Laxmi Prasad Sahu ORDER
Chandra Mohan Garg, Member (J)
1. These appeals have been filed by the revenue against the separate orders both dated 4.12.2018 of the CIT(A), 2, Bhubaneswar for the assessment years 2010-11 & 2011-12.
2. In both the appeals, the grievance of the revenue is that the ld CIT(A) was not justified in deleting the penalty levied under section 271(1)(c) of the Income tax Act, 1961 by following the decision of decision of Hon'ble Supreme Court in the case of CIT vs. SSA's Emerald Meadows (2016) 73 taxmann.com 248 (SC).
3. At the time of hearing, ld Departmental Representative by referring to the grounds of appeal submitted that the decision of Hon'ble Supreme Court in the case of SSA's Emeralds Meadow (supra) is not binding on the department in view of the decision of Hon'ble Supreme Court in the case of Shanmugavael Nadar, MANU/SC/0833/2002 : 263 ITR 658 (SC), wherein, it is held that a rejection of SLP through a non-speaking order is not a binding precedent. He, therefore prayed that the orders of the ld CIT(A) be reversed by restoring the order of the AO.
4. Replying to above, ld Counsel for the assessee supported the orders of the ld CIT(A) and further submitted that in this case, both notices u/s. 274 r.w.s. 271 was issued on 29.12.2017 for the assessment year 2010-2011 and 2011-12 and the inappropriate words in the said notice have not been struck off. Therefore, it is not understood as to under which limb of provisions of Section 271(1)(c) of the Act, the Assessing Officer has levied penalty. Since the said show cause notices issued u/s. 274 did not specify the charge against the assessee as to whether it was for concealing the particulars of income or for furnishing inaccurate particulars of income, therefore, the penalty orders passed under Section 271(1)(c) of the Act in pursuance to the said notices were rightly reversed by ld CIT(A). The Ld. AR further submitted that the ld CIT(A) has followed the decision of Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory reported in MANU/KA/2416/2012 : 359 ITR 565, which decision has been upheld by the Hon'ble Apex Court in case of CIT Vs. SSA's Emerald Meadows (2016) 73 Taxman.com 248 (SC). Therefore, it was his contention that there was no ambiguity and perversity in the orders of the ld CIT(A) to be interfered with and same may be upheld.
5. We have heard the rival submissions and perused the material available on record, inter alia, notices u/s. 274 read with section 271(1)(c) of the Act dated 29.12.2017. We find the only issue to be decided in the grounds of appeal is regarding deletion of penalty levied u/s. 271(1)(c) on the ground of inappropriate words in the said notices have not been struck off. A perusal of the notices issued u/s. 274 r.w.s. 271 dated 29.12.2017 show that the inappropriate words in the said notice have not been struck off. Even the last line of the said notice only speaks of Section 271 and does not even mention of section 271(1)(c) of the I.T. Act. It is pertinent to note here that the penalty order is based on furnishing of inaccurate particulars but the notice is not specifying exactly on which limb the penalty u/s. 271(1)(c) has been initiated. From the notices dated 29.12.2017 for both the assessment years produced during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. In the instant case also the inappropriate words in the penalty notices have not been struck off and the notices do not specify as to under which limb of the provisions, the penalty u/s. 271(1)(c) has been initiated. On perusal of the impugned order, we observe that the ld CIT(A) deleted the penalty after considering the decision of Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory, MANU/KA/2416/2012 : 35 taxmann.com 250 (Kar) and also the decision of Hon'ble Supreme Court in the case of CIT vs. SSA's Emerald Meadows, 73 taxmann.com 248 (SC). The relevant findings of the ld CIT(A) are as under:
"4. I have carefully examined the assessment order, penalty order and submissions of the appellant. I find that in the assessment order, the Assessing Officer has initiated penalty proceedings u/s. 271(1)(c) Of the Income Tax Act,' 1961, for furnishing inaccurate particulars of income. In the penalty notice, the Assessing Officer charged the appellant for concealing the particulars of income. In the penalty order the Assessing Officer has levied the penalty for concealment of income or for furnishing of inaccurate particulars of such income. Hon'ble High Court of Karnataka in the case of Manjunatha Cotton & Ginning Factory has held that the Assessing Officer has to clearly specify whether there is concealment of income or whether there is filing of inaccurate particulars of income and in the absence of such clarity the levy of penalty will be bad in law. The relevant portion of the judgment is as below:
CIT Vs. Manjunatha Cotton & Ginning Factory MANU/KA/2416/2012 : [2013] 35 taxmann.com 250 (Karnataka)
"Notice under section] 274 should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form, where all the grounds mentioned in section 271 are mentioned, would not satisfy requirement of law. The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb ' bad in law. [Para 0] "
5. This decision was applied by Hon'ble High Court of Karnataka in the case of CIT Vs. SSA's Emerald Meadows. The head notes are as below:
CIT Vs. SSA'S Emerald Meadows [2016] 73 taxmann.com 241 (Karnataka)
"Section 274, read with section 271(1)(c), of the Income-tax Act, 1961-Penalty-Procedure for imposition of (Conditions precedent)-Assessment year 2009-of-Tribunal allowed appeal of assessee holding that notice issued by Assessing Officer under section 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income-It relied on decision of Division Bench of Karnataka High Court rendered in case of CIT v. Manjunatha Cotton & Ginning Factory MANU/KA/2416/2012 : [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250-Against order of Tribunal, revenue filed appeal before High Court Whether since matter was covered by above decision of Division Bench, there was no substantial question of law arising for determination-Held, yes [Para 4] [In favour of assess]. "
6. Hon'ble Supreme Court in the same case has upheld the decision of Hon'ble High Court of Karnataka. The head notes are as below:
CIT Vs. SSA'S Emerald Meadows [2016] 73 taxmann.com 248(SC) "Section 274, read with "section 271(1)(c), of the Income-tax Act, 1961-Penalty-Procedure for imposition of (Conditions precedent)-Assessment year 2009-10-Tribunal, relying on decision of Division Bench of Karnataka High Court rendered in [case of CIT v. Manjunatha Cotton & Ginning Factory MANU/KA/2416/2012 : [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250, allowed appeal of assessee holding that notice issued by Assessing Officer under section 274 read with section 271(1)(c) was bad in law] as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income-High Court held that matter was covered by aforesaid decision of Division Bench and, therefore, there was no substantial question of law arising for determination Whether since there was no merit, in SLP filed by revenue, same was liable to be dismissed-Held, yes [Para 2] [In favour of assessee. "
7. The appellant's case is clearly covered by the decisions mentioned above. Therefore, the penalty levied by the Assessing Officer of Rs. 42,86,803/- u/s. 271(1)(c) of the Income Tax Act, 1961 is ordered to be deleted. The ground of appeal is allowed."
From the above, it clearly shows that the ld CIT(A) has followed the judicial discipline by following the proposition in the case of Manjunatha Cotton (supra), which decision has been upheld by Hon'ble Supreme Court in the case of SSA's Emerald Meadows (supra). Therefore, we are of the considered opinion that the ld CIT(A) was justified in deleting the penalty levied u/s. 271(1)(c) of the Act. Hence, we do not see any infirmity in the orders of the CIT(A) and, accordingly, uphold the same.
6. In the result, appeals of the revenue are dismissed.
Order pronounced on 15/10/2020.
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