2019 (2) TMI 642 - AT - Income Tax

Penalty u/s 271(1)(c) - non specification of charge - defective notice - penalty levied without giving a valid notice by specifying the fault for which the assessee was being proceeded with u/s 271(1)(c) - Held that - As decided in PRINCIPAL COMMISSIONER OF INCOME TAX-19, KOLKATA VERSUS DR. MURARI MOHAN KOLEY 2018 (9) TMI 1 - CALCUTTA HIGH COURT there was no specific charge against the assessee in the notice. Revenue has missed out their opportunity to subject the assessee to the penalty proceeding by not issuing a proper notice. No specific case has been made out by the Revenue as to why the matter should be remanded except that the assessee had not participated properly in the assessment proceedings but for that reason best judgment assessment has been made and the income, which had escaped assessment has been added to the income of the assessee. It was incumbent upon the Revenue to make out a specific case for imposition of penalty, on which count the Revenue has failed. Thus penalty imposed by the AO and confirmed by the Ld. CIT(A) u/s. 271(1)(c) of the Act in the present case is not sustainable and hence, we delete the same. - decided against revenue

Summary

Issues:
Appeal against penalty u/s 271(1)(c) for Assessment Year 2013-14 due to lack of valid notice specifying the fault.

Analysis:
The appeal was filed against a penalty imposed under section 271(1)(c) without a valid notice specifying the fault. The appellant argued that the Assessing Officer (AO) did not provide a clear notice indicating whether the penalty was for concealing income particulars or furnishing inaccurate income particulars. The appellant contended that this lack of specificity in the notice rendered it invalid as per law. The appellant cited various legal precedents, including decisions from the Hon'ble Karnataka High Court and Hon'ble Bombay High Court, to support their argument. These precedents emphasized the importance of a clear and specific notice under section 274 of the Income Tax Act to inform the assessee of the charges they are facing. The appellant highlighted that the Hon'ble Supreme Court and various High Courts had upheld the requirement for a specific charge in penalty notices.

The Departmental Representative (DR) opposed the appellant's arguments and cited several case laws to counter the appellant's legal precedents. The DR referred to decisions from Mumbai ITAT and Hon'ble Bombay High Court, arguing that the notice under section 274 does not need to be in a specific form as long as the assessee is informed of the charges. The DR emphasized that penalty proceedings are quasi-criminal in nature and that the principles of natural justice must be followed. The DR also mentioned that a mistake in the notice language or the absence of specific details would not invalidate the penalty proceedings.

The Tribunal examined the arguments presented by both parties and reviewed the legal precedents cited. The Tribunal noted that there were conflicting views on the issue, with some courts emphasizing the need for a specific charge in the notice, while others focused on the assessee's awareness of the charges. Ultimately, the Tribunal chose to follow the view expressed by the Hon'ble Karnataka High Court, which emphasized the importance of a clear and specific notice under section 274. The Tribunal held that the penalty imposed in the present case was not sustainable due to the lack of specificity in the notice. Citing the precedent set by the Hon'ble Calcutta High Court and a previous decision of the Tribunal, the penalty imposed by the AO and confirmed by the CIT(A) was deemed unsustainable, and therefore, deleted.

In conclusion, the Tribunal allowed the appellant's appeal, ruling in favor of the assessee and canceling the penalty imposed under section 271(1)(c) for the Assessment Year 2013-14.