2019 (9) TMI 1197 - AT - Income Tax

Penalty u/s 271(1)(c) - non specification of charge - HELD THAT - AO has not mentioned the specific charge in its penalty order whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. - Decided in favour of assessee.

Summary

Issues:
Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals) and its sustainability.

Analysis:
1. The appeal was filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals) confirming a penalty under section 271(1)(c) of the Act. The effective issue raised was the confirmation of the penalty levied by the Assessing Officer for ?39,756.00.

2. The Assessee, an individual, received income from salary, partnership firm, and claimed to have conducted retail business of imitation jewelry not disclosed in the tax return. The Assessing Officer treated a peak credit in the bank account as unexplained income under section 69 of the Act.

3. The Assessing Officer issued a notice for penalty under section 271(1)(c) after the assessment. The Assessee did not respond, leading to the imposition of a penalty of ?39,756.00 by the AO.

4. The Assessee contended before the CIT (A) that no penalty should be imposed as the addition was based on the peak credit balance in the bank account.

5. However, the CIT (A) upheld the penalty, stating the Assessee failed to provide reasons for not disclosing bank transactions, collected through AIR information.

6. The CIT (A) noted the Assessee did not offer any income for the business conducted, leading to the penalty confirmation.

7. The Appellate Tribunal observed that the penalty was imposed without specifying the charge, as required under section 271(1)(c) of the Act. Citing relevant case law, the Tribunal held that a penalty cannot be imposed without a clear finding on the specific charge.

8. Due to the lack of a specific charge in the penalty order, the Tribunal deemed the penalty unsustainable, leading to the allowance of the Assessee's appeal.

9. The Tribunal refrained from discussing the appeal grounds on merits, as the penalty was deleted on technical grounds.

10. Consequently, the appeal filed by the Assessee was allowed, with the penalty being deleted due to the absence of a specific charge in the penalty order.

This detailed analysis covers the issues raised in the judgment, the arguments presented, and the final decision of the Appellate Tribunal regarding the sustainability of the penalty under section 271(1)(c) of the Income Tax Act, 1961.