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2020 (3) TMI 965 - AT - Income TaxPenalty u/s. 271(1)(c) - defective notice - unexplained receipt of cash since the assessee has not disclosed in the return of income the said amount - HELD THAT - As decided in case of Jeetmal Choraria 2017 (12) TMI 883 - ITAT, KOLKATA Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. We, therefore, sustain the deletion of penalty by the Ld. CIT(A) on the reason of invalid notice before imposing penalty and, therefore, the appeal of revenue is dismissed.
Issues:
Appeal against penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for AY 2012-13. Analysis: The appellant contested the penalty imposed by the Assessing Officer (AO) and confirmed by the Ld. CIT(A) under section 271(1)(c) of the Act. The Ld. CIT(A) upheld the penalty as the appellant failed to establish the source of cash amounting to ?9,50,000, treating it as unexplained receipt. The appellant argued that the notice proposing the penalty was defective as it did not specify the fault or charge against the assessee clearly. Citing various legal precedents, the appellant contended that the penalty should be deleted due to the defective notice. The appellant referred to the decision of the Hon'ble Karnataka High Court and the Hon'ble Bombay High Court, emphasizing that penalties based on defective show cause notices are invalid. The appellant also highlighted a similar decision by the ITAT in another case. The Ld. DR opposed the appellant's submission and presented case laws to counter the appellant's arguments. The Ld. DR cited several decisions of the Mumbai ITAT and the Bombay High Court to support the contention that a notice need not be in a specific form and a mistake in the notice does not necessarily invalidate penalty proceedings. However, the Coordinate Bench of the Tribunal, in a previous case, discussed the relevance of these case laws and differentiated between the issue of recording satisfaction and the necessity of a specific charge in the show cause notice under section 274 of the Act. The Tribunal, following the precedent set by the Hon'ble Karnataka High Court, held that the imposition of penalty based on a defective show cause notice cannot be sustained. Referring to the earlier decision, the Tribunal ruled in favor of the appellant and deleted the penalty imposed under section 271(1)(c) of the Act. The Tribunal emphasized the importance of clarity in the show cause notice and the need for a specific charge against the assessee. Consequently, the appeal of the assessee was allowed, and the penalty was canceled. In conclusion, the Tribunal's decision highlighted the significance of a clear and specific charge in the show cause notice for imposing penalties under section 271(1)(c) of the Income-tax Act, 1961. The ruling emphasized the legal precedent set by the Hon'ble Karnataka High Court and reiterated that penalties based on defective notices are not sustainable. The Tribunal's decision in this case aligned with the principles of natural justice and the requirement for procedural clarity in penalty proceedings.
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