2017 (9) TMI 1927 - AT - Income Tax

Penalty u/s 271(1)(c) - Defective notice - addition on account of bogus liabilities AND on account of unaccounted entries - CIT(A) deleted the penalty - assessee argued for non specification of charge in notice - HELD THAT - As in case of Cit Vs. Manjunatha Cotton and Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT wherein it is held that as the notice issued by the ld Assessing Officer did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income therefore the order of levy of penalty is bad. On the similar circumstances in the assessment order at page No.6 the ld Assessing Officer has mentioned both the limbs and in the penalty order Assessing Officer has levied penalty on both the limbs. Therefore in view of the above judicial precedents we do not find any infirmity in the order of the order of the ld CIT(A) in deleting the penalty u/s 271(1)(c) of Assessing Officer - Decided against revenue.

Summary

Issues:
Appeal against deletion of penalty u/s 271(1)(c) of the Income Tax Act, 1961 by the ld CIT(A)-XXII, New Delhi for Assessment Year 2000-01.

Analysis:
1. The appeal was filed by the Revenue against the order of the ld CIT(A)-XXII, New Delhi dated 03.10.2011, where the penalty u/s 271(1)(c) of ? 12,28,080/- levied by the ld ACIT, Central Circle-17, New Delhi was deleted. The assessment u/s 153A was completed on ? 24.12.2007 against the return income of ? 39,38,860, with additions of ? 39,96,951 on account of bogus liabilities and ? 70,000 on account of unaccounted entries confirmed by the ld CIT(A) and coordinate bench. The Revenue contended that the penalty was justified due to the assessee's failure to establish the genuineness of liabilities and unexplained cash deposits.

2. The Revenue raised grounds of appeal challenging the deletion of penalty by the ld CIT(A). The ld DR relied on lower authorities' orders confirming the additions and argued that the penalty was correctly imposed. The ld AR submitted that a search operation took place on 13.12.2005, and the assessee had disclosed unclaimed creditors in the return for A.Y. 2003-04 before the search. The penalty was imposed by the AO for concealment and furnishing inaccurate particulars of income without specific satisfaction recorded, leading to an unsustainable penalty.

3. The ld AR argued that the charge was twin, for furnishing incorrect particulars and concealment of income, without specific charges specified by the AO. Citing legal precedents, the AR contended that the penalty order was bad in law due to the lack of specific charges. The Hon'ble Supreme Court's decision in CIT Vs. SSA's Emerald Meadows was relied upon to support the argument that the penalty imposition lacked specificity and was unsustainable. The order of the ld CIT(A) deleting the penalty was upheld based on judicial precedents.

4. The Tribunal dismissed the Revenue's appeal, upholding the deletion of the penalty u/s 271(1)(c) by the ld CIT(A). The Tribunal concurred with the arguments presented by the ld AR regarding the lack of specific charges specified by the AO for penalty imposition. Relying on legal precedents, the Tribunal found no infirmity in the ld CIT(A)'s decision to delete the penalty, emphasizing the importance of specific charges for penalty imposition under section 271(1)(c) of the Income Tax Act, 1961.