Case Law Details
Ecorea & Kuroda Electric India Private Limited Vs DCIT (ITAT Pune)
At the outset the Ld.AR invited our attention to the Notices under section 274 r.w.s. 271(1)(c) of the Act dated 04/05/2017 and 29/06/2017 issued by the AO. The Ld. Authorised Representative(ld.AR) of the assessee explained that the appropriate clause has not been strike out by the AO in the notice. The Ld. Departmental Representative (ld. DR) for the Revenue could not rebut this fact.
It is held that the Penalty Notice is defective, therefore, the penalty levied under section 271(1)(c) of the Act, is not maintainable.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income-tax(Appeals)-1, Pune’s, order dated 16.09.2019 for the Assessment Year 2014-15, involving proceedings under section 271(1)(c) of the Income Tax Act, 1961. The Assessee has raised the following grounds of appeal:
“1) On facts and circumstances of the case and in law, the Honourable CIT (Appeal)-1, Pune erred in confirming the levy of penalty of Rs.28,57,500/- in spite of the fact that the learned Assessing Officer (“AO”) did not provide a reasonable opportunity of hearing not clarifying the limb under which penalty was sought to be levied in the notice.
The appellant hereby prays that the penalty may be deleted.
2) On facts and circumstances of the case and in law, the Honourable CIT (Appeal)-1, Pune erred in confirming the levy of penalty of Rs.28,57,500/- without appreciating the fact that the non-disclosure of interest income under the head Income from Other Sources was only due to a manual mistake or human error and it did not amount to concealment or furnishing inaccurate particulars of income as envisaged u/s 271(1)(c) of the Act. The appellant hereby prays that the penalty may be deleted.
3) On facts and circumstances of the case and in law, the Honourable CIT (Appeal)-1, Pune erred in confirming the levy of penalty of Rs.28,57,500/- without appreciating the fact that the assessee has shown his bona fide approach since the said income had been reflected in the Audited Financial Statements of the assessee. The appellant hereby prays that the penalty may be deleted.
4) The appellant hereby reserves the right to add, amend, alter or raise any additional ground or grounds of appeal or delete or withdraw any of the ground of appeal/s.”
2. Brief facts of the case are that Penalty order u/s 271(1)(c) of the Act was passed on 28/06/2017 by the Dy.Commissioner of Income Tax, Circle-1(2), Pune herein after called as Assessing Officer(AO) levying penalty of Rs. 28,57,500/-. The Assessee filed appeal before the Ld.Commissioner of Income Tax(Appeal) who dismissed the appeal of the assessee.
3. Aggrieved by the order of the ld.CIT(A), the assessee filed an appeal before this Tribunal.
4. At the outset the Ld.AR invited our attention to the Notices under section 274 r.w.s. 271(1)(c) of the Act dated 04/05/2017 and 29/06/2017 issued by the AO. The Ld. Authorised Representative(ld.AR) of the assessee explained that the appropriate clause has not been strike out by the AO in the notice. The Ld. Departmental Representative (ld. DR) for the Revenue could not rebut this fact.
5. We have heard both the parties and perused the records. It is a fact that the AO has not stroke out the appropriate words i.e. Inappropriate particulars or Concealment of Income.
5.1 The Hon’ble Bombay High Court has held as under in the case of Ganga Iron & Steel Trading Co. v/s Commissioner of Income Tax [2022] 135 taxmann.com 244 (Bombay) order dated December 22, 2021 as under:
“10. We find that the law as laid down by the Full Bench applies on all fours to the facts of the present case as in the show cause notice dated 12-2-2008, the Assistant Commissioner of Income-tax is not clear as to whether there was concealment of particulars of income or that the Assessee had furnished inaccurate particulars of income. We therefore find that issuance of such show cause notice without specifying as to whether the Assessee had concealed particulars of his income or had furnished inaccurate particulars of the same has resulted in vitiating the show cause notice.
Heavy reliance was placed by the learned counsel for the Revenue on the decision in Mak Data (P.) Ltd. (supra) to urge that the penalty contemplated by section 271 (1) (c) of the said Act was in the nature of civil liability and mens rea was not essential therein. The decision in Dilip N. Shroff (supra) having been held as not laying down good law in Dharmendra Textile Processors Ltd. (supra), it was submitted that the show cause notice issued in the present proceedings was liable to be upheld. It may be noted that all the decisions relied upon by the learned counsel for the Revenue were considered by the Full Bench while answering the issues referred to it on reference. The Full Bench having considered these decisions and having answered the question as regards defect in the notice under section 271(1)(c) of the said Act resulting in vitiating the penalty proceedings, we find ourselves bound by the answers given by the Full Bench. It would not be permissible for us to disregard this aspect and take a different view of the matter. Accordingly substantial question of law no. III is answered by holding that since the show cause notice dated 12-2-2008 does not indicate whether there was concealment of particulars of income or furnishing of incorrect particulars of such income, the same would vitiate the penalty proceedings.”
6. Respectfully following the above decision of the Hon’ble Bombay High Court it is held that the Penalty Notice is defective, therefore, the penalty levied under section 271(1)(c) of the Act, is not maintainable. Thus, the grounds of appeal raised by the assessee are allowed.
7. In the result, appeal of the Assessee is Allowed.
Order pronounced in the open Court on 30th June, 2022.
