2020 (2) TMI 333 - HC - Income Tax

Penalty levied u/s. 271(1)(c) - notices issued had not struck off the portion which were inapplicable - HELD THAT - In the present case, as well if the notice dated 30/09/16 (at page 32) is perused, it is apparent that the inapplicable portions have not been struck off. This coupled with the fact adverted to in paragraph (5) of this order, leaves no ground for interference with the impugned order. The impugned order is quite consistent with the law laid down in the case of Samson Perinchery 2017 (1) TMI 1292 - BOMBAY HIGH COURT and New Era Sova Mine 2019 (7) TMI 1002 - BOMBAY HIGH COURT and therefore, warrants no interference. The contention based upon MAK Data (P.) Ltd. 2013 (11) TMI 14 - SUPREME COURT also does not appeal to us in the peculiar facts of the present case. The notice in the present case is itself defective and further, there is no finding or satisfaction recorded in relation to concealment or furnishing of inaccurate particulars.

Summary

Issues:
Whether the Tribunal was right in deleting the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 based on the disclosure made by the assessee in the revised returns.

Analysis:
The appellant's counsel argued that the revised returns filed by the respondent showed piecemeal disclosures, citing the case of Mak Data (P.) Ltd v/s. Commissioner of Income Tax, and contended that such disclosures do not absolve the assessee from paying the penalty. The appellant emphasized that the assessment order referred to concealment or inaccurate particulars, making the deletion of penalty by the Commissioner (Appeals) and ITAT questionable.

On the other hand, the respondent's counsel pointed out the absence of any findings regarding concealment or furnishing of inaccurate particulars. He highlighted that the notice issued to the assessee did not specify the basis for satisfaction, relying on legal precedents to argue that a penalty cannot be sustained based on a defective notice.

The High Court examined the contentions and records, noting that both the Commissioner (Appeals) and ITAT concluded that there was no satisfaction by the Assessing Officer regarding concealment or inaccurate particulars, which is essential for initiating penalty proceedings. Referring to legal judgments, the Court emphasized the importance of a notice clearly indicating the basis for satisfaction, and in this case, found that the notice was defective as it did not strike off inapplicable portions.

The Court held that the defective notice and absence of satisfaction regarding concealment or inaccurate particulars rendered the penalty proceedings invalid. Citing consistency with previous legal decisions, the Court dismissed the appeal, stating that no substantial question of law arose in this case. The Court also referred to a similar decision in Tax Appeal No.24 of 2019, where the appeal was declined based on identical facts, further supporting the dismissal of the present appeal.