2017 (1) TMI 1034 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - invalid notice - Held that - In view of the fact that the notice issued for levy of penalty u/s. 271(1)(c) is ambiguous and vague and does not specify the charge for levy of penalty, the same is held to be bad in law and hence the subsequent proceedings arising there from are vitiated. The impugned order is set aside and the appeal of the assessee is allowed.

Summary

Issues:
- Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2007-08.

Detailed Analysis:
1. The appeal was against the order of the Commissioner of Income Tax (Appeals) confirming the penalty under section 271(1)(c) of the Act. The assessee, engaged in trading food grain items, voluntarily declared additional income during a survey and offered it for tax in a revised return. The Assessing Officer accepted the revised return without any further addition but initiated penalty proceedings. The issue was whether there was concealment of income or furnishing of inaccurate particulars.

2. The assessee argued that the penalty was unjustified as there was no concealment or inaccurate particulars in the return. The notice for penalty did not specify the charge clearly, violating principles of natural justice. The High Court's decision in a similar case was cited to support the argument that vague notices render penalty proceedings invalid.

3. The Department contended that the penalty was for concealment since the additional income was declared due to a survey. However, the Tribunal noted that the notice did not specify whether the penalty was for concealment or furnishing inaccurate particulars, as required by law.

4. Citing previous judgments, the Tribunal emphasized the importance of clearly specifying the charge in penalty notices. It highlighted that concealment and inaccurate particulars are distinct, requiring separate identification in penalty proceedings. The Tribunal found the notice issued in this case to be ambiguous and lacking in specificity, leading to the invalidation of subsequent penalty proceedings.

5. Ultimately, the Tribunal held that the notice for penalty was ambiguous and failed to specify the charge clearly, rendering it invalid in law. As a result, the penalty proceedings were deemed vitiated, and the appeal of the assessee was allowed, setting aside the penalty order.

6. The judgment highlighted the significance of clear and specific notices in penalty proceedings to ensure fairness and compliance with legal requirements. The decision emphasized the distinction between concealment of income and furnishing inaccurate particulars, underscoring the need for precise identification of charges in penalty notices to uphold principles of natural justice.