2019 (3) TMI 1587 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - different limbs of Section 271(1)(c) in initiation and levy of penalty - Assessee submitted that assessing officer in the assessment order has initiated the penalty proceedings for furnishing inaccurate particulars, however, levied the penalty under different limbs of Section 271(1)(c) for concealing particulars of income - HELD THAT - In the present case, the assessing officer while passing the assessment order initiated the penalty proceedings for furnishing inaccurate particulars of income. However, levied the penalty for concealing the particulars of income. In the show cause notice issued before levy of the penalty, both the limbs of section 271(1)(c) of the Income Tax Act have been mentioned. Therefore, the notice is invalid and bad in Law, which resulted into vitiating the entire penalty proceedings. The satisfaction of the assessing officer is also defective as noted above in the impugned orders. Therefore, no penalty is leviable. See M/S SSA'S EMERALD MEADOWS 2016 (8) TMI 1145 - SC ORDER - Decided in favour of assessee

Summary

Issues: Challenge against penalty under section 271(1)(c) of the Income Tax Act, 1961 for concealing income particulars.

Analysis:
The appeal was filed against the order of the Learned CIT(A)-3, Delhi, challenging the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2009-2010. The assessing officer had passed the assessment order holding that the assessee utilized client code modification to set off losses against income earned from real estate business, disallowing a claim of &8377; 6,44,060. Subsequently, penalty proceedings were initiated, and the penalty was levied for concealing income particulars. The assessee argued that the notice issued before the penalty levy mentioned both limbs of Section 271(1)(c), making it invalid and bad in law. The assessing officer initiated penalty proceedings for inaccurate particulars but levied the penalty for concealing income particulars, rendering the notice defective. The ITAT Delhi referred to a previous case where the penalty notice did not specify the limb of Section 271(1)(c) under which the penalty was initiated, leading to the appeal being allowed. In this case, since the notice did not specify the limb, the penalty proceedings were deemed invalid, and the penalty was canceled. The appeal of the assessee was allowed, and the penalty was set aside.

In conclusion, the judgment revolved around the challenge against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for concealing income particulars. The ITAT Delhi ruled in favor of the assessee, citing that the notice issued before the penalty levy did not specify the limb of Section 271(1)(c) under which the penalty was initiated, rendering the penalty proceedings invalid. As a result, the penalty was canceled, and the appeal of the assessee was allowed.