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H.M. Ice & Storage Pvt. Ltd., AK- 2, Shalimar Bagh, New Delhi. vs DCIT, Circle- 12(1), New Delhi.
August, 21st 2018

Subject: DR on the other hand submitted that non-striking off the inappropriate

Referred Sections:
Section 271(1)(c)
Section 274

Referred Cases / Judgments
Vidyanath Urban Co-operative Bank Ltd. vs. ACIT
CIT vs. Manjunath Catton

 

            IN THE INCOME TAX APPELLATE TRIBUNAL
                 DELHI BENCH "SMC", NEW DELHI
         BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER

                            ITA No.926/Del/2018
                          Assessment Year : 2001-02
H.M. Ice & Storage Pvt. Ltd.,                    DCIT, Circle- 12(1),
AK- 2, Shalimar Bagh,                            New Delhi.
                                           Vs.
New Delhi.

PAN : AABCH0132N
    (Appellant)                                    (Respondent)

      Assessee by                      :         Ms. Apoorva Bhardwaj, CA
      Department by                    :         Shri Atiq Ahmed, Sr. DR
      Date of hearing                  :         02-08-2018
      Date of pronouncement            :         20-08-2018

                                ORDER

PER R. K. PANDA, AM :

      This appeal filed by the assessee is directed against the order dated

15.11.2017 of CIT(A)- 42, New Delhi relating to assessment year 2001-02.

2.    Levy of penalty of Rs.5,14,150/- by the Assessing Officer u/s 271(1)(c)

of the I.T. Act, 1961 which has been sustained by the ld. CIT(A) is the only

issue raised by the assessee in the grounds of appeal.

3.    The ld. counsel for the assessee at the outset referring to page ­ 1 of the

Paper Book drew the attention of the Bench to the notice issued u/s 274 r.w.s.

271 and submitted that the Assessing Officer has not struck off the

inappropriate words. Therefore, under which limb the penalty has been levied

had not been specified. Referring to various decisions including the decision of
                                        2
                                                               ITA No.926/Del/2018









the Pune Bench of the Tribunal in the case of Vidyanath Urban Co-operative

Bank Ltd. vs. ACIT and vice-versa vide ITA No.2078 & 2079/PUN/2014 order

dated 24.03.2017 for assessment years 2007-08 & 2008-09, he submitted that

the Tribunal, following the decision of the Hon'ble Karnataka High Court in the

case of CIT vs. Manjunath Catton & Ginning Factory reported in 359 ITR 565,

has cancelled such penalty on the ground that the notice issued u/s 274 r.w.s.

271 is bad in law and subsequent proceedings arising thereafter are vitiated on

account of non-striking off of the inappropriate words in the penalty notice.

Referring to various other decisions, she submitted that since the Assessing

Officer in the instant case has not struck off the inappropriate words in the

penalty notice, therefore, the penalty so levied by the Assessing Officer and

sustained by the ld. CIT(A) would bad in law.

4.    The ld. DR on the other hand submitted that non-striking off the

inappropriate words from the penalty notice will not invalidate the proceedings.

Since the assessee in the instant case had concealed its true income liable to tax

by way of furnishing inaccurate particulars of income o account of

accommodation entries of Rs.13,00,000/-, therefore, the penalty levied by the

Assessing Officer and sustained by the ld. CIT(A) should be upheld.
                                        3
                                                              ITA No.926/Del/2018




5.    I have considered rival arguments made by both the sides and perused the

material available on record. I find the Assessing Officer levied penalty of

Rs.5,14,150/- u/s 271(1)(c) on account of accommodation entries of

Rs.13,00,000/- taken by the assessee from M/s Ankur Marketing Limited which

during the course of assessment proceedings was found not in existence and the

assessee was unable to prove the identity and creditworthiness of the loan

creditor and genuineness of the transactions. I find the addition was sustained

by the ld. CIT(A) and the Assessing Officer thereafter initiated penalty

proceedings and, thereafter, levied penalty of Rs.5,14,150/- u/s 271(1)(c) which

has been sustained by the ld. CIT(A). It is the submission of the ld. counsel for

the assessee that the inappropriate words in the notice issued u/s 274 r.w.s. 271

has not been struck off by the Assessing Officer for which the penalty

proceedings are initiated and, therefore, the penalty so levied by the Assessing

Officer and sustained by the ld. CIT(A) is bad in law.

6.    I find merit in the above argument of the ld. counsel for the assessee. A

perusal of the notice issued u/s 274 r.w.s. 271 shows that the inappropriate

words in the said notice has not been struck off i.e. the notice does not specify

under which limb of section 271(1)(c) the penalty proceedings had been

initiated i.e. whether for concealment of income or for furnishing of inaccurate
                                             4
                                                                       ITA No.926/Del/2018




particulars of income. I find the Hon'ble Karnataka High Court in the case of

M/s SSA'S Emerald Meadows (supra) has observed as under :-

      "3.     The Tribunal has allowed the appeal filed by the assessee holding the notice
      issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the
      Income Tax Act, 1961 (for short `the Act') to be bad in law as it did not specify which
      limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e.,
      whether for concealment of particulars of income or furnishing of inaccurate
      particulars of income. The Tribunal, while allowing the appeal of the assessee, has
      relied on the decision of the Division Bench of this Court rendered in the case of
      COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING
      FACTORY (2013) 359 ITR 565.
      4.      In our view, since the matter is covered by judgment of the Division Bench of
      this Court, we are of the opinion, no substantial question of law arises in this appeal
      for determination by this Court. The appeal is accordingly dismissed."







7.    I find the SLP filed by the Revenue has been dismissed by the Hon'ble

Apex Court. Further, the various Benches of the Tribunal following the above

decisions are cancelling the penalty so levied by the Assessing Officer and

confirmed by the ld. CIT(A) on account of non-striking of the inappropriate

words from the notice issued u/s 274 r.w.s. 271 of the Act. Since in the instant

case, the Assessing Officer has not struck off the inappropriate words in the

notices issued u/s 274 r.w.s. 271, therefore, the notice does not specify under

which limb of section 271(1)(c) the penalty proceedings had been initiated i.e.

whether for concealment of income or for furnishing of inaccurate particulars of

income. Therefore, the penalty proceedings become bad in law. I, therefore,
                                           5
                                                                 ITA No.926/Del/2018




set-aside the order of the ld. CIT(A) and direct the Assessing Officer to cancel

the penalty so levied. The appeal filed by the assessee is accordingly allowed.

8.     In the result, the appeal filed by the assessee is allowed.

       Order pronounced in the open Court on this 20th August, 2018.

                                                          Sd/-
                                                    (R. K. PANDA)
                                                ACCOUNTANT MEMBER
Dated: 20-08-2018.
Sujeet
Copy of order to: -
       1)       The   Appellant
       2)       The   Respondent
       3)       The   CIT
       4)       The   CIT(A)
       5)       The   DR, I.T.A.T., New Delhi
                                                                 By Order
//True Copy//
                                                            Assistant Registrar
                                                            ITAT, New Delhi

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