2022 (10) TMI 1160 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice u/s 274 - Non striking of any of the twin charge - HELD THAT - From the perusal of the notice dated 31/03/2013 issued u/ss 274 r/w section 271(1)(c) of the Act, we find that the AO did not strike off any of the twin charges i.e., concealment of particulars of income or furnishing of inaccurate particulars of income. The case of the assessee is squarely covered by the decision of Mohd. Farhan A. Shaikh 2021 (3) TMI 608 - BOMBAY HIGH COURT wherein held that the defect in notice by not striking off the irrelevant matter would vitiate the penalty proceedings. Accordingly, we reverse the findings of the lower authorities and quash the penalty order passed under section 271(1)(c) - Assessing Officer is directed to delete the penalty levied under section 271(1)(c) of the Act. Appeal by the assessee is allowed.

Summary

Issues:
- Challenge to order dated 29/10/2019 under section 250 of the Income Tax Act, 1961
- Grounds raised by the assessee in the appeal
- Additions made in the assessment under section 143(3) r/w section 153A of the Act
- Confirmation of additions by the learned CIT(A)
- Penalty order dated 28/09/2018 under section 271(1)(c) of the Act
- Appeal against the penalty order
- Specification of penalty head
- Relevant legal precedent on penalty proceedings
- Decision and direction regarding the penalty

Detailed Analysis:

The appeal before the Appellate Tribunal ITAT Mumbai challenged the order dated 29/10/2019 under section 250 of the Income Tax Act, 1961, for the assessment year 2005-06. The assessee raised multiple grounds in the appeal, including issues related to the ex-parte order, confirmation of penalty, and the validity of penalty proceedings. The assessment under section 143(3) r/w section 153A of the Act resulted in various additions, such as disallowances and penalties, which were contested by the assessee.

In the appeal, the learned CIT(A) confirmed most additions made by the Assessing Officer, leading to further appeals by both parties. Subsequently, a penalty order was passed under section 271(1)(c) of the Act, which was challenged in a further appeal. During the hearing, the penalty imposition without specifying the relevant grounds was highlighted by the learned Authorised Representative. The Assessing Officer's failure to specify the nature of the penalty in the notice was a crucial point of contention.

The Appellate Tribunal, after considering the submissions and legal precedents, found that the penalty proceedings were flawed due to the Assessing Officer's failure to specify the grounds for penalty imposition. Citing a relevant decision of the Hon'ble Jurisdictional High Court, the Tribunal ruled in favor of the assessee, quashing the penalty order under section 271(1)(c) of the Act. Consequently, the Tribunal directed the Assessing Officer to delete the imposed penalty amount.

In conclusion, the appeal by the assessee was allowed, and the penalty order was overturned based on the legal inadequacies in the penalty proceedings, emphasizing the importance of proper specification of penalty grounds in such cases.