2019 (10) TMI 1524 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Defective notice - non specification of clear charge - HELD THAT - As decided in SHRI HARISH CHANDER KAPOOR PROP. M/S. LUCKY ENTERPRISES 2019 (10) TMI 604 - ITAT DELHI as relying on HEMLA EMBROIDERY MILLS PRIVATE LTD 2019 (10) TMI 250 - ITAT DELHI Assessee has raised a specific ground of appeal that A.O. has miserably failed to point out exactly under which limb of Section the impugned penalty proceedings have been initiated and for want of which the present penalty have become invalid. Therefore we are of the view that the contention of the Ld. D.R. has no merit and is accordingly rejected. Following the above decisions we are of the view that since the impugned show cause notices issued by the A.O. are bad in law therefore entire penalty proceedings are vitiated and as such no penalty is leviable against the assessee. We accordingly set aside the Orders of the authorities below and cancel the penalty. - Decided in favour of assessee.

Summary

Issues involved:
Challenging penalty under section 271(1)(c) of the I.T. Act, 1961 for different assessment years due to ambiguity in show cause notices regarding the grounds for penalty initiation.

Analysis:
1. The appeals were against various Orders of the Ld. CIT(A)-30, New Delhi, challenging the penalty under section 271(1)(c) of the I.T. Act, 1961. The Assessee argued that the penalty should be quashed as the A.O. did not specify whether it was for inaccurate particulars of income or concealment of income in the show cause notices.

2. The Assessee contended that the penalty proceedings lacked clarity as the A.O. did not specify the grounds for initiating the penalty under section 271(1)(c) of the I.T. Act. The Assessee relied on previous judgments to support their case, emphasizing the importance of clarity in the initiation of penalty proceedings.

3. The ITAT considered similar cases where penalties were canceled due to ambiguity in the show cause notices. In the case of Shri Harish Chander Kapoor, Gurgaon vs., ITO, Ward-2(1), Gurgaon, the Tribunal set aside the penalty due to the lack of clarity in the initiation of penalty proceedings under section 271(1)(c) of the I.T. Act.

4. The Assessee raised the issue that the A.O. failed to specify the grounds for penalty initiation in the show cause notice, which was crucial for a valid penalty under section 271(1)(c) of the I.T. Act. The Tribunal referred to previous judgments and upheld the Assessee's argument, leading to the cancellation of the penalty.

5. The Tribunal reiterated that the show cause notices must specify the exact grounds for initiating penalty proceedings under section 271(1)(c) of the I.T. Act. Relying on legal precedents, including the decision of the Hon’ble Delhi High Court, the Tribunal concluded that the ambiguity in the notices rendered the penalty proceedings invalid, resulting in the cancellation of the penalties.

6. Based on the legal principles established in previous cases, the Tribunal canceled the penalties imposed on the Assessee due to the lack of clarity in the initiation of penalty proceedings. The Orders of the authorities below were set aside, and the penalties were canceled in favor of the Assessee.