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2018 (5) TMI 424 - AT - Income TaxPenalty u/s. 271(1)(c) - AO has just ticked on the option of concealment of income or furnishing inaccurate particulars of such income - non specification of charge - Held that - After perusing the contents of the Notice dated 30.11.2012, we are of the view that the AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. Notice issued by the AO u/s. 271(1)(c) read with Section 274 is bad in law as it does not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. The penalty in dispute is not sustainable in the eyes of law. See CIT & Anr. Vs. M/s SSA s Emerald Meadows 2016 (8) TMI 1145 Supreme Court - Decided in favour of assessee.
Issues Involved:
1. Imposition of penalty under section 271(1)(c) of the Income Tax Act. 2. Defective show cause notice lacking specific charge. 3. Admission of additional ground based on legal precedent. Issue-wise Detailed Analysis: 1. Imposition of Penalty under Section 271(1)(c): The core issue in this appeal was the imposition of a penalty amounting to ?10,14,700 under section 271(1)(c) of the Income Tax Act by the Assessing Officer (AO). The penalty was sustained by the Commissioner of Income Tax (Appeals), Rohtak. The Assessee challenged this imposition, arguing that the penalty was not justified. 2. Defective Show Cause Notice: The Assessee contended that the show cause notice issued by the AO on 30.11.2012 was defective as it did not specify the exact charge—whether it was for "concealment of particulars of income" or for "furnishing inaccurate particulars of income." This lack of specificity was argued to be contrary to the provisions of law, rendering the penalty unsustainable. The Assessee's counsel cited several judicial precedents to support this argument, including: - ITAT, Delhi decision in the case of ABR Auto Pvt. Ltd. vs. ACIT. - Hon’ble Karnataka High Court decision in the case of CIT & Ors. vs. M/s Manjunatha Cotton and Ginning Factory. - Apex Court decision in the case of CIT & Anr. vs. M/s SSA’s Emerald Meadows. 3. Admission of Additional Ground: During the hearing, the Assessee sought permission to raise an additional ground, citing the Hon’ble Supreme Court’s judgment in NTPC vs. CIT and the decision in M/s Jute Corporation of India Ltd. vs. CIT. The additional ground raised was that the penalty should be quashed due to the defective show cause notice. The Tribunal admitted this additional ground, considering it a legal ground that did not require fresh facts to be investigated. Tribunal's Findings: The Tribunal examined the records, including the penalty notice dated 30.11.2012, and found that the AO had used a standard format without specifying the exact charge. The Tribunal noted that the AO had merely ticked an option without clarifying whether the penalty was for concealment of income or furnishing inaccurate particulars. This was deemed contrary to the provisions of law. The Tribunal's decision was supported by various judicial precedents, including: - CIT & Anr. vs. M/s SSA’s Emerald Meadows, where the Karnataka High Court and the Supreme Court held that a notice under section 274 read with section 271(1)(c) must specify the exact charge. - ITAT decisions in similar cases, reinforcing the necessity of a clear and specific charge in the penalty notice. Conclusion: The Tribunal concluded that the penalty notice was defective and the penalty imposed was not sustainable in the eyes of law. Consequently, the penalty was deleted, and the appeal was decided in favor of the Assessee. The other grounds raised by the Assessee became academic and were not adjudicated. Result: The appeal filed by the Assessee was allowed, and the penalty under section 271(1)(c) was cancelled. The order was pronounced on 26/04/2018.
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