2019 (6) TMI 295 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT - Notice issued by the A.O. for levy of penalty under section 271(1)(c) of the Act to be bad in law as it did not specify in which limb of Section 271(1)(c), 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. On this score itself, similar view is taken in the case of CIT vs. M/s. SSAs Emerald Meadows 2015 (11) TMI 1620 - KARNATAKA HIGH COURT and this decision is confirmed by the Hon ble Supreme Court 2016 (8) TMI 1145 - SC ORDER Since the show cause notice is invalid due to the above reason and as such the entire penalty proceedings are vitiated. Thus, no penalty is leviable against the assessee. - Decided in favour of assessee.

Summary

Issues: Challenge to penalty under section 271(1)(c) of the I.T. Act, 1961 due to vague show cause notice specifying concealment or furnishing inaccurate particulars of income.

Analysis:
1. The appeal was directed against the Order of the Ld. CIT(A)-15, New Delhi, challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961 for the A.Y. 2013-2014.

2. The assessee contended that the notice under section 271(1)(c) did not specify the exact charge of concealment or furnishing inaccurate particulars of income, making it vague and liable to be set aside. Reference was made to an Order of ITAT, Delhi C-Bench in a specific case.

3. On the contrary, the Ld. D.R. argued that the failure of the A.O. to specify the charge in the show cause notice did not warrant deletion of the penalty. Reference was made to an Order of ITAT, Chennai Bench.

4. The Appellate Tribunal noted that the show cause notice issued by the A.O. did not specify the limb of Section 271(1)(c) under which the penalty proceedings were initiated, rendering it invalid in law. The Tribunal cited decisions by the Hon'ble Karnataka High Court and the Hon'ble Supreme Court, along with consistent views of ITAT, Delhi Benches, to support the conclusion that in such cases, the levy of penalty is invalid.

5. Consequently, the Tribunal set aside the Orders of the authorities below and canceled the penalty, as the show cause notice was deemed invalid, leading to the entire penalty proceedings being vitiated. The decisions relied upon by the Ld. D.R. were found insufficient to support the Revenue's case.

6. Ultimately, the appeal of the assessee was allowed, and the penalty was canceled based on the invalidity of the show cause notice. The order was pronounced in the open Court.