2018 (11) TMI 1630 - AT - Income Tax

Penalty u/s 271(1)(c) - defective of notice - non specification of charge - HELD THAT - In the instant case there is no dispute that the AO has issued the notice u/s 271(1)(c) without striking irrelevant columns to specify whether the penalty was initiated for furnishing inaccurate particulars of income or for concealment of income. The Hon ble Jurisdictional High Court in SMT. BAISETTY REVATHI 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT held that non specifying the issue with regard to furnishing the inaccurate particulars of income or concealment of income renders the notice invalid. - decided in favour of assessee.

Summary

Issues:
1. Validity of penalty notice under section 271(1)(c) for concealment of income or furnishing inaccurate particulars.
2. Interpretation of penalty notice ambiguity.
3. Compliance with legal requirements for penalty imposition.
4. Application of previous judicial decisions on penalty notices.

Issue 1: Validity of penalty notice under section 271(1)(c) for concealment of income or furnishing inaccurate particulars.
The appeal was filed by the revenue against the order of the Commissioner of Income Tax(Appeals) concerning the penalty imposed under section 271(1)(c) for the assessment year 2012-13. The assessee raised a ground before the CIT(A) regarding a defect in the penalty notice issued by the Assessing Officer (AO) under section 271(1)(c). The AO initiated penalty proceedings without explicitly specifying whether it was for furnishing inaccurate particulars of income or for concealment of income. The Ld.CIT(A) cancelled the penalty based on a decision of the Hon'ble Jurisdictional High Court, emphasizing the importance of specifying the nature of the offense in the penalty notice.

Issue 2: Interpretation of penalty notice ambiguity.
The Tribunal noted that the penalty notice issued by the AO did not specify whether the penalty was for furnishing inaccurate particulars of income or for concealment of income, rendering the notice invalid. The Hon'ble Jurisdictional High Court held that the charge in penalty proceedings must be clear and unambiguous to provide the assessee with a proper opportunity to defend themselves. Ambiguity in the notice, as observed in this case, was considered a significant flaw, leading to the cancellation of the penalty by the Ld.CIT(A) and subsequently upheld by the Tribunal.

Issue 3: Compliance with legal requirements for penalty imposition.
The Tribunal highlighted that the penalty notice lacked specificity, as it did not clearly indicate whether the penalty was for concealment of income or furnishing inaccurate particulars. Citing previous judicial decisions, the Tribunal emphasized the importance of adhering to legal requirements when initiating penalty proceedings under section 271(1)(c). The decision reiterated that the penalty charge must be unequivocal and unambiguous to ensure fairness in the proceedings.

Issue 4: Application of previous judicial decisions on penalty notices.
The Tribunal referenced previous decisions, including one involving Konchada Sreeram, where the Hon'ble ITAT, Visakhapatnam, held that the failure to strike irrelevant columns in the penalty notice rendered it invalid. By following the precedent set by the Hon'ble Andhra Pradesh High Court and its own decisions, the Tribunal concluded that the penalty notice issued in this case was invalid due to the lack of specificity. Consequently, the penalty imposed by the AO was cancelled based on the non-compliance with legal requirements for penalty imposition.

In conclusion, the Tribunal dismissed the appeal of the revenue, upholding the decision of the Ld.CIT(A) to cancel the penalty due to the invalidity of the notice issued under section 271(1)(c) for failing to specify the nature of the offense clearly. The judgment underscores the significance of complying with legal requirements and ensuring clarity in penalty notices to uphold the principles of fairness and procedural justice in penalty proceedings.