2017 (4) TMI 1408 - HC - Income Tax

Penalty levied u/s. 271(1)(c) - non specification of charge - Held that - We note that the AO has issued notice to the assessee vide dated 31.03.2000 u/s. 274 read with section 271 without specifying as to whether the assessee has concealed the particulars of its income or furnished inaccurate particulars of such income. We find force in the argument of the Ld. Counsel that without specifying the fault i.e. as to whether the assessee has concealed the particulars of its income or has furnished inaccurate particulars of his income the notice itself is bad in law in the case of SSA s Emerald Medadow 2016 (8) TMI 1145 - SUPREME COURT - Decided in favour of assessee

Summary

Issues:
Validity of penalty notice under section 271(1)(c) of the Income-tax Act, 1961.

Analysis:
The appeals filed by the assessee were against the penalty levied under section 271(1)(c) of the Income-tax Act, 1961. The Counsel for the assessee argued that the notice initiating the penalty was invalid as it did not specify whether the assessee had concealed income or furnished inaccurate particulars of income. The Counsel relied on a decision of the Hon'ble Karnataka High Court in a similar case and highlighted that the notice without specifying the fault was bad in law. The Counsel contended that since the notice itself was defective, the penalty proceeding was vitiated and the penalty should be canceled.

The Departmental Representative supported the lower authorities' orders and opposed any interference in the CIT(A)'s decision. After hearing both sides, the Bench noted that the AO had issued the notice without specifying whether the assessee had concealed income or furnished inaccurate particulars. The Bench agreed with the Counsel's argument that such a notice was bad in law, citing the Hon'ble Karnataka High Court's decision. The Bench highlighted that the Hon'ble Supreme Court had dismissed the revenue's appeal against the Karnataka High Court's decision. Due to the defective notice initiating the penalty, the Bench concluded that the penalty proceedings were vitiated. Consequently, the Bench decided to cancel the penalty for all the assessment years in question.

In conclusion, the High Court at Patna allowed all the appeals of the assessee, emphasizing the invalidity of the penalty notice due to the failure to specify whether the assessee concealed income or furnished inaccurate particulars. The judgment was pronounced in open court on 12.04.2017.