2023 (1) TMI 1266 - AT - Income Tax

Penalty levied u/s 271(1)(c) - Defective notice - not strike off the appropriate portion of the notice specifying the charge of the penalty - HELD THAT - CIT(A) has deleted the penalty on the ground that the AO did not strike off the appropriate portion of the notice specifying the charge of the penalty. This fact has not been disputed by the Revenue. In such circumstances when the relevant limb of penalty notice is not ticked specifying the charge of the assessee, it has been held in various case laws as referred above in CIT(A) s order, the penalty notice is invalid. Hence, on this count only, we do not find any infirmity in the order of the CIT(A). We hold that the CIT(A) is correct in holding that in such circumstances, the penalty levied is not sustainable. Appeal by the Revenue stands dismissed.

Summary

Issues:
Penalty imposed under section 271(1)(c) of the Act - Jurisdictional aspect and validity of penalty notice not specifying charge - Merits of the case regarding penalty deletion.

Analysis:
The appeal by the Revenue before the Appellate Tribunal ITAT Delhi challenged the Order of the Ld. CIT(A)-8, New Delhi, pertaining to A.Y. 2015-16. The grounds of appeal raised questions about the deletion of penalty under section 271(1)(c) of the Act. The penalty amount in question was Rs.55,85,200. The ld.CIT(A) allowed the appeal on two grounds. Firstly, the relevant limb in the penalty notice was not ticked off, leading to a jurisdictional issue. The ld.CIT(A) emphasized the importance of clearly specifying the grounds for penalty imposition, citing legal precedents where failure to do so rendered the penalty invalid.

The ld.CIT(A) held that the penalty notice was invalid due to the failure to specify the charge of penalty clearly. This decision was supported by the Tribunal, noting that the Revenue did not dispute this fact. The Tribunal concurred with the ld.CIT(A) that in such cases, where the penalty notice lacks specificity, the penalty becomes unsustainable. Therefore, the Tribunal upheld the decision that the penalty was not validly imposed.

Regarding the merits of the case, the Tribunal found it unnecessary to delve into the details as the penalty notice itself was deemed invalid. Consequently, the penalty levied based on the flawed notice was also deemed liable for cancellation. Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the decision to delete the penalty. The order was pronounced on 11.01.2023.