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2018 (1) TMI 1241 - AT - Income TaxPenalty u/s 271(1)(c) - undisclosed sale of flats - AO pointed out the discrepancy in the sales disclosed by the assessee and the sales as per AIR information the assessee surrendered the said income - Held that - There is no dispute on the point that the assessee surrendered this income when the AO brought to the notice of the assessee about the discrepancy in the sales declares by the assessee which is not matching with the details as per AIR information. AO though stated in the assessment order that the penalty proceeding have been initiated separately however, the grounds on which the penalty proceeding have been initiated are required to be stated in the show cause notice issued u/s 274 r.w.s. 271(1)(c). As find that the Assessing Officer has neither specified a particular ground or default of the assessee nor deleted the irrelevant ground or default of the assessee as mentioned in the show cause notice issued u/s 274 dated 30.08.2013. Thus the notice issued u/s 274 r.w.s. 271(1)(c) of the Act dated 30.08.2013 is not valid and the same is quashed - Decided in favour of assessee
Issues Involved:
1. Validity of the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. 2. Specificity of the notice issued under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961. Issue-Wise Detailed Analysis: 1. Validity of the Penalty Imposed under Section 271(1)(c): The assessee appealed against the order confirming the penalty of ? 4,95,018/- imposed under Section 271(1)(c) for the assessment year 2011-12. The primary contention was that the penalty was unjustified and arbitrary. The assessee argued that the penalty was imposed without clearly specifying whether it was for "concealment of particulars of income" or for "furnishing inaccurate particulars of income." The Tribunal noted that the assessee had not disclosed a sale amounting to ? 16,02,000/- in the return of income, which was later surrendered when the discrepancy was pointed out by the Assessing Officer (AO). However, the Tribunal emphasized that the AO must specify the exact ground for the penalty in the notice issued under Section 274, which was not done in this case. Consequently, the penalty imposed was deemed invalid and was quashed. 2. Specificity of the Notice Issued under Section 274 read with Section 271(1)(c): The Tribunal examined the additional ground raised by the assessee regarding the validity of the notice issued under Section 274. The assessee contended that the notice did not specify whether the penalty was for "concealment of particulars of income" or for "furnishing inaccurate particulars of income," thereby violating the principles of natural justice. The Tribunal relied on precedents, including the Hon'ble Karnataka High Court's decision in CIT vs. Manjunatha Cotton & Ginning Factory, which held that a notice must clearly state the grounds on which the penalty is proposed. The Tribunal found that the notice issued to the assessee was a standard form without striking off the irrelevant parts, leading to ambiguity. This lack of specificity rendered the notice invalid. The Tribunal also referenced the Hon'ble Supreme Court's dismissal of the Revenue's SLP in CIT vs. SSA’s Emerald Meadows, which upheld the requirement for clear and specific notices. Consequently, the Tribunal quashed the notice under Section 274 and deleted the penalty. Conclusion: The Tribunal allowed the appeal, quashing the notice issued under Section 274 and deleting the penalty imposed under Section 271(1)(c) due to the lack of specificity in the notice. This decision underscores the importance of clear and specific grounds in penalty notices to uphold the principles of natural justice.
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