9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 1072 - AT - Income TaxPenalty u/s 271(1)(c) - additional income declared by the appellant in the return of income filed in response to the notice issued u/s 153C - specification of charge - Held that - Notice issued u/s 274 r.w.s 271(1)(c) of the Act is suffering from serious technical error and non application of mind by Ld.A.O who failed to level specific charge on the assessee at the time of initiating penalty proceedings due to which the principle of natural justice seems not to have been followed. We accordingly hold that the impugned penalty notice u/s 274 r.w.s. 271(1)(c) of the Act are invalid and untenable and thus deserves to be quashed. - Decided in favour of assessee.
Issues Involved:
1. Legality of penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act, 1961. 2. Specificity of charge in penalty notices under Section 274 read with Section 271(1)(c) of the Act. 3. Application of Explanation 5A to Section 271(1)(c) of the Act. Issue-wise Detailed Analysis: 1. Legality of Penalty Proceedings Initiated Under Section 271(1)(c): The assessee challenged the penalty proceedings initiated by the Assessing Officer (AO) under Section 271(1)(c) for various assessment years, arguing that the penalty was uncalled for and bad in law. The assessee contended that the penalty was levied without fulfilling the requisite conditions and that the order imposing the penalty was not a speaking order. The Tribunal noted that the AO did not specify under which limb of Section 271(1)(c) the penalty was initiated, i.e., whether for concealment of income or furnishing inaccurate particulars of income. This lack of specificity was deemed a fatal error, rendering the penalty proceedings invalid. 2. Specificity of Charge in Penalty Notices: The Tribunal emphasized the importance of specifying the charge in penalty notices. It referred to the assessment order and the penalty show cause notices, which mentioned both limbs of Section 271(1)(c) without specifying the particular charge. This ambiguity was considered a violation of the principles of natural justice, as it did not allow the assessee to understand the exact charge and prepare a defense. The Tribunal cited several judicial precedents, including the Karnataka High Court's decision in CIT v. Manjunath Cotton & Ginning Factory and the Supreme Court's decision in CIT v. SSA's Emerald Meadows, which held that penalty notices must clearly specify the charge. The Tribunal concluded that the penalty notices issued to the assessee were defective and invalid. 3. Application of Explanation 5A to Section 271(1)(c): The assessee argued that the provisions of Explanation 5A to Section 271(1)(c) were wrongly applied by the CIT(A). The Tribunal did not delve deeply into this issue, as it had already decided in favor of the assessee on the grounds of the invalidity of the penalty notices. The Tribunal noted that the additional income was offered by the assessee in the returns filed in response to the notice under Section 153C, and the relevant taxes were duly paid. The Tribunal did not find it necessary to address the applicability of Explanation 5A in detail, as the primary issue of the defective penalty notices was sufficient to quash the penalties. Conclusion: The Tribunal allowed the appeals of the assessee for all the assessment years, holding that the penalty notices issued under Section 274 read with Section 271(1)(c) were invalid due to the lack of specificity in the charges. Consequently, the penalties levied under Section 271(1)(c) were directed to be deleted. The remaining grounds raised on merits were rendered academic and infructuous, as the primary issue of the defective penalty notices was decisive. The order was pronounced in the open court on 17.12.2018.
|
