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2018 (2) TMI 599 - AT - Income TaxPenalty u/s. 271(1)(c) - defective notice - non mentioning of charge - Held that - We find that the notice dt. 07-03-2013 issued u/s. 274 r.w.s 271 of the Act does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. Thus penalty to be canceled - Decided in favour of assessee.
Issues Involved:
1. Validity of Penalty Imposed under Section 271(1)(c) of the Income Tax Act. 2. Defective Notice Issued under Section 274 read with Section 271(1)(c) of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Validity of Penalty Imposed under Section 271(1)(c) of the Income Tax Act: The core issue in this appeal is the confirmation of a penalty amounting to ?1,52,305/- imposed under Section 271(1)(c) of the Income Tax Act by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT-A]. The appellant argued that the penalty was imposed based on a defective notice, which did not specify the charge of offense, i.e., whether it was for concealment of income or furnishing inaccurate particulars. 2. Defective Notice Issued under Section 274 read with Section 271(1)(c) of the Income Tax Act: The appellant contended that the statutory notice dated 07-03-2013 issued by the AO under Section 274 read with Section 271 of the Act was defective. The appellant relied on the decision of the Hon’ble Supreme Court in the case of SSA’s Emerald Meadows, which held that a penalty based on a defective notice is not maintainable. The appellant further cited the Karnataka High Court's decision in CIT vs SSA’s Emerald Meadows, which was approved by the Supreme Court by dismissing the Special Leave Petition (SLP) filed by the Revenue. On the other hand, the respondent (Revenue) argued that the CIT-A correctly confirmed the penalty. The Revenue cited various case laws to support their contention that the notice under Section 274 need not specify the exact charge, as long as the assessee is given an opportunity to be heard. Specifically, they referred to the judgments of the Calcutta High Court in Dr. Syamal Baran Mondal Vs. CIT and the Bombay High Court in CIT Vs. Smt. Kaushalya, which held that a mere mistake in the language of the notice does not invalidate the penalty proceedings. Tribunal's Findings: The Tribunal considered the rival submissions and the written submissions along with the case laws cited by both parties. The Tribunal noted that the same set of written submissions was filed before the Coordinate Bench of the Tribunal in the case of Jeetmal Choraria, where it was elaborately discussed that when there are two views on an issue, the view favoring the assessee should be adopted, as enunciated by the Supreme Court in the case of Vegetable Products Ltd. The Tribunal observed that the notice dated 07-03-2013 issued under Section 274 read with Section 271 of the Act did not specify the charge of offense committed by the assessee, i.e., whether it was for concealment of income or furnishing inaccurate particulars. Hence, the notice was held to be defective. The Tribunal further noted that the Revenue's SLP against this judgment was dismissed by the Supreme Court, thereby upholding the decision that a penalty based on a defective notice is not maintainable. Conclusion: Respectfully following the judicial precedents, the Tribunal canceled the penalty of ?1,52,305/- levied by the AO under Section 271(1)(c) of the Act and confirmed by the CIT-A. The grounds raised by the assessee in the appeal for the assessment year under consideration were allowed. Final Order: The appeal of the assessee was allowed, and the penalty was canceled. The order was pronounced in the open court on 07-02-2018.
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