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2022 (1) TMI 826 - AT - Income TaxPenalty u/s 271(1)(c) - Defected notice u/s 274 - non specification of charge - HELD THAT - The penalty has been imposed by the AO u/s 271 (1)(c) without mentioning the specific charge in penalty order dated 21/03/2018 whether it was levied on account of concealment of income or furnishing inaccurate particulars of income. AO has not levied the penalty on the specific charge as mandated u/s 271(1)(c) - In such facts and circumstance the Hon ble Jurisdictional High Court in the case of Snita Transport Pvt. Ltd. Vs. Assistant Commissioner of Income Tax 2012 (12) TMI 981 - HIGH COURT OF GUJARAT has held that penalty cannot be imposed without mentioning the specific charge. AO has not mentioned the specific charge in his penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore in our considered view the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. Hence the ground of appeal of the assessee is allowed.
Issues:
- Appeal against penalty order under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2010-11. Analysis: 1. The assessee contested the penalty imposed under section 271(1)(c) of the Act, arguing that the AO did not record mandatory satisfaction during assessment and the show cause notice did not specify the exact charge for the penalty. The appellant also challenged the quantum and timing of the penalty, claiming it was illegal and excessive. 2. The AO initiated penalty proceedings based on the assessee's failure to file a return under section 139(1) and subsequent declaration of income after proceedings under section 147 were initiated. The AO held that by not filing the return despite having taxable income, the assessee concealed income, justifying the penalty under section 271(1)(c). 3. The CIT (A) affirmed the penalty, emphasizing that the appellant's actions were intentional and not inadvertent. Citing case law, the CIT (A) highlighted that penalty for concealment cannot be imposed if the assessee had disclosed facts before the authorities. The CIT (A) concluded that the penalty order was fair and valid based on the facts and legal precedents. 4. The ITAT considered the appeal, noting that the penalty was imposed without specifying the charge of concealment or furnishing inaccurate particulars in the order. Referring to a relevant High Court case, the ITAT held that a penalty cannot be sustained without mentioning the specific charge. As the AO failed to specify the charge, the penalty was deemed unsustainable, and the appeal was partly allowed. 5. The ITAT refrained from considering the merits of the penalty appeal due to the technical ground of lack of specific charge invocation. Consequently, the penalty imposed by the AO and confirmed by the CIT (A) was deemed invalid, leading to the partial allowance of the assessee's appeal. 6. In conclusion, the ITAT set aside the penalty on the grounds of procedural irregularity, emphasizing the necessity of clearly specifying the charge when imposing penalties under section 271(1)(c) of the Income Tax Act, 1961. The judgment highlights the importance of procedural compliance in penalty assessments to ensure the validity and sustainability of such penalties.
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