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2017 (12) TMI 200 - AT - Income TaxPenalty u/s 271(1)(c) - non-specification of the accusation in the notice issued u/s 274 - Held that - It is not in dispute that in the assessment order it was not specified as to whether the penalty proceedings were intended to be initiated on a single count i.e. for furnishing of inaccurate particulars of income or concealment of income or for both . As submitted by the Ld Counsel for the assessee the notice which is placed in the paper book is a standard format signed by the Assessing Officer and forwarded to the assessee which does not indicate as to the reason for initiation of penalty proceedings. No doubt the chronology of events preceding the process of initiation of penalty proceedings clearly indicate that the proceedings are meant for levy of penalty on both counts in which event it may not be necessary to strike off the word or but the fact remains that it was not specified through penalty notice. Thus notice issued by the Assessing Officer has to be determined as a notice issued in violation of principles of natural justice and consequently penalty levied on the strength of such notice deserves to be quashed. - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Legitimacy of penalty levied under Section 271(1)(c) of the Income Tax Act. 3. Applicability of Section 153C regarding the initiation of penalty proceedings. 4. Validity of the penalty notice under Section 274 for not specifying the nature of penalty. Detailed Analysis: Condonation of Delay: The appeal was filed with a delay of 10 days. The assessee initially filed a petition for condonation of a 7-day delay, later corrected to 9 days, citing the absence of a part-time secretarial assistant and a public holiday as reasons. The Departmental Representative argued that the delay was unjustified as the appeal papers were ready and could have been filed earlier. After considering the reasons and the fact that the papers were sent by Registered Post promptly, the Tribunal condoned the delay, deeming it backed by a sufficient cause. Legitimacy of Penalty under Section 271(1)(c): The penalty of ?11,43,300 was levied by the Assessing Officer (A.O.) under Section 271(1)(c) for concealment of income. The assessee, involved with M/s. SVS Educational Society, was found with incriminating documents during a search operation, indicating undisclosed income from loan transactions. Despite admitting the undisclosed income during the search, the assessee did not report it in the return filed. The A.O. and the Commissioner of Income Tax (Appeals) [CIT(A)] found that the assessee's explanations were inconsistent and unsupported by evidence, leading to the confirmation of the penalty. Applicability of Section 153C: The assessee contended that Section 153C was erroneously invoked as no documents belonging to him were seized. The Departmental Representative argued that the seized documents and the assessee's statements during the search justified the initiation of penalty proceedings under Section 153C. The Tribunal did not delve deeply into this issue due to the resolution of the primary issue regarding the penalty notice. Validity of Penalty Notice under Section 274: The Tribunal focused on the additional legal ground regarding the penalty notice issued under Section 274. The notice did not specify whether the penalty was for 'concealment of income' or 'furnishing of inaccurate particulars of income.' The Tribunal referenced the jurisdictional High Court and Supreme Court decisions, emphasizing that such non-specification violates principles of natural justice. Consequently, the penalty notice was deemed invalid, and the penalty levied was quashed. Conclusion: The Tribunal allowed the appeal filed by the assessee, primarily on the ground that the penalty notice under Section 274 was invalid due to non-specification of the nature of the penalty. This decision rendered it unnecessary to address other issues raised by the assessee and the Departmental Representative. The order pronounced on 30th November 2017 set aside the penalty levied by the A.O. and confirmed by the CIT(A).
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