2018 (3) TMI 49 - AT - Income Tax

Penalty u/s 271(1)(c) - eligibility of notice u/s 274 - non specify which limb of Section 271 (1)(c) of the Act, the penalty proceedings had been initiated - Held that - It is evident from the notice u/s 274 r.w.s. 271 of the Act dated 28.03.2013 for the impugned year that the Assessing Officer has not specifically specified as to under which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton & Ginning Factory, (2013 (7) TMI 620 - KARNATAKA HIGH COURT) has held that notice un/s 274 should specifically state the grounds mentioned in Section 271(l)(c), i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income. Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law.- Decided in favour of assessee.

Summary

Issues:
Challenge against imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Admission of Additional Grounds
The appellant challenged the penalty imposed under section 271(1)(c) and sought admission of additional grounds raising legal issues. The Tribunal admitted the grounds as they were crucial to the penalty matter, emphasizing that no new investigation was required, and they were fundamental to the case.

Issue 2: Validity of Penalty Notice
The appellant contended that the penalty notice was defective as it did not specify the charge under which penalty was imposed, violating the requirement of section 271(1)(c). Citing relevant case law, the Tribunal noted that failure to specify the charge makes the penalty order liable for cancellation, despite evidence of income concealment. The Tribunal upheld the argument, emphasizing the necessity of specifying the charge for penalty imposition.

Issue 3: Compliance with Legal Requirements
The Assessing Officer argued that penalty proceedings were validly initiated, but the Tribunal found the notice deficient as it did not specify the limb of section 271(1)(c) under which penalty was imposed. Relying on precedents, the Tribunal concluded that the penalty notice was legally flawed, leading to the deletion of the penalty and setting aside the CIT(A)'s order.

Conclusion:
The Tribunal allowed the appeal, emphasizing the importance of complying with legal requirements in penalty proceedings. The penalty notice's failure to specify the charge under section 271(1)(c) rendered the penalty order invalid, resulting in its deletion. The Tribunal's decision highlighted the significance of proper notice in penalty imposition under the Income Tax Act, ultimately favoring the appellant in this case.