2019 (12) TMI 1602 - AT - Income Tax

Addition u/s 271(1)(c) - Defective notice u/s 274 - whether the penalty is sustainable when the same has been initiated and levied without specifying the alleged guilt committed by the assessee either for concealment of income or furnishing of inaccurate particulars of income ? - HELD THAT - AO has not mentioned the specific charge in its penalty orders as to whether it was levied for concealment of income or for furnishing inaccurate particulars of income. No such definite finding is reflecting from the orders impugned before us. Therefore, in our considered view, the penalty levied by the AO and confirmed by the CIT (A) is not sustainable in the eye of law. The penalty is, thus, deleted. Hence, the ground of appeal of the assessee is allowed.

Summary

Issues:
Penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 without specifying the alleged guilt for "concealment of income" or furnishing of "inaccurate particulars of income."

Analysis:

1. Issue of Penalty Specification:
The appeal challenged the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Year 2011-2012. The key issue was whether the penalty was sustainable when initiated and levied without specifying the alleged guilt committed by the assessee for "concealment of income" or furnishing "inaccurate particulars of income."

2. Lack of Specific Charge:
The penalty proceeding was initiated without clearly specifying whether it was for "concealment of income" or for furnishing "inaccurate particulars of income." The show-cause notice did not specify the exact charge under section 271(1)(c) of the Act. The judgment referred to the importance of distinguishing between concealment and furnishing inaccurate particulars of income, citing relevant case law.

3. Ambiguity in Penalty Order:
The penalty order levied penalties for both concealment of income and furnishing inaccurate particulars without specifying the guilt committed by the assessee under section 271(1)(c) of the Act. The order lacked clarity on the specific charge, which was highlighted as a crucial flaw.

4. Legal Precedents and Principles:
The judgment referenced legal precedents emphasizing the necessity for a clear finding by the Assessing Authority on whether there was concealment of income or furnishing inaccurate particulars. Failure to reach a definitive conclusion on the charge could render the penalty unsustainable in the eyes of the law.

5. Decision and Ruling:
The Appellate Tribunal concluded that the penalty imposed by the AO and confirmed by the CIT(A) was not sustainable due to the lack of specific charges assigned. Consequently, the penalty was deleted, and the assessee's appeal was allowed. The Tribunal refrained from adjudicating on the merits of other grounds raised by the assessee due to the technical grounds leading to the penalty's deletion.

In summary, the judgment highlighted the importance of clearly specifying the charges of "concealment of income" or furnishing "inaccurate particulars of income" when imposing penalties under section 271(1)(c) of the Income Tax Act, 1961. Failure to do so could render the penalty unsustainable in the eyes of the law, as demonstrated in the case at hand.