2021 (7) TMI 16 - AT - Income Tax

Penalty levied under section 271(1)(c) - Addition of additional ground - HELD THAT - Additional ground raised are already available on record and no investigation of the fresh facts is required for adjudication of these grounds. Accordingly, in view of the settled principal in the case of National Thermal Power Co. Ltd. v. CIT 1996 (12) TMI 7 - SUPREME COURT the additional grounds raised by the assessee are admitted. Initiating the penalty proceeding relevant charges either of concealment of income or furnishing of inaccurate particulars of income - The assessee was not clear under which limb of section 271C of the Act, the penalty was initiated. The Hon ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT has held that while issuing the notice the Assessing Officer has to come to conclusion that whether it is a case of concealment of income or furnishing of inaccurate particulars of income and sending printed forms where all grounds mentioned in section 271 are mentioned, would not satisfy requirement of law. The Hon ble Supreme Court in the case of SSA S Emerald Meadows 2016 (8) TMI 1145 - SC ORDER , has also upheld the finding in the case of Manjunatha Cotton and Ginning Factory (supra) Respectfully, following the decision of the Hon ble Karnataka High Court and Hon ble Supreme Court, we are of the opinion that penalty levied is bad in law and accordingly we cancel the same. Additional ground of the appeal is allowed.

Summary

Issues:
1. Admissibility of additional grounds raised by the assessee challenging penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Clarity of charges for penalty proceedings under section 271(1)(c) - concealment of income or furnishing inaccurate particulars of income.

Issue 1 - Admissibility of Additional Grounds:
The appeal was filed by the assessee challenging the penalty under section 271(1)(c) of the Income-tax Act, 1961. The assessee raised additional legal grounds before the ITAT, which were objected to by the Departmental Representative. The ITAT found that the additional grounds were purely legal in nature and all relevant facts were already on record, thus admitting the additional grounds as per the settled principle in the case of National Thermal Power Co. Ltd. v. CIT. The ITAT proceeded to hear arguments on the admissibility of the additional grounds.

Issue 2 - Clarity of Charges for Penalty Proceedings:
The ITAT considered the arguments presented regarding the lack of clarity in the charges for penalty proceedings under section 271(1)(c). The Assessing Officer had initiated penalty proceedings without specifying whether it was for concealment of income or furnishing inaccurate particulars of income. The ITAT noted that both in the assessment order and the notice for penalty proceedings, there was ambiguity regarding the nature of charges. Citing the decisions of the Hon'ble Karnataka High Court and the Supreme Court, the ITAT held that such lack of clarity in specifying the charges rendered the penalty levied as bad in law. Consequently, the ITAT canceled the penalty, allowing the additional ground raised by the assessee on this issue.

Conclusion:
The ITAT allowed the appeal of the assessee, canceling the penalty levied under section 271(1)(c) of the Income-tax Act, 1961. The judgment emphasized the importance of clarity in specifying charges for penalty proceedings and upheld the legal principle that penalties must be initiated with clear and unambiguous grounds. The decision was pronounced on 30th June 2021 by the ITAT Delhi.