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2021 (1) TMI 840 - AT - Income TaxPenalty u/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT - 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) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) 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, the decision of the Hon ble Karnataka High Court in the case of SSA S Emerald Meadows 2015 (11) TMI 1620 - KARNATAKA HIGH COURT where the SLP filed by the Revenue has been dismissed 2016 (8) TMI 1145 - SC ORDER is directly on the issue contested herein by the Assessee. Further, 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. - Decided in favour of assessee.
Issues:
1. Validity of penalty under section 271(1)(c) of IT Act 1961. 2. Specific charge for penalty in the notice u/s 274 read with Sec. 271. 3. Applicability of penalty provisions in search cases. 4. Interpretation of relevant judicial pronouncements in penalty proceedings. Analysis: Issue 1: Validity of penalty under section 271(1)(c) of IT Act 1961 The appeal was filed against the penalty imposed by the Assessing Officer under section 271(1)(c) of the IT Act. The CIT(A) upheld the penalty, leading to the assessee's appeal. The Assessing Officer levied the penalty after confirming certain additions in the first appeal. The assessee contended that the penalty order lacked a specific charge for concealment of income or furnishing inaccurate particulars of income, citing relevant judicial decisions to support their argument. The DR, however, argued that the penalty was clear on the grounds of concealment of income. The Tribunal found that the penalty notice and assessment order did not specify the charge clearly, rendering the penalty unsustainable. Issue 2: Specific charge for penalty in the notice u/s 274 read with Sec. 271 The Tribunal noted that the notice issued under section 274 read with section 271(1)(c) did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income. Citing the decision in the case of M/s SSA's Emerald Meadows, the Tribunal held that the absence of a specific limb mentioned in the notice rendered the penalty proceedings invalid. The Tribunal emphasized the importance of a clear charge in penalty proceedings, as highlighted in relevant judicial pronouncements. Issue 3: Applicability of penalty provisions in search cases The Tribunal highlighted that the penalty notice in the present case did not mention the appropriate limb under section 271(1)(c) for which the penalty was initiated. It differentiated the case from precedents related to survey cases, emphasizing that penalties in search cases have separate provisions under section 271AAB of the Act. The Tribunal found that the penalty in the current case was based on an incorrect section, further supporting the assessee's argument against the penalty imposition. Issue 4: Interpretation of relevant judicial pronouncements in penalty proceedings The Tribunal extensively referred to judicial decisions, including the Hon'ble Supreme Court and High Court rulings, to analyze the validity of the penalty imposed. Citing the decisions in cases such as CIT vs. SSA's Emerald Meadows and Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd., the Tribunal concluded that the penalty notice lacking a specific charge for concealment or inaccurate particulars of income was not sustainable. By aligning with the judicial precedents, the Tribunal set aside the penalty levied under section 271(1)(c) and directed the Assessing Officer to cancel the penalty. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the significance of clear charges in penalty proceedings and aligning with relevant judicial pronouncements to invalidate the penalty order.
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