2018 (1) TMI 1481 - AT - Income Tax

Penalty u/s 271(1)(c) - penalty was initiated for filing inaccurate particulars of income whereas it was finally imposed for concealment of income - Non specification of charge - HELD THAT - The undisputed facts are that the AO initiated penalty proceedings for furnishing inaccurate particulars of income whereas the penalty was finally imposed for concealment of income. In our considered view the AO has to specifically point out one of the two limbs on which the penalty is proposed to be levied on the assessee so that the assessee can get full natural justice to respond to the charge for which it is penalised but in the present case this is not so and thus the AO himself was not clear as to which limb penalty was to be imposed. The case of the assessee also gets support from the decision of Samson Perinchery 2017 (1) TMI 1292 - BOMBAY HIGH COURT wherein it has been held that the AO has to specify the charge on which penalty is being imposed failing which the penalty order cannot be sustained. In the instant case also the AO initiated penalty on one limb but imposed penalty on the other which is wrong and therefore order of CIT(A) cannot be sustained. The case of the assessee is squarely covered by the said decision and we respectfully following the same set aside the order of CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.

Summary

Issues Involved:
Challenge to validity of penalty order under Section 271(1)(c) of the Income Tax Act for concealment of income despite initiation for inaccurate particulars of income.

Detailed Analysis:

Issue 1: Validity of Penalty Order
The appeal challenged the penalty order under Section 271(1)(c) of the Income Tax Act, arguing that the notice did not specify the charge for which the penalty was imposed, rendering it void ab initio. The AO initiated penalty proceedings for inaccurate particulars of income but imposed the penalty for concealment of income. The appellant contended that this lack of clarity in the notice warranted quashing the penalty order. The respondent defended the penalty, stating that it was rightly initiated on both grounds. The Tribunal noted that the AO's failure to specify the charge for the penalty deprived the appellant of natural justice. Citing a previous case, the Tribunal emphasized the importance of clarity in specifying the grounds for penalty imposition. The Hon'ble Bombay High Court's decision affirmed this stance, highlighting the need for clarity in penalty notices. The Tribunal, following this precedent, set aside the CIT(A)'s order and directed the AO to delete the penalty.

This detailed analysis provides a comprehensive overview of the legal issues involved in the judgment, the arguments presented by both parties, and the Tribunal's reasoning based on legal precedents and principles.