2017 (4) TMI 1388 - AT - Income Tax

Penalty u/s.271(1)(c) - unexplained deposits in this bank account both cash and cheque deposit - defective notice - Held that - As observed that the show cause notice issued in the present case u/s 274 of the Act does not 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 u/s 274 of the Act does not strike out the inappropriate words. In these circumstances we are of the view that imposition of penalty cannot be sustained. - Decided in favour of assessee

Summary

Issues:
Appeal against CIT(A)'s confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. The Assessee, an individual and a doctor by profession, appealed against the CIT(A)'s confirmation of penalty imposed by the AO under section 271(1)(c) of the Act for concealing income particulars or furnishing inaccurate income particulars for AY 2004-05 to 2009-10.

2. The AO initiated penalty proceedings against the Assessee for not disclosing a bank account during assessment proceedings. The Assessee did not participate in the proceedings, leading to ex-parte orders imposing penalties.

3. The Assessee filed appeals against the assessment and penalty orders, facing delays. The CIT(A) refused to condone the delays, confirming the penalties. However, the Tribunal had earlier condoned delays in similar cases due to valid reasons.

4. The main issue was the validity of the penalty imposition. The Assessee argued that the show cause notice did not specify the charge of concealing income particulars or furnishing inaccurate income particulars, citing relevant judicial decisions.

5. Citing precedents from the Karnataka and Bombay High Courts, the Assessee contended that penalties based on defective show cause notices are invalid. The Tribunal observed that the notice in this case did not specify the charge clearly, rendering the penalty unsustainable.

6. Consequently, the Tribunal accepted the Assessee's plea, holding that the penalty imposition was not justified. Therefore, all the Assessee's appeals were allowed, and the penalties were directed to be canceled.

This detailed analysis covers the issues involved in the appeal against the confirmation of penalties under section 271(1)(c) of the Income Tax Act, 1961, providing a comprehensive understanding of the judgment's key aspects and legal reasoning.