2019 (1) TMI 1721 - AT - Income Tax

Penalty levied u/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT - As decided in AMAN MEHTANI VERSUS DCIT CENTRAL CIRCLE-1 FARIDABAD 2017 (11) TMI 1759 - ITAT DELHI Assessing Officer was not sure under which provisions of Section 271 of the Income Tax Act 1961 the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon ble Supreme Court in case of M/s SSA Emerald Meadows 2016 (8) TMI 1145 - SC ORDER - Decided in favour of assessee.

Summary

Issues Involved:
Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Confirmation of Penalty
The appeal was against the order of the ld. CIT(A)-5, Ludhiana, confirming the penalty levied by the AO under section 271(1)(c) of the Income Tax Act, 1961. The AO had observed that the assessee concealed particulars and furnished inaccurate particulars of income, leading to a penalty of ?6,27,823. The assessee contended that the addition made was only ?3,51,790, as an income of ?20,00,000 was already disclosed under section 132(4) of the Act. The AO initiated penalty proceedings without specifying whether the penalty was for concealing income or furnishing inaccurate particulars. The ld. CIT(A) upheld the penalty, prompting the assessee to appeal.

Issue 2: Penalty Initiation
The assessee argued that the AO failed to specify the grounds for initiating the penalty proceedings, as required under section 274 read with section 271 of the Act. The assessee relied on a decision by the ITAT Delhi Bench, which emphasized the importance of clearly stating the basis for initiating penalty proceedings. The ld. DR supported the penalty, asserting that the assessee both concealed income and furnished inaccurate particulars, justifying the penalty under section 271(1)(c).

Issue 3: Judicial Precedent
The ITAT referred to a previous decision by the ITAT Delhi Bench, where it was held that if the Assessing Officer does not specify the grounds for penalty under section 271(1)(c), the penalty proceedings are invalid. Citing the judgment of the Hon'ble Supreme Court in the case of M/s SSA' Emerald Meadows, the ITAT concluded that since there was no concealment and all details were provided during assessment, the penalty could not be sustained. Relying on the precedent, the ITAT decided to delete the penalty levied by the AO and confirmed by the ld. CIT(A).

In conclusion, the ITAT allowed the appeal of the assessee, emphasizing the importance of clearly specifying the grounds for initiating penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on established judicial precedents and principles, leading to the deletion of the penalty in this case.

(Order Pronounced in the Court on 15/01/2019)