2019 (2) TMI 1635 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - defective notice - non specification of charge - HELD THAT - Notices issued by the A.O. for levy of penalty under section 271(1)(c) of the I.T. Act 1961 to be bad in Law as it did not specify in which limb of Section 271(1)(c) of the I.T. Act 1961 the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing inaccurate particulars of income. The entire penalty proceedings are therefore vitiated and no penalty is leviable .See M/S SSA S EMERALD MEADOWS 2016 (8) TMI 1145 - SC ORDER - Decided in favour of assessee.

Summary

Issues:
Challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961 for A.Ys. 2010-2011 and 2011-2012 based on show cause notices lacking specificity in initiating penalty proceedings.

Analysis:
The appeals were brought against the Common Order of the Ld. CIT(A)-XXVI, New Delhi, contesting the penalty imposed under section 271(1)(c) of the I.T. Act, 1961. The Assessee argued that the show cause notices issued by the A.O. before the penalty imposition did not specify under which limb of Section 271(1)(c) the penalty proceedings were initiated. Citing the Judgment of Hon’ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows, the Assessee contended that the notices were legally flawed. The Assessee's position was supported by the decision of the Hon’ble Supreme Court, confirming the Karnataka High Court's ruling.

The Revenue, represented by the Ld. D.R., relied on the lower authorities' orders. However, upon careful consideration of both parties' arguments, the Tribunal concluded that the penalty was not justified. The A.O.'s show cause notices lacked specificity by merely stating that the Assessee had concealed income particulars or provided inaccurate income particulars without specifying the relevant limb of Section 271(1)(c) under which the penalty proceedings were initiated. This lack of specificity rendered the penalty proceedings invalid, as per legal precedents. The Tribunal highlighted the decisions of the Hon’ble Karnataka High Court and the Hon’ble Supreme Court, which supported the Assessee's argument. Additionally, a Coordinate Bench of the ITAT, Delhi-A Bench, in a previous case, had set aside the penalty following the same legal principles.

Based on the legal analysis and precedents, the Tribunal ruled in favor of the Assessee, allowing the appeals and canceling the penalty proceedings. The Tribunal's decision was in line with the judgments of the Coordinate Bench of the Tribunal and the higher courts, emphasizing the importance of specificity in initiating penalty proceedings under Section 271(1)(c) of the I.T. Act, 1961.