2020 (3) TMI 1232 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - Non specification of limb on which the penalty was proposed to be levied - non-striking off relevant clause in the notice shows - HELD THAT - We hold that the notice was issued by the Assessing Officer U/s. 274 r.w.s 271(1)(c) of the Act is without specifying the charge for which the notice was issued as was non striking off of the inappropriate limb on account of non-application of mind and therefore the penalty proceedings initiated are bad in law. Thus, we direct the Assessing Officer to delete the penalty levied U/s. 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues:
Initiation of penalty proceedings without specifying the charge for which the penalty was proposed to be levied under section 271(1)(c) of the Income Tax Act.

Analysis:
The appeal was filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) sustaining the penalty levied under section 271(1)(c) of the Act for the assessment year 2013-14. The assessee argued that the initiation of penalty proceedings was improper as the Assessing Officer did not specify the limb on which the penalty was proposed to be levied. The additional ground challenging the initiation of penalty proceedings was admitted for adjudication based on legal grounds. The Counsel for the assessee contended that the penalty proceedings were improper and invalid due to the non-application of mind by the Assessing Officer in specifying the charge for which the penalty was initiated. The Assessing Officer did not strike off irrelevant limbs in the notice issued, leading to ambiguity in the charge for penalty.

The Tribunal observed that the Assessing Officer failed to specify the charge or limb for which the penalty proceedings were initiated, as required under section 271(1)(c) of the Act. The penalty order mentioned levying penalty for furnishing inaccurate particulars of income and for concealment of income, without clear indication in the notice. Citing precedent cases, the Tribunal emphasized the importance of clearly indicating the specific charge in the penalty notice to ensure compliance with principles of natural justice. The Tribunal referred to decisions where penalties were dropped due to the absence of a clear indication of the charge in the penalty notice.

Based on various judicial precedents, including decisions by the Bombay High Court and the ITAT, the Tribunal held that the penalty proceedings initiated by the Assessing Officer were bad in law due to the failure to specify the charge for which the penalty was proposed. The Tribunal directed the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act. Since the penalty was ordered to be deleted on the preliminary point, other arguments raised by the Counsel for the assessee were not addressed as they were deemed academic. Consequently, the appeal of the assessee was allowed, and the penalty was directed to be deleted.