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04-06-2019, Desai and Company, Section 271(1)(c), 274, Tribunal Bangalore

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3 months 1 week ago #9673 by amit
Section - 271(1)(c), 274, 148, 292B
Order Date - 04-06-2019
Favouring - Assessee
Court - Tribunal Bangalore
Appellant - Desai and Company
Respondent - DCIT
Justice - N. V. VASUDEVAN VP & JASON P BOAZ AM
Citation - 619Taxpundit89
Appeal No. - ITA No.997/Bang/2016
Asstt. Year - 2006-07

Order

PER : Jason P. Boaz, A.M

This is an appeal by the assessee directed against the order dated 29.01.2016 of CIT(A), Hubli, relating to Assessment Year 2006-07 whereby the CIT(A) confirmed the order of the Assessing Officer (AO) dated 21.02.2013 imposing penalty 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 firm, engaged in business as dealers in tractors, trax vehicles and accessories, filed its return for Assessment Year 2006-07 on 30.10.2006 declaring income of Rs.59,10,997/-, and subsequently revised to Rs.1,31,11,000/- as per return filed on 31.12.2008; which included Rs.11,80,000/- added back towards bad debts written off and Rs.60,20,000/- added back towards claim of discount to cover deficiencies as stated in letter dated 30.12.2008. 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 31.12.2008 wherein the assessee’s income was determined at Rs.1,31,11,000/- and the AO simultaneously initiated proceedings under section 271(1)(c) of the Act by issue of notice dated 31.12.2008. Subsequently, the AO passed an order dated 16.06.2009 levying penalty of Rs 24,23,520/- under section 271(1)(c) of the Act which was upheld by the CIT(A). On further appeal, a Co-ordinate Bench of the Tribunal vide order in ITA No.521/Bang/2010 dated 10.08.2010 allowed the assessee’s appeal. The Hon’ble Karnataka High Court vide order in ITA No.5063/2010 dated 20 10.2011 set aside the matter to the file of the AO to pass orders afresh.

2.2 In the second round, the AO, after considering the assessee’s explanation passed order dated 21.02.2013 levying penalty of Rs.24,23,520/- under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income. The assessee’s appeal was dismissed by the CIT(A)-Hubli vide order dated 29.01.2016 upholding the levy of penalty of Rs.24,23,520/- under section 271(1)(c) of the Act on the assessee, inter alia, brushing aside the applicability of the decision of the Hon’ble Karnataka High Court in the case of Manjuantha Cotton & Ginning Factory 359 ITR 565 (Kar) relied upon by the assessee.

3. Aggrieved by the order of CIT(A), Hubli, dated 29.01.2016, upholding the AO’s action in levying penalty under section 271(1)(c) of the Act for Assessment Year 2006-07, the assessee has filed this appeal wherein it has raised the following grounds:

4. Ground No 2 : In this ground (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 271(1)(c) of the Act dated 31.12.2008 for initiating proceedings for imposing penalty was not in accordance with law, on this ground, the order imposing penalty should be quashed. The learned Counsel for the assessee also drew out attention to the show cause notice issued under section 271(1)(c) of the Act for initiating penalty proceedings dated 31.12.2008 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 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.

5. We have also perused the show-cause notice issued under section 271(1)(c) of the Act for the Assessment Year 2006-07. 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”. We also find that while in the order of assessment for Assessment Year 2006-07 dated 31.12.2008 that penalty proceedings under section 271(1)(c) of the Act were for “concealment of particulars of income”, the AO levied penalty thereunder for “furnishing of inaccurate particulars of income” in order dated 21.02.2013.

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)

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