2019 (4) TMI 951 - AT - Income Tax

Condonation of delay of 98 days - assessee wife was undergoing medical treatment for uterus cancer - HELD THAT - We have heard both the parties and convinced that there is a reasonable cause for delay in filing the appeal, accordingly, the delay is condoned. Additional ground - HELD THAT - The additional ground raised by the assessee with regard to validity of issue of notice u/s 274 r.w.s. 271 is a legal issue which does not require verification of facts or need further investigations. - additional ground raised by the assessee is admitted. Penalty u/s 271(1)(c) - defective notice - notice u/s 271 r.w.s. 274 is ambiguous causing confusion and the assessee was not made known for which limb of the notice the penalty proceedings were initiated - HELD THAT - In the instant case as discussed above, the AO did not strike out the irrelevant column. Therefore, respectfully following the decision of Hon ble Andhra Pradesh High Court in the case of Baisetty Revathy 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT and the decision of Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT , we hold that the notice issued u/s 271(1)(c) is invalid.

Summary

Issues:
1. Delay in filing the appeal.
2. Addition of unexplained creditors and penalty imposition.
3. Validity of the notice issued under section 271(1)(c) of the Income Tax Act.

Analysis:
1. The appeal was filed with a delay of 98 days due to the assessee's wife undergoing medical treatment. The delay was condoned by the tribunal after considering the reasons provided by the assessee.

2. The assessment resulted in an addition of ?16,42,750 under section 68 of the Act for unexplained creditors, leading to penalty initiation under section 271(1)(c). A penalty of ?6,61,589 was levied by the Assessing Officer.

3. During the appeal hearing, the assessee raised an additional ground regarding the validity of the notice issued under section 271(1)(c) of the Act. The notice did not specify whether the penalty proceedings were for concealment of income or furnishing of inaccurate particulars. The tribunal admitted the additional ground as it was a legal issue not requiring further investigation.

4. The tribunal examined the notice issued by the Assessing Officer and found that it did not specify the specific charge for initiating penalty proceedings under section 271(1)(c). Citing precedents from the Hon'ble High Courts, the tribunal held that the notice was invalid due to the ambiguity in specifying the charge. As a result, the penalty imposed by the AO was canceled, and the notice was quashed.

5. Based on the legal principles established by the decisions of the Hon'ble High Courts and the tribunal's own findings, the tribunal allowed the appeal of the assessee, concluding that the notice issued under section 271(1)(c) was invalid. The order was pronounced in the open court on 5th April 2019.