2019 (1) TMI 1976 - AT - Income Tax

Penalty levied u/s 271(1)(c) - assessee filed revised return beyond the due date for filing revised return and only due to the enquiries in the assessment proceedings - defective notice u/s 274 - argument of non specification of clear charge - CIT-A deleted the penalty levy - HELD THAT - A perusal of the notice issued under section 274 r.w.s. 271 of the Act which is at page no. 17 of the paper book reveals that the AO has not deleted the inappropriate words and parts of the notice whereby it is not clear as to the default committed by the assessee i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars of income that the penalty under section 271(1)(c) of the Act is sought to be levied. In this regard we find that in its order in the case of M/s Manjunatah Cotton Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT relied on by the assessee /respondent had held that such a notice as had also been issued in the case in hand is invalid and the consequential penalty proceedings are also not valid. Thus we hold that the notice issued under section 274 r.w.s. 271 for initiating penalty proceedings under section 271(1)(c) of the Act in the case in hand is invalid and consequently the penalty proceedings are also invalid - Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Deletion of penalty levied under Section 271(1)(c) of the Income Tax Act.
3. Validity of the notice issued under Section 274 read with Section 271 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The revenue filed an appeal with a delay of 7 days due to a heavy workload in disposing of scrutiny assessment cases. The appellant requested condonation of this delay. The respondent opposed the application for condonation. The Tribunal, considering the application and following the principles laid down by the Hon'ble Supreme Court in the case of "Land Acquisition Collector vs. Mst. Kitzi," condoned the delay and admitted the appeal to be heard on merits.

2. Deletion of Penalty Levied Under Section 271(1)(c) of the Income Tax Act:
The assessee filed a return of income declaring a loss, which was later revised to include an interest income of Rs. 3,44,40,001/- from M/s. Rinita Impex Pvt. Ltd. The Assessing Officer (AO) noted that the revised return was filed beyond the due date and initiated penalty proceedings under Section 271(1)(c) for concealment of income and furnishing inaccurate particulars. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the penalty, leading to the revenue's appeal before the Tribunal.

3. Validity of the Notice Issued Under Section 274 Read with Section 271 of the Income Tax Act:
The assessee challenged the validity of the notice issued under Section 274, arguing it was vague and did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. The Tribunal referred to the Hon'ble High Court of Karnataka's judgment in the case of "M/s Manjunatah Cotton & Ginning Factory" and the Hon'ble Bombay High Court's judgment in "CIT vs. Samson Perinchery," which held that such vague notices are invalid. The Tribunal concluded that the notice issued was invalid, and consequently, the penalty proceedings were also invalid.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the penalty under Section 271(1)(c). The Tribunal emphasized that the notice issued under Section 274 was invalid due to its vagueness, as it failed to specify the exact nature of the default. This decision applied to both the assessment years 2010-11 and 2011-12, maintaining judicial consistency.

Order Pronouncement:
The order was pronounced in the open court on 31st January 2019, dismissing both appeals filed by the revenue with no order as to cost.