2017 (8) TMI 1508 - HC - Income Tax

Levy of penalty u/s 271(1)(c) - Application of independent mind by the AO on the issue of furnishing of inaccurate particulars or concealment of income - Launching of prosecution against the assessee. Appeal admitted. Once we have admitted the Appeal on substantial questions of law, we do not think that there is any justification for the Deputy Commissioner of Income Tax, Central Circle8( 1) to threaten the appellant/applicant with any prosecution. Even if such prosecution is launched, the same shall not proceed till the pendency of this Appeal.

Summary

Issues involved:
1. Out of turn hearing for admission of the Appeal.
2. Clarity on the act attributable to the assessee for the proposed penalty under Section 271 of the Income Tax Act, 1961.
3. Approval of penalty under Section 271(1)(c) by the Tribunal.
4. Justification of the Assessing Officer's decision on penalty initiation.
5. Stay on prosecution by the Deputy Commissioner of Income Tax.

Analysis:

1. The High Court considered the Application/Notice of Motion requesting an out of turn hearing for the admission of the Appeal. The Court, after hearing both sides and perusing the documents, granted the request based on the reasons presented in the supporting affidavit.

2. The Court observed that the show cause notices did not clearly indicate the act attributable to the assessee for which the Revenue proposed a penalty under Section 271 of the Income Tax Act, 1961. The Court highlighted the importance of clearly specifying whether the penalty is for concealment of income, furnishing inaccurate particulars, or failure to comply with notices as outlined in the relevant sections of the IT Act.

3. The Appeal raised questions of law regarding the Tribunal's approval of a penalty under Section 271(1)(c) of the Act. The Court agreed to admit the Appeal on substantial questions of law related to the penalty imposed.

4. Another issue raised was whether the Assessing Officer properly determined if the penalty initiation was due to furnishing inaccurate particulars or concealment of income. The Court referred to a previous decision to assess the justification of the Assessing Officer's actions in this case.

5. Finally, the Court addressed the issue of stay on prosecution by the Deputy Commissioner of Income Tax. The Court ruled that no prosecution should proceed until the Appeal is resolved, and the Notice of Motion was made absolute in favor of the appellant/applicant.

This comprehensive analysis covers the various issues involved in the legal judgment delivered by the High Court, addressing the key points and decisions made by the Court in each aspect of the case.