ANIRUDDHA BOSE,J. - (1.) This appeal is directed against a decision of the Income Tax Appellate Tribunal in substance invalidating an order of imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961. Five assessment years are involved in this appeal, being 2004-05,2005- 06,2006-07,2007-08 and 2009-10. The proceeding for imposition of penalty arose out of an order of best judgment assessment made by the assessing officer pertaining to the aforesaid five assessment years. The assessing officer had found that the assessee had not disclosed a bank account which was operated by him in his return of income. For this reason, the assessing officer had added the deposits made in that bank account to the total income of the assessee.
(2.) Mr. Chowdhury, learned Counsel for the Revenue submits that there was a live bank account, which reflected several withdrawals and utilisation of the withdrawn sums by the assessee. Ultimately, the deposits to that bank account was added to the income of the assessee and tax charged thereon, as we have already observed. But the dispute in this appeal is not on that count.
(3.) A penalty proceeding was initiated and notice was served upon the assessee under section 274 of the Income Tax Act, 1961 primarily in respect of such undisclosed income. The assessing officer also found certain sum which was wrongly claimed as deduction. Subsequently, penalty was imposed for all the five assessment years under Section 271(1)(c) of the Act equivalent to 100% of the tax sought to be evaded. The assessee challenged the penalty order unsuccessfully before the Commissioner of Income Tax (Appeals). Further appeal of the assessee, however, was allowed by the Income Tax Appellate Tribunal, which disposed of all the five appeals pertaining to the five assessment years in a composite order passed on 5th April, 2017. The Tribunal held: "9. As far as the merits of the order of CIT(A) confirming the order of the AO imposing penalty on the Assessee under section 271(1)(c) of the Act is concerned, the ld. Counsel for the assessee submitted before us that the show cause notice issued under section 274 of the Act before imposing penalty does contain the specific charge against the assessee namely as to whether the assessee was guilty of having concealed particulars of income or having furnished inaccurate particulars of income. Copies of the show cause notice under section 274 of the Act were filed before us in this regard. Perusal of the same reveals that AO has struck out the irrelevant portion in the show cause notice and therefore the show cause notice does specify the charge against the assessee as to whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars of income. 10. The ld. Counsel for the assessee drew our attention to the decision of the Hon'ble Karnataka High Court in the case of Commissioner of Income Tax v. SSA's Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 wherein the Hon'ble Karnataka High Court following its own decision in the case of Commissioner of Income Tax v. Manjunatha Cotton and Ginning factory (2013) 359 ITR 565 took a view that imposing of penalty under section 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice under section 274 of the Act does specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The ld. Counsel further brought to our notice that as against the decision of the Hon'ble Karnataka High Court the revenue preferred an appeal in SLP in CC No.11485 of 2016 and the Hon'ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department. The ld. Counsel also brought to our notice the decision of the Hon'ble Bombay High Court in the case of Commissioner of Income Tax v. Shri Samson Perinchery in ITA No.1154 of 2014 dated 05.01.2017 wherein the Hon'ble Bombay High Court following the decision of the the Hon'ble Karnataka High Court in the case of of Commissioner of Income Tax v. Manjunatha Cotton and Ginning factory (supra) came to the conclusion that imposition of penalty on defective show cause notice without specifying the charge against the assessee cannot be sustained. Our attention was also drawn to the decision of ITAT in the case of Suvaprasanna Bhattacharya v. ACIT in ITA NO 1303/Kol/2010 dated 06.11.2015 wherein identical proposition has been followed by the Tribunal. The learned DR relied on the order of the CIT(A). 11. We have already observed that the show cause notice issued in the present case under section 274 of the Act does specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice under section 274 of the Act does strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. ";