2014 (1) TMI 1697 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - As u/s 271(1)(c) of the Act the penalty can be imposed either for filing inaccurate particulars or concealing particulars of income. The AO is required to satisfy the charge for which the penalty is imposed. We have gone through the assessment order as well as the penalty order. We noted that the AO has not initiated penalty in respect of any specific charge nor specified any particular charge while imposing the penalty on the assessee. The AO simply observed that the penalty is leviable u/s 271(1)(c) of the Act. The Hon ble Supreme Court in the case of CIT vs Atul Mohan Bindal 2009 (8) TMI 44 - SUPREME COURT has laid down that before imposing the penalty by the AO the Revenue must comply with the conditions as specified u/s 271(1)(c) of the Act. Similar view has been taken by the Hon ble Supreme Court in the case of Dilip N.Shroff vs JCIT and Another (2007 (5) TMI 198 - SUPREME Court ) The Hon ble Gujarat High Court in the case of New Srathia Engg.Co. vs CIT 2006 (1) TMI 71 - GUJARAT High Court has laid down that order of penalty must clearly state whether it is for concealment or for furnishing inaccurate particulars. Since no specific charge has been brought out against the assessee we therefore delete the penalty imposed u/s 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty imposed under section 271(1)(c) of the IT Act.

Analysis:
The appeal was filed by the assessee against the penalty imposed by the AO under section 271(1)(c) of the IT Act. The AO added a sum in respect of a loan taken by the assessee from one of the directors of the company, as the assessee could not prove the creditworthiness of the director. The AO initiated penalty proceedings without specifying the charge for which the penalty was imposed. The AO imposed the penalty based on the tax sought to be evaded, without clearly stating whether it was for concealment or furnishing inaccurate particulars. The assessee contended that they did not conceal or furnish inaccurate particulars of income. The CIT(A) confirmed the penalty, but the ITAT noted that the AO did not comply with the conditions specified under section 271(1)(c) of the Act. Referring to relevant case laws, the ITAT emphasized that the penalty order must clearly state whether it is for concealment or furnishing inaccurate particulars. Since no specific charge was brought against the assessee, the ITAT deleted the penalty imposed under section 271(1)(c) of the Act.

In conclusion, the ITAT allowed the appeal of the assessee, highlighting the importance of clearly specifying the charge for imposing a penalty under section 271(1)(c) of the IT Act. The judgment emphasized that the penalty order must comply with the conditions specified in the Act and clearly state whether it is for concealment or furnishing inaccurate particulars. The decision was based on the principles established by relevant case laws, ensuring procedural fairness in penalty proceedings.