2019 (5) TMI 296 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - non specification of charge - show cause notice before levy of the penalty against the assessee - HELD THAT - A.O. issued show cause notice dated 30.11.2016 before levy of the penalty against the assessee which is bad in law as it did not specify in 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 inaccurate particulars of income. The entire penalty proceedings are, therefore, vitiated and no penalty is leviable. As relying on SSA'S EMERALD MEADOWS 2016 (8) TMI 1145 - SUPREME COURT the orders of the authorities below are set aside and penalty is cancelled. - Decided in favour of assessee.

Summary

Issues: Challenge against levy of penalty under section 271(1)(c) of the I.T. Act, 1961 due to lack of specification in show cause notice regarding the limb of Section 271(1)(c) under which penalty proceedings were initiated.

Analysis:

1. Levy of Penalty under Section 271(1)(c):
The appeal was directed against the Order of the Ld. CIT(A)-1, New Delhi, challenging the penalty under section 271(1)(c) of the I.T. Act, 1961 for the A.Y. 2014-2015. The Assessee contended that the A.O. failed to specify in the show cause notice the limb of Section 271(1)(c) under which the penalty proceedings were initiated, which is a legal requirement. The Hon'ble Supreme Court's decision in the case of CIT vs. M/s. SSAs Emerald Meadows was cited, emphasizing the importance of proper specification in the notice. The Tribunal concurred, holding that the show cause notice dated 30.11.2016 was deficient as it did not specify whether the penalty was for concealment of particulars of income or furnishing inaccurate particulars of income. Consequently, the penalty proceedings were deemed vitiated, and it was concluded that no penalty was leviable against the Assessee.

2. Judicial Precedents and Legal Interpretation:
The Tribunal referred to the decision of the Hon'ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows, which was upheld by the Hon'ble Supreme Court. These judgments supported the view that a show cause notice must specify the limb of Section 271(1)(c) under which the penalty proceedings are initiated. The lack of such specificity renders the penalty proceedings invalid. By relying on these judicial precedents, the Tribunal set aside the orders of the lower authorities and canceled the penalty levied against the Assessee. This decision was based on a strict interpretation of the statutory provisions and established legal principles.

3. Final Decision and Outcome:
After considering the arguments presented by both parties, the Tribunal concluded that the penalty was not sustainable due to the defective show cause notice that failed to specify the relevant limb of Section 271(1)(c) under which the penalty proceedings were initiated. As a result, the appeal of the Assessee was allowed, and the penalty was canceled. The Tribunal's decision was based on legal principles, statutory provisions, and consistent judicial interpretations, ensuring that the penalty imposition was in accordance with the law.

In summary, the judgment by the Appellate Tribunal ITAT DELHI highlighted the importance of proper specification in show cause notices for penalty proceedings under Section 271(1)(c) of the I.T. Act, 1961. The decision was supported by relevant judicial precedents and legal interpretations, ultimately leading to the cancellation of the penalty levied against the Assessee.