2017 (10) TMI 319 - AT - Income Tax

Penalty u/s 271(1)(c) - concealment of particulars of income or furnishing of inaccurate particulars - validity of notice - Held that - The notice issued by the Assessing Officer under section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. See CIT & Anr. Vs. M/s SSA s Emerald Meadows 2015 (11) TMI 1620 Karnataka High Court. Appeal filed by the Assessee stands allowed.

Summary

Issues:
Penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for inaccurate particulars and concealment of income.

Analysis:

Issue 1: Accuracy of Penalty Imposed
The appeal challenged the penalty of ?98,996 imposed under section 271(1)(c) of the Income Tax Act, 1961. The appellant argued that the penalty was unjust as the AO did not consider all facts before confirming it. The AO disallowed an amount of ?3,20,377 claimed under section 57 of the Act, stating that processing charges paid were not allowable. The appellant contended that the penalty was based on inaccurate particulars and concealment of income, which was disputed.

Issue 2: Legal Grounds for Penalty
The appellant relied on legal precedents to support their argument against the penalty. They cited cases where penalties were confirmed for incorrect claims and concealment of income. However, the appellant contended that the penalty proceedings were vitiated as they were not in accordance with the law. The appellant argued that the penalty should be cancelled based on legal grounds and cited relevant case laws to support their position.

Issue 3: Tribunal Decision
After hearing both parties and reviewing the assessment and penalty orders, the Tribunal found that the penalty proceedings were flawed. Citing legal judgments, the Tribunal concluded that the penalty was not sustainable under the law. The Tribunal referred to specific cases where penalties were cancelled due to procedural errors in initiating penalty proceedings. Consequently, the Tribunal decided in favor of the assessee, deleting the penalty on legal grounds and against the Revenue.

In conclusion, the Tribunal allowed the appeal, deleting the penalty based on legal grounds and precedents cited. The decision was made considering procedural errors in the penalty proceedings, leading to the cancellation of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961.