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2022 (1) TMI 889 - AT - Income TaxPenalty u/s. 271(1)(c) - Non mentioning of specific charge - Bogus purchases - HELD THAT - We find that in this case the penalty notice does not identify the charge against the assessee as to whether the notice is meant for the charge against the assessee of furnishing inaccurate particulars of income or concealment of income warranting levy of penalty u/s. 271(1)(c) of the I.T.Act. . As relying on Mohammed Farhan A. Shaikh 2021 (3) TMI 608 - BOMBAY HIGH COURT we find that the notice in this also is an omnibus show-cause notice as it does not strike off/delete the inappropriate/irrelevant/not applicable portion. Such a generic notice betrays a nonapplication of mind. Hence the penalty levied pursuant to such a notice is not legally sustainable in law. Hence following the aforesaid precedent from the Full Bench of the Hon ble Jurisdictional High Court we hold that the Assessing Officer was bereft of valid jurisdiction as the notice issued to assessee is unsustainable in law. The penalty levied is without jurisdiction on account of non identification of charges in the penalty notice - Decided in favour of assessee.
Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the I.T. Act. 2. Specificity of the charge in the penalty notice. 3. Validity of the penalty notice issued by the Assessing Officer. Detailed Analysis: 1. Confirmation of Penalty under Section 271(1)(c) of the I.T. Act: The primary issue in this case is the confirmation of a penalty of ?10,32,450 under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer (AO) had imposed a 100% disallowance for bogus purchases without doubting the sales, which led to the penalty. The Commissioner of Income Tax (Appeals) [CIT(A)] granted partial relief but confirmed the penalty. The assessee contested the penalty on the grounds that the notice issued did not specify the charge for which the penalty proceedings were initiated. 2. Specificity of the Charge in the Penalty Notice: The assessee argued that the penalty notice did not specify whether the charge was for furnishing inaccurate particulars of income or concealment of income. This lack of specificity was claimed to be a violation of the principles laid out in the case of Mohammed Farhan A. Shaikh Vs. PCIT (125 taxmann.com 253), where the Hon'ble Bombay High Court held that the penalty notice must clearly identify the charge against the assessee. The Tribunal noted that the notice in question was an omnibus show-cause notice, failing to strike off the irrelevant portions, thereby not conveying the specific charge to the assessee. 3. Validity of the Penalty Notice Issued by the Assessing Officer: The Tribunal examined the validity of the penalty notice based on the precedent set by the Hon'ble Bombay High Court. It was found that the notice did not meet the legal requirements as it was vague and did not specify the exact charge, thus betraying non-application of mind. The Tribunal referred to various judgments, including the Full Bench decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax and the Supreme Court's judgment in Dilip N. Shroff, which emphasized that a penalty notice must be precise and unambiguous. The Tribunal concluded that the penalty levied pursuant to such a generic notice is not legally sustainable. Conclusion: The Tribunal held that the penalty notice issued to the assessee was invalid due to its failure to specify the charge, thereby lacking jurisdiction. Consequently, the penalty levied was quashed. The Tribunal did not engage in the merits of the case as the primary issue of jurisdiction rendered it unnecessary. The adjudication applied mutatis mutandis to all the appeals for different assessment years, leading to the partial allowance of the appeals by the assessee. The judgment was pronounced in the open court on 18.01.2022.
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