2019 (6) TMI 721 - HC - Income Tax

Penalty u/s 271(1)(c) - non specifying which of the two contraventions, the assessee is guilty of - HELD THAT - The notice issued u/s 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. See Amrit Foods vs Commissioner of Central Excise UP 2005 (10) TMI 96 - SUPREME COURT as well as DR. MURARI MOHAN KOLEY 2018 (9) TMI 1 - CALCUTTA HIGH COURT and M/S. SRMB SRIJAN LTD 2019 (4) TMI 1502 - CALCUTTA HIGH COURT - Decided in favour of assessee.

Summary

Issues:

1. Deficiency in the notice under Section 272(1)(c) specifying the contraventions.
2. Interpretation of technical defect in the notice under Section 271(1)(c) read with Section 274 of the Income Tax Act, 1961.

Issue 1: Deficiency in the notice under Section 272(1)(c) specifying the contraventions

The High Court, in this judgment, addressed the deficiency in the notice issued under Section 272(1)(c) of the Income Tax Act. The Court noted that the impugned notice failed to specify which contravention the assessee was guilty of. Citing the decision of the Supreme Court in Amrit Foods Versus Commissioner of Central Excise, U. P., the High Court found the notice to be flawed. Additionally, the Court referenced a Division Bench decision of the Court in Principal Commissioner of Income Tax – 19, Kolkata Versus Dr. Murari Mohan Koley, along with judgments from the Karnataka and Bombay High Courts and an unreported judgment of the Division Bench in Principal CIT – 1, Kolkata Versus M/S. SRMB Srijan Ltd. The High Court emphasized that the deficiency in the notice was a technical defect under Section 271(1)(c) read with Section 274 of the Income Tax Act, 1961.

Issue 2: Interpretation of technical defect in the notice under Section 271(1)(c) read with Section 274 of the Income Tax Act, 1961

The High Court clarified that its examination was limited to the technical defect in the notice issued under Section 271(1)(c) read with Section 274 of the Income Tax Act, 1961, and its consequences. The Court explicitly stated that it did not delve into any other issues beyond the deficiency in the notice. Consequently, the appeal (ITAT No. 272 of 2017) and the stay application (GA No. 2455 of 2017) were dismissed by the High Court. This judgment underscores the importance of a notice specifying contraventions under the relevant sections of the Income Tax Act to ensure procedural fairness and compliance with legal requirements.

This detailed analysis of the judgment from the High Court of Calcutta highlights the critical issues of deficiency in the notice under Section 272(1)(c) and the interpretation of technical defects in the notice under Section 271(1)(c) read with Section 274 of the Income Tax Act, 1961. The Court's reliance on previous decisions and its narrow focus on the technical aspect of the notice demonstrate a commitment to upholding procedural fairness and legal standards in matters of taxation.