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2019 (5) TMI 417 - AT - Income TaxLevy of penalty u/s 271(1)(c) - defective notice - non specification of charge - HELD THAT - As relying on SSA'S EMERALD MEADOWS 2016 (8) TMI 1145 - SC ORDER and MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, 2013 (7) TMI 620 - KARNATAKA HIGH COURT imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. Also see DR. MURARI MOHAN KOLEY 2018 (9) TMI 1 - CALCUTTA HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Validity of the penalty notice under Section 271(1)(c) of the Income Tax Act. 2. Whether the penalty imposed under Section 271(1)(c) is sustainable in the absence of specific charges. 3. Confirmation of penalty by the CIT(A) despite the alleged defects in the show-cause notice. 4. Applicability of case law precedents regarding defective penalty notices. Detailed Analysis: 1. Validity of the Penalty Notice under Section 271(1)(c) of the Income Tax Act: The primary issue in this case revolves around the validity of the penalty notice issued under Section 271(1)(c) of the Income Tax Act. The assessee argued that the show-cause notice dated 06.03.2006 was defective because it did not specify whether the penalty was for "concealment of particulars of income" or "furnishing inaccurate particulars of income." This defect, the assessee contended, rendered the notice invalid. 2. Whether the Penalty Imposed under Section 271(1)(c) is Sustainable in the Absence of Specific Charges: The assessee's counsel cited several judicial precedents, including decisions from the Hon'ble Karnataka High Court and the Hon'ble Supreme Court, which held that a penalty notice must explicitly state the charge against the assessee. The Tribunal noted that the Hon'ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows and CIT vs. Manjunatha Cotton and Ginning Factory had established that a penalty notice without specific charges is invalid. The Hon'ble Supreme Court had also dismissed the revenue's appeal against this view, reinforcing the necessity for clear charges in penalty notices. 3. Confirmation of Penalty by the CIT(A) Despite the Alleged Defects in the Show-Cause Notice: The CIT(A) had confirmed the penalty imposed by the Assessing Officer (AO), stating that the assessee had not appealed against the assessment order, which had attained finality. The CIT(A) also mentioned that the assessee failed to provide proof of filing an appeal and did not respond to notices under Section 250. The CIT(A) concluded that the penalty was justified as the assessee had filed inaccurate particulars of income by claiming ineligible deductions. 4. Applicability of Case Law Precedents Regarding Defective Penalty Notices: The Tribunal reviewed various case laws cited by both parties. It noted that the Hon'ble Calcutta High Court in Dr. Murari Mohan Koley and the Hon'ble Bombay High Court in CIT vs. Shri Samson Perinchery had upheld the principle that a penalty notice must specify the charge. The Tribunal also referred to its own decision in Jeetmal Choraria vs. ACIT, which followed the same principle. The Tribunal distinguished these cases from those cited by the revenue, such as Dr. Syamal Baran Mondal vs. CIT, which dealt with the recording of satisfaction rather than the specificity of charges in the notice. Conclusion: The Tribunal concluded that the penalty notice issued in this case was defective as it did not specify whether the penalty was for "concealment of particulars of income" or "furnishing inaccurate particulars of income." Following the consistent judicial view that such defects render the notice invalid, the Tribunal held that the penalty imposed under Section 271(1)(c) could not be sustained. Consequently, the Tribunal allowed the assessee's appeal and deleted the penalty. Final Judgment: The appeal filed by the assessee is allowed, and the penalty imposed under Section 271(1)(c) of the Income Tax Act is deleted. The order was pronounced in the open court on 1st May, 2019.
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