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2022 (4) TMI 172 - AT - Income TaxPenalty u/s 271(1)(c) - Non specification of clear charge - as argued assessee is not conveyed in clear terms the specific default for which penalty under the said statutory provision was sought to be imposed - HELD THAT - Failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on her, i.e, by failing to strike-off the irrelevant default in the SCN , dated 10.07.2014, had left her guessing of the default for which she was being proceeded against for. We, thus held A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which she was being proceeded against, therefore, the penalty under Sec. 271(1)(c).- Decided in favour of assessee.
Issues:
Appeal against penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. Analysis: 1. The appeal was filed against the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. The appellant contested the penalty amount and the validity of the penalty proceedings initiated. The appellant argued that the penalty was confirmed without proper consideration of facts and circumstances, including the origin of the income computation. The appellant also challenged the legality of the penalty proceedings, citing deficiencies in the notice issued by the Assessing Officer. 2. The appellant filed the income tax return for the assessment year 2009-10, declaring a total income. Subsequently, the case was reopened under section 147 of the Act, leading to an assessment with additional income from LTCG and undisclosed investments. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for concealing income and furnishing inaccurate particulars. A show cause notice was issued, and the penalty was imposed for alleged concealment and inaccuracies. 3. The Tribunal examined the validity of the penalty proceedings, focusing on the show cause notice issued by the Assessing Officer. It was observed that the notice failed to specify the exact default for which the penalty was being imposed. The Tribunal emphasized that the two defaults under section 271(1)(c) - concealment of income and furnishing inaccurate particulars - are distinct and must be clearly communicated to the assessee for a fair opportunity to respond. 4. Referring to relevant judicial pronouncements, the Tribunal highlighted the importance of specifying the charge in the show cause notice for penalty proceedings. Failure to do so was deemed a violation of natural justice and statutory requirements. The Tribunal cited cases where courts held notices lacking specificity as bad in law. The Tribunal also noted that a similar view was taken by other High Courts and Tribunals in cases involving unclear show cause notices. 5. Ultimately, the Tribunal concluded that the Assessing Officer's failure to specify the default in the show cause notice deprived the assessee of a fair opportunity to defend against the penalty. As a result, the penalty imposed under section 271(1)(c) was deemed invalid and quashed. The Tribunal set aside the penalty amount, emphasizing the importance of adhering to procedural requirements and ensuring clarity in penalty proceedings. 6. Since the penalty was quashed due to jurisdictional issues, the Tribunal did not delve into the merits of the case. The appeal of the assessee was allowed based on the observations made regarding the procedural irregularities in the penalty imposition process. The Tribunal's decision to nullify the penalty was grounded in upholding the principles of natural justice and statutory obligations. This detailed analysis highlights the procedural and jurisdictional aspects of the case, focusing on the validity of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961. The Tribunal's decision underscores the significance of clear communication and adherence to legal requirements in penalty imposition, ensuring fairness and due process for the assessee.
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