2019 (2) TMI 1536 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - non-striking off the inappropriate words in the notice - HELD THAT - As relying on YUM RESTAURANTS (INDIA) PVT. LTD. VERSUS INCOME-TAX OFFICER 2017 (9) TMI 102 - ITAT DELHI we cancel the penalty so levied by the Assessing Officer and upheld by the CIT(A) due to non-striking off the inappropriate words in the notice. The grounds raised by the assessee are allowed.

Summary

Issues Involved:
Appeals against penalty levied under section 271(1)(c) of the IT Act for concealment of income and furnishing inaccurate particulars of income.

Analysis:
1. The appeals were filed against the CIT(A)'s orders upholding the penalty levied by the Assessing Officer under section 271(1)(c) of the IT Act for the assessment year 2015-16.

2. The Assessing Officer made additions to the total income of the assessee, including amounts related to derivative trading, salary to staff, travelling expenses, training expenses, and depreciation. Subsequently, penalty proceedings were initiated under section 271(1)(c) for concealing income. The CIT(A) upheld the penalty by citing that the appellant failed to disclose income from trading in future & options, which was not a justifiable reason for non-disclosure.

3. The appellant challenged the CIT(A)'s decision on various grounds, including the lack of clear findings in the penalty order regarding concealment of income or furnishing inaccurate particulars. The appellant also argued that voluntary disclosure of income from certain transactions should be considered.

4. The appellant contended that the Assessing Officer did not specify the grounds for penalty imposition clearly in the notice, which is essential under section 271(1)(c). Citing precedents and legal provisions, the appellant argued that the penalty was not justified due to procedural lapses.

5. The Tribunal, considering the inconsistent application of penalty provisions, observed that failure to specify the grounds for penalty initiation renders the penalty unsustainable. Relying on previous decisions, the Tribunal canceled the penalty in both appeals due to the Assessing Officer's failure to clearly state the basis for penalty imposition.

6. The Tribunal allowed the appeals, concluding that the penalty imposition lacked clarity and failed to meet the legal requirements. The decisions were pronounced in open court on 25.02.2019.

This detailed analysis covers the issues involved in the legal judgment, highlighting the grounds of appeal, arguments presented, and the Tribunal's decision based on legal precedents and procedural requirements.