9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1053 - AT - Income TaxPenalty u/s 271(1)(c) - defective notice - non specification of charge - penalty was initiated for furnishing of inaccurate particulars of income but finally levied for concealment of income - notice u/s 274 read with section 271 issued in a mechanical manner without application of mind as the AO has not specified one the two limbs on which penalty was proposed to be levied - HELD THAT - AO in not striking off the inappropriate limb in the notice and initiating the penalty on one limb and imposing penalty finally on the other limb is clear cut in violation of principle of natural justice as the assessee was deprived of reasonable opportunity to respond and deal with the particular charge on which the penalty was levied. In our view, the penalty order in such a scenario is clearly bad in law and can not be sustained. The case of the assessee is clearly supported by the decision relied upon by the assessee as stated hereinabove in the case of Shri Samson Perinchery vs. CIT 2017 (1) TMI 1292 - BOMBAY HIGH COURT and CIT vs. Mrs. Piedade Perinchery 2017 (1) TMI 1458 - BOMBAY HIGH COURT has held that where the AO has failed to state particularly the one of the two limbs on which the penalty was proposed to be levied then the penalty order would be bad in law as the assessee was not given proper opportunity to respond to the charge on which the penalty was levied. We hereby direct the AO to delete the penalty. - Decided in favour of assessee.
Issues:
1. Challenge to penalty on technical grounds - initiation for inaccurate particulars of income but levied for concealment of income. 2. Proper application of mind in penalty proceedings - specific limb not mentioned in notice under section 274 read with section 271. 3. Justification for penalty imposition - change of heads of income not attracting penalty. 4. Disclosure of particulars in annual accounts for disallowance under section 14A - no penalty attraction. Analysis: Issue 1: Challenge to penalty on technical grounds The appeal was against the order of the Commissioner of Income Tax (Appeals) for assessment year 2008-09. The assessee contended that the penalty was confirmed despite being initiated for inaccurate particulars of income but levied for concealment of income. The penalty notice was issued without specifying the particular limb, leading to a challenge on technical grounds. The penalty was imposed for concealment of income, which the assessee argued was against established judicial principles. Issue 2: Proper application of mind in penalty proceedings The Assessing Officer (AO) initiated penalty proceedings for inaccurate particulars of income but did not specify the particular limb in the notice under section 274 read with section 271. The penalty was imposed for concealment of income, creating a procedural flaw as the assessee was not given a proper opportunity to respond to the specific charge on which the penalty was levied. The Tribunal held that the penalty order, in this case, was bad in law due to the violation of the principle of natural justice. Issue 3: Justification for penalty imposition The assessee argued that the penalty under section 271(1)(c) was not attracted merely due to a change in the heads of income by the AO. Citing various decisions, the assessee contended that penalty imposition was not warranted in this scenario. The Tribunal agreed with this argument, emphasizing that a mere change in the heads of income does not automatically attract penalty under section 271(1)(c). Issue 4: Disclosure of particulars in annual accounts for disallowance under section 14A The assessee maintained that no penalty should be imposed for the disallowance made under section 14A as all particulars were disclosed in the annual accounts submitted to the revenue authorities. Relying on specific case laws, the assessee argued against penalty imposition in this regard. The Tribunal, considering the disclosure of particulars, concurred with the assessee's position and directed the Assessing Officer to delete the penalty. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the procedural irregularities in the penalty imposition and the lack of grounds for penalty attraction based on the issues raised by the assessee. The Tribunal directed the Assessing Officer to delete the penalty, highlighting the importance of adhering to procedural fairness and legal principles in penalty proceedings.
|
