2019 (12) TMI 521 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - concealment of income or furnishing of inaccurate particulars of income? - the CIT(A) levied penalty u/s 271(1)(c) of the Act but under which limb of Section 271(1)(c), the penalty is levied was not mentioned in the notice issued under Section 271(1)(c) read with Section 274 of the Act - case of assessee is that the penalty provision being quasi judicial, unless there is specific charge there cannot be levy of penalty - HELD THAT - In the notice issued u/s 274 r.w.s 271(1)(c) of the Income Tax Act, 1961, there was no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income - From the notice dated 27/3/2015 produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. Besides that the Assessment Order also did not specify the charge as to whether there is concealment of income or furnishing of inaccurate particulars of income in assessee s case. There is separate provision for penalty in search cases given under the statute after 01.07.2012 that of Section 271AAB of the Act which was totally ignored by the Assessing Officer. While dealing with this contention, the CIT(A) has taken the due date that of filing of return of income i.e. 31.08.2007 which is contrary to Section 271AAB of the Income Tax Act, 1961. Thus, the penalty itself is based on incorrect Section. Therefore we are taking up the contention of the assessee that there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 of the Act. The penalty levied u/s 271(1)(c) is not sustainable and has to be deleted - notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law - appeal of the assessee is allowed.

Summary

Issues:
Penalty under section 271(1)(c) - Specific charge not mentioned in notice - Concealment of income or furnishing inaccurate particulars - Validity of penalty order - Applicability of penalty provisions in quasi-judicial context - Assessment post search and seizure action - Appeal against CIT(A) order.

Analysis:
The appeal concerns the imposition of a penalty under section 271(1)(c) of the Income Tax Act, 1961, without specifying the particular charge of concealment of income or furnishing inaccurate particulars in the notice. The appellant argued that the penalty order lacked clarity on the basis for penalty imposition, citing legal precedents to support the contention that specific charges are essential for a valid penalty. The appellant highlighted the quasi-judicial nature of penalty provisions, emphasizing the necessity of a clear charge for penalty imposition. The appellant's position was supported by references to relevant court decisions, including the Supreme Court and the Delhi High Court.

The case originated from a search and seizure action under section 132 of the Act, leading to penalty proceedings under section 271(1)(c) for an addition made during assessment. The penalty order was challenged before the CIT(A), where the appeal was dismissed. During the proceedings, the appellant contended that the penalty order failed to specify the grounds for penalty imposition, rendering it legally unsustainable. The appellant invoked legal principles emphasizing the importance of clarity in penalty notices and the necessity of specific charges for penalty imposition in quasi-judicial contexts.

Upon careful consideration of the arguments presented by both parties and a review of the relevant case law, the Tribunal found merit in the appellant's contentions. Noting that the penalty notice did not specify the particular limb of section 271(1)(c) under which the penalty was imposed, the Tribunal held that the penalty order was not legally sustainable. The Tribunal relied on the decision of the Hon'ble Supreme Court and the Hon'ble Karnataka High Court to support its conclusion that a penalty notice lacking specificity on the charge of concealment or inaccurate particulars is invalid. Consequently, the Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to cancel the penalty levied under section 271(1)(c).

In conclusion, the Tribunal allowed the appellant's appeal, emphasizing the necessity of clear and specific charges in penalty notices under section 271(1)(c) for a valid penalty imposition. The decision underscores the importance of legal precision and adherence to procedural requirements in penalty proceedings, particularly in cases involving concealment of income or furnishing inaccurate particulars.