2019 (2) TMI 2107 - HC - Income Tax

Appeal u/s 260A - imposition of a penalty under Rule 173-Q of the Central Excise Rules, 1944 - charges against the assessee in the notice issued u/s 271 r.w.s. 274 - HELD THAT - A Division Bench judgment of our Court in Dr. Murari Mohan Koley 2018 (9) TMI 1 - CALCUTTA HIGH COURT relying on a judgment of the Tribunal 2017 (4) TMI 1388 - ITAT KOLKATA which in turn relied upon judgments of the Karnataka and Bombay High Courts, it came to the conclusion that unless the charge against the assessee was specific, the same could not be maintained. Applying this ratio, the Tribunal, in our opinion, has correctly deleted the penalty for the self same reason that no details of any charge were provided to the assessee in the impugned notice. For this technical reason, the order of the Tribunal has to be upheld. We admit the appeal before us and dismiss the same. We make it absolutely clear that we have only gone into the question of technical defect in the notice dated 31st March, 2015 stated to have been issued u/s 271 read with Section 274 of the Income Tax Act, 1961 and the consequences thereof. We have not gone into any other issue.

Summary

Issues Involved:
The judgment involves an appeal u/s 260A of the Income Tax Act, 1961 regarding the imposition of a penalty under Rule 173-Q of the Central Excise Rules, 1944. The main issue revolves around the specificity of charges against the assessee in the notice issued u/s 271 read with Section 274 of the Income Tax Act, 1961.

Judgment Details:

1. The Court referred to a Supreme Court judgment in Amrit Foods case emphasizing the importance of specifying the exact nature of contravention for which the assessee is liable under the provisions of the relevant rule. The failure to do so renders the penalty imposition invalid.

2. A Division Bench judgment of the Calcutta High Court in Principal Commissioner of Income Tax-19, Kolkata Versus Dr. Murari Mohan Koley highlighted the necessity of specific charges against the assessee for maintaining the penalty. The Tribunal correctly deleted the penalty in this case due to the lack of details provided in the notice.

3. The Tribunal's decision to delete the penalty of Rs.1,46,16,904/- was upheld by the High Court based on the technical reason that no specific details of any charge were provided to the assessee in the impugned notice.

4. The High Court clarified that they only examined the technical defect in the notice issued u/s 271 read with Section 274 of the Income Tax Act, 1961, and its consequences. No other issues were addressed in this appeal.

5. Ultimately, the appeal (ITA 14 of 2019) along with the connected stay application (GA 3412 of 2018) was dismissed by the High Court, affirming the Tribunal's decision to delete the penalty due to the lack of specific charges against the assessee.