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2020 (1) TMI 45 - AT - Income TaxPenalty u/s 271(1)(c) - no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income - HELD THAT - Merely stating that 271(1)(c) penalty has to be initiated does not amount to satisfaction. The notice u/s 271(1)(c) is also silent on the particular limb under which the penalty order was passed. First of all, 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 13.12.2016 and 08.05.2017 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. 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. Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) of the Act has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) of the Act is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, SSA S Emerald Meadows 2016 (8) TMI 1145 - SC ORDER - when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT will be applicable in the present case. Thus, notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to delete the penalty so levied. - Decided in favour of assessee.
Issues Involved:
1. Levy of Penalty under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Years 2014-15 and 2015-16. Detailed Analysis: ITA No. 3936/Del/2019 (Assessment Year 2014-15) Background: The assessee, a partnership firm engaged in civil construction, declared an income of ?3,77,73,030/-. The case was selected for scrutiny due to a survey under Section 133A. An addition of ?81,27,391/- was made as undisclosed income based on impounded material, leading to a total assessed income of ?4,59,00,420/-. Penalty proceedings under Section 271(1)(c) were initiated, resulting in a penalty of ?25,12,000/-. Assessee's Arguments: - The notice for penalty did not specify the particular limb of Section 271(1)(c) being invoked, i.e., whether for "concealment of income" or "furnishing inaccurate particulars of income." - The penalty order lacked satisfaction from the Assessing Officer regarding the specific charge. - Cited decisions from higher courts, including CIT vs. SSA’s Emerald Meadows and Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd., where similar notices were deemed bad in law. Revenue's Arguments: - The assessment and penalty orders were proper, with the Assessing Officer duly recording satisfaction regarding undisclosed income. - Argued that the non-striking of the correct limb in the notice did not cause prejudice to the assessee, who understood the purport of the notice. - Cited various judgments supporting the validity of penalty despite procedural lapses in the notice. Tribunal's Findings: - The assessment order did not record satisfaction regarding the specific limb of Section 271(1)(c) being invoked. - The notice under Section 271(1)(c) was ambiguous, failing to specify the charge. - Relied on the Supreme Court's affirmation of the Karnataka High Court's decision in SSA’s Emerald Meadows, which invalidated similar penalty notices. - Concluded that the penalty notice was void ab initio and quashed the penalty. Conclusion: The appeal for Assessment Year 2014-15 was allowed, and the penalty under Section 271(1)(c) was quashed. ITA No. 3937/Del/2019 (Assessment Year 2015-16) Background: Similar to the previous year, the assessee faced a penalty of ?15,46,000/- under Section 271(1)(c) for undisclosed income based on impounded material. Tribunal's Findings: - The notice for Assessment Year 2015-16 also failed to specify the limb of Section 271(1)(c) being invoked. - Applied the same reasoning and legal precedents as in ITA No. 3936/Del/2019. Conclusion: The appeal for Assessment Year 2015-16 was allowed, and the penalty under Section 271(1)(c) was quashed. Final Order: Both appeals (ITA No. 3936/Del/2019 and ITA No. 3937/Del/2019) were allowed, and the penalties under Section 271(1)(c) for Assessment Years 2014-15 and 2015-16 were quashed.
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