961 and weight of evidence and probabilities of the case;
2. The Learned CIT(A) has erred in law and on facts in perversely stating `despite several notices issued / sent providing the appellant an opportunity to appear and put forth its submissions, there was no compliance on its part whatsoever', thereby further erred in passing order without considering representations / submissions made;
3. The Learned CIT(A) has erred in law and on facts in not adjudicating on the grounds raised / contentions on law and merits of the Act, thus the order of the Learned CIT(A) is against principles of natural justice, provisions of section 250(6) and liable to be set aside;
4. The Learned CIT(A) has erred in upholding order levying penalty failing to notice that it is bad in law as it is based on notice dated 24.06.2015 which is vague, issued without application of mind and without specifying the exact conduct contumacious;
5. The Learned CIT(A) has erred in law in not appreciating that the penalty, order is bad in law as it is based on the notice which does not unambiguously state whether the Appellant has concealed its income or furnished inaccurate particulars thereof;
6. The Learned CIT(A) has grossly erred in upholding levy of penalty without appreciating that penalty cannot be levied on additions made on protective basis in the assessment proceedings;
7. Without prejudice to the above, the Learned CIT(A) and the AO have erred in concluding that he Appellant has furnished inaccurate particulars of income;
8. The Learned CIT(A) has erred not following binding precedence of judicial bodies which are covered in favour of the Appellant on the impugned issue;
9. The Learned CIT(A) has erred in failing to appreciate that there was no conscious act of furnishing inaccurate particular or concealment of income on the part of the Appellant.
4. Ground Nos.4 and 5 : In support of these grounds (supra) raised before the Tribunal, the learned Counsel for the assessee contended that the CIT(A) failed to follow the binding decision of Hon’ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar); and since the notice issued under section 274 r.w.s. 271 of the Act for imposing penalty under section 271(1)(c) of the Act was not in accordance with law, on this ground alone, the order imposing penalty should be quashed. The learned Counsel for the assessee also drew our attention to the show cause notice issued under section 274 r.w.s 271 of the Act for initiating penalty proceedings dated 24.06.2015 and submitted that the said notice does not specify as to whether the assessee is guilty of having “furnished inaccurate particulars of income” or of having “concealed particulars of such income”. He pointed out that the show cause notice does not
strike out the irrelevant portion viz., “furnished inaccurate particulars of income” or “concealed particulars of such income”. He drew our attention to a decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Karn); wherein it was held that if the show cause notice issued for levy of penalty under section 271(1)(c) of the Act does not specify as to the exact charge viz., whether the charge is that the assessee has “furnished inaccurate particulars of income” or “concealed particulars of income” by striking out the irrelevant portion of printed show cause notice, then the imposition of penalty on the basis of such invalid show cause notice cannot be sustained. It was further submitted by the learned AR that the issue of the penalty order being passed pursuant to issue of defective notice being invalid has been raised before the CIT(A) as additional grounds and the fact thereof has been recorded at para 6 of the impugned order of the CIT(A).
5. We have also perused the show-cause notice issued under section 274 r.w.s. 271 of the Act for he Assessment Year 2012-13 (placed at page 2 of paper book). The AO, in the said show cause notice, has not struck off the irrelevant portion as to whether the charge against the assessee is “concealing particulars of income” or “furnishing of inaccurate particulars of income”.
6. The learned DR relied on the order of the CIT(A). He placed reliance on the decision of the Hon'ble ITAT Bangalore Bench in the case of Shri P.M.Abdulla Vs. ITO ITA No.1223 & 1224/Bang/2012 order dated 17.10.2016 taking a view that absence of specific mention in the show cause notice under section 274 of the Act about the charge under section 271(1)(c ) of the Act is not fatal to levy of penalty under section 271(1)(c) of the Act. In coming to the aforesaid conclusion, the Bench followed