2018 (3) TMI 664 - AT - Income Tax

Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that - We find that the notice dt. 20-03-2014 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. - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act for A.Y 2006-07.

Analysis:
The Revenue appealed against the Commissioner of Income Tax (Appeals) order directing the deletion of penalty imposed under section 271(1)(c) of the Act. The Revenue sought to adopt arguments from a different case and relied on the order of the Assessing Officer (AO) to confirm the penalty. On the other hand, the Respondent argued that the penalty was imposed on a defective notice and cited the decision of the Hon'ble Supreme Court in a specific case. The Respondent also referred to a judgment of the Hon'ble Karnataka High Court. The Tribunal considered the submissions and case laws, including those from a Coordinate Bench, and discussed various decisions from different High Courts and ITAT Mumbai. The Tribunal agreed with the reasoning of the Coordinate Bench in a similar case and reproduced parts of the earlier order for reference.

The Tribunal analyzed various decisions, including those from the Hon'ble Bombay High Court and Hon'ble Patna High Court, regarding the validity of the notice issued under section 271(1)(c) of the Act. It highlighted the importance of the notice as an administrative device to inform the assessee about the proposed penalty. The Tribunal noted conflicting views from different jurisdictions but decided to follow the view of the Hon'ble Karnataka High Court. The Tribunal observed that the show cause notice in the present case did not specify the charge against the assessee, leading to the conclusion that the penalty imposition could not be sustained. The Tribunal also noted that the notice issued was defective as it did not specify the offense committed by the assessee.

The Tribunal referred to a Special Leave Petition (SLP) filed by the Revenue before the Hon'ble Supreme Court, which was dismissed. Following the judicial precedents and the reasoning provided in the analysis, the Tribunal canceled the penalty imposed by the AO under section 271(1)(c) of the Act. Consequently, the grounds raised by the Revenue in the appeal were dismissed, and the appeal of the Revenue was ultimately dismissed.