2004 (3) TMI 51 - HC - Income Tax

Penalty under section 271B deficiencies in the show cause notice - show cause notice has not been signed by any person and the place intended for signature was kept blank - deficiencies in the show cause notice are not curable by the provisions of section 292B Thus order of penalty was not valid

Summary

Issues:
Validity of penalty order under section 271B
Applicability of section 292B to cure deficiencies in show cause notice

Analysis:

1. Validity of penalty order under section 271B:
The case involved the imposition of a penalty under section 271B of the Income-tax Act, 1961, due to the non-filing of tax audit reports within the prescribed time. The Assessing Officer imposed a penalty of Rs. 1 lakh, which was later set aside by the Tribunal on the ground that the show cause notice served to the assessee was invalid as it was not signed by the Assessing Officer. The Tribunal relied on a Division Bench judgment and held that the invalidity of the notice invalidated the penalty imposition. The Revenue contended that the defect in the notice was a mere irregularity and could be cured under section 292B, and therefore, the penalty should not have been invalidated. However, the Tribunal found that the notice lacked the signature of the Assessing Officer, making it invalid, and set aside the penalty order.

2. Applicability of section 292B to cure deficiencies in show cause notice:
The respondent-assessee argued that the judgment in Anand and Co. [1994] 207 ITR 418 was distinguishable from the present case as the notice in question here was unsigned, unlike the case in Anand and Co. The Madhya Pradesh High Court's judgment in Umashankar Mishra v. CIT [1982] 136 ITR 330 was cited, which held that the signing of a notice under section 271(1)(a) was not merely a technicality and was essential for validity. The respondent contended that the provisions of section 292B would not apply in this case. The Court agreed with the Tribunal's decision to set aside the penalty, emphasizing that a valid notice is a jurisdictional requirement, and the absence of the Assessing Officer's signature rendered the notice invalid. The Court found no reason to differ with the Tribunal's view and answered both questions in favor of the assessee, concluding that the reference was answered accordingly.

In conclusion, the High Court of Calcutta upheld the Tribunal's decision to set aside the penalty order under section 271B due to the invalidity of the show cause notice lacking the signature of the Assessing Officer. The Court emphasized the importance of a valid notice as a jurisdictional requirement and found that the deficiencies in the notice were not curable under section 292B. The judgment highlighted the significance of procedural compliance in penalty proceedings under the Income-tax Act, 1961.