TaxTMI 
TaxTMI 
2018 (9) TMI 418
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....ision of Manjunatha Cotton and Ginning Factory & Others [2013] 359 ITR 565 (Kar), the ground has been raised for cancellation of penalty imposed subsequent to the initiation of the said faulty notice. 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 which is for initiating penalty under variuos clauses of section 271. He notice has listed three different classes of defaults for initiating penalty. The first para has been not been either struck off or ticked. The second para which is for failure to comply with a notice u/s. 1421)/143(2) of the IT Act has been 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. From 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 income can be l....
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....am 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. SSA'S Emerald Meadows. 5. ITAT Order, Kolkata Bench in the case of Abu Mansur Ali vs. DCIT 6. ITAT Order, Kolkata Bench in the case of M/s Atmaram & 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. SSA's 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. Veerabhadrappa Sangappa & Co. 11. ITAT order, Kolkata Bench in the case of Suresh Karmakar vs. DCIT. 1.4 Following the above cases and as the relevant notice initiating the penalty u/s. 271(1)(c) has failed to strike off the irrelevant portions, penalty order dated 18.09.2015 and challenged in the present appeal is cancelled for being vague as above. The grounds raised by way of revision or addition of grounds are thus allowed." 3. It thus emerges that CIT(A) has deleted the impugned penalty....
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....nn.com 51 (iii) Mahesh M.Gandhi Vs. ACIT Vs. ACIT ITA No.2976/Mum/2016 dated 27.2.2017. Reliance was placed on two decisions of the Hon'ble Bombay High Court viz., (i) CIT Vs. Kaushalya 216 ITR 660(Bom) and (ii) M/S.Maharaj Garage & Co. Vs. CIT dated 22.8.2017. This decision was referred to in the written note given by the learned DR. This is an unreported 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 written note filed before us. 9. In the case of CIT Vs. Kaushalya (supra), the Hon'ble 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-criminal 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 justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure follow....
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....to a patent non application of mind on the part of the Assessing authority. Further, it held that the Assessing Officer had made additions under Section 69 of the Act being undisclosed investment. In the appeal, the said finding was set-aside. But addition was sustained on a new ground, that is under valuation of closing stock. Since the Assessing Authority had initiated penalty proceedings based on the additions made under Section 69 of the Act, which was struck down by the Appellate Authority, the initiated penal proceedings, nolonger exists. If the Appellate Authority had initiated penal proceedings 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 dated 9th April, 2009. Aggrieved by the said order, the revenue filed appeal before High Court. The Hon'ble 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 th....
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....le from a reading of the Assessment order in which the penalty was initiated. 14. From the aforesaid discussion it can be seen that the line of reasoning of the Hon'ble Bombay High Court and the Hon'ble Patna High Court is that issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The Tribunal Benches at Mumbai and Patna being subordinate to the Hon'ble Bombay High Court and Patna High Court are bound to follow the aforesaid view. The Tribunal Benchs at Bangalore have to follow the decision of the Hon'ble Karnataka High Court. As far as benches of Tribunal in other jurisdictions are concerned, there are two views on the issue, one in favour of the Assessee rendered by the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning (supra) and other of the Hon'ble Bombay High Court in the case of Smt.Kaushalya. It is settled legal position that where two views are available on an issue, the view favourable to the Assessee h....