2019 (6) TMI 790 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - as argued show cause notice issued u/s 274 without containing the specific charge as to whether the assessee was guilty of having concealed particulars of income or having particulars of such income is defective - 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. To arrive at this conclusion in the case of BIJOY KUMAR AGARWAL 2019 (6) TMI 721 - CALCUTTA HIGH COURT as relied on the decision of 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 - Decided in favour of assessee.

Summary

Issues:
Challenge to penalty proceedings initiation due to defective show cause notice.

Analysis:
The appeal was against the confirmation of a penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961. The AO had added a sum to the total income of the assessee on account of short term capital gain from the sale of shares, and subsequently initiated penalty proceedings. The penalty was confirmed by the Ld. CIT(A), leading to the appeal before the Tribunal. During the appeal hearing, the department was absent, and the assessee's counsel raised a preliminary issue regarding the initiation of penalty proceedings. The counsel argued that the show cause notice issued by the AO did not contain a specific charge, making it defective. The counsel cited a decision of the Hon'ble Kolkata High Court in a similar case, where it was held that a notice under section 271(1)(c) without specifying the contravention was defective. The High Court relied on previous decisions to support this conclusion. The Tribunal found that the issue raised by the assessee was covered by the judicial pronouncements cited and, therefore, canceled the penalty imposed by the AO.

In conclusion, the Tribunal allowed the appeal of the assessee, canceling the penalty imposed under section 271(1)(c) by the AO and confirmed by the Ld. CIT(A). The decision was based on the defect in the show cause notice, following the judicial pronouncements referenced during the hearing. The Tribunal's decision was in line with the legal precedent established by the Hon'ble Kolkata High Court and other relevant cases.