2016 (9) TMI 795 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - Held that - The penalty levied under Section 271(1)(c) on the basis of defective notice under Section 274 is not sustainable and accordingly the same is deleted. - Decided in favour of assessee

Summary

Issues:
1. Condonation of delay in filing appeals before the Tribunal.
2. Quantum appeal against assessment order under Section 143(3) of the Income Tax Act.
3. Penalty appeal under Section 271(1)(c) of the Income Tax Act.

Condonation of Delay:
The appellant filed two appeals against orders of the Commissioner of Income Tax (Appeals) with a delay of 61 days. The delay was attributed to health issues and the time taken to appoint a Chartered Accountant. The Tribunal, after considering medical records and circumstances, condoned the delay as beyond the appellant's control.

Quantum Appeal:
In the quantum appeal, the appellant contested the CIT (Appeals) order on various grounds, including challenging the disallowance of cash deposits in the bank account and levy of interest under Sections 234A & 234B. The Tribunal dismissed the appeal due to a lack of evidence supporting the claims and delays in filing the appeal.

Penalty Appeal:
The penalty appeal under Section 271(1)(c) raised issues regarding the justification of penalty imposition, the nature of business activities, and the validity of the notice issued by the Assessing Officer. The Tribunal admitted additional legal grounds challenging the notice's validity and relied on judicial pronouncements to rule in favor of the appellant. The penalty was deemed unsustainable due to the defective notice, following the principles outlined in relevant High Court judgments.

Conclusion:
The Tribunal dismissed the quantum appeal due to lack of evidence and delays in filing, while allowing the penalty appeal based on the defective notice issued by the Assessing Officer. The judgment emphasized the importance of clear grounds for penalty imposition and upheld the appellant's arguments regarding the notice's legality.