2021 (5) TMI 480 - AT - Income Tax

Levy of penalty u/s. 271(1)(C) - defective notice u/s 274 - non specifying clear-cut charge of Concealment of Income or furnishing inaccurate particulars of income - HELD THAT - The Revenue could not dispute the fact that notice u/s. 271(1)(c) of the Act does not specify specific charge whether it is against the filing of accurate particulars of income or concealing particulars of income. As relying o M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. 2019 (8) TMI 409 - DELHI HIGH COURT hereby quash the penalty order as the initiation of penalty is not in accordance with law - Decided in favour of assessee.

Summary

Issues:
- Appeal against penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for assessment years 2008-09 & 2009-10.

Analysis:
1. Assessment Year 2009-10:
- The assessee appealed against the penalty imposed under section 271(1)(c) of the Income Tax Act, challenging the order of the Assessing Officer. The Assessing Officer had made various additions to the income of the assessee, leading to the imposition of the penalty. The CIT(A) confirmed the penalty, which led to the appeal before the Tribunal.
- The primary contention raised by the assessee was regarding the legality of the penalty, specifically highlighting the defective notice issued by the Assessing Officer. The notice did not specify a clear charge against the assessee, as required by law. The assessee argued that this defect rendered the penalty proceedings invalid, citing a judgment of the Hon'ble Delhi High Court in a similar case.
- The Tribunal, after considering the arguments from both sides, observed that the notice indeed did not specify the specific charge against the assessee, whether for concealment of income or furnishing inaccurate particulars of income. Citing the judgment of the Hon'ble Delhi High Court, the Tribunal quashed the penalty order on the grounds of the defective initiation of penalty proceedings. Consequently, the appeal of the assessee was allowed.

2. Assessment Year 2008-09:
- The grounds raised in the appeal for Assessment Year 2008-09 mirrored those raised for Assessment Year 2009-10. The issues and contentions were identical to the previous assessment year.
- Both parties presented similar arguments as in the appeal for Assessment Year 2009-10. The Tribunal noted the similarities in facts and grounds between the two assessment years.
- Following the consistent view taken for Assessment Year 2009-10 and considering the identical nature of the issues, the Tribunal allowed the appeal for Assessment Year 2008-09. The penalty imposed under section 271(1)(c) was quashed based on the defective initiation of penalty proceedings, as observed in the previous assessment year.

In conclusion, the Tribunal allowed the appeals for both assessment years, quashing the penalties imposed under section 271(1)(c) of the Income Tax Act due to the defective initiation of penalty proceedings, as per the judgment of the Hon'ble Delhi High Court. The consistent approach was taken for both assessment years, leading to the favorable outcome for the assessee.