2022 (4) TMI 489 - AT - Income Tax

Penalty u/s 271 - Defective notice u/s 274 r.w.s. 271(1)(c) as issued as no specific charge was levelled against the assessee - HELD THAT - Revenue failed to level any specific charge against the assessee which has, therefore, vitiated the penalty proceedings from the very beginning itself. Therefore, since notice issued for levy of penalty is invalid and defective, penalty proceedings carried thereafter deserves to be quashed. We accordingly order so, allow the legal ground raised by the assessee

Summary

Issues:
Challenge to imposition of penalty under section 271(1)(c) of the Income Tax Act due to defective notice lacking specific charge.

Analysis:
The appeal before the Tribunal pertains to the Assessment Year 2009-10 against the order of the Commissioner of Income-tax (Appeals) dated 24.11.2021, arising from the assessment order framed under section 271(1)(c) of the Income Tax Act, 1961. The assessee challenged the penalty imposition, citing a defective notice lacking specific charges. The legal issue of the defective notice was raised, referring to a judgment of the jurisdictional High Court. The Department argued that this issue was not raised before the Commissioner of Income-tax (Appeals) and could not be raised for the first time before the Tribunal. However, the Tribunal admitted the legal ground for adjudication based on the Supreme Court's ruling that legal issues can be raised at any point.

During the assessment proceedings, a sum was deemed bogus and unexplained, leading to penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income. The notice issued by the Assessing Officer mentioned both limbs of section 271(1)(c), indicating uncertainty regarding the specific charge against the assessee. The Tribunal noted a similar case where the High Court held that a notice lacking a specific charge vitiates penalty proceedings. In line with this precedent, the Tribunal found the notice in the current case to be invalid and defective, leading to the quashing of penalty proceedings and the deletion of the imposed penalty. Consequently, the appeal filed by the assessee was allowed, and the penalty was removed.

In conclusion, the Tribunal's decision revolved around the challenge to the imposition of penalty under section 271(1)(c) due to a defective notice lacking specific charges. The Tribunal admitted the legal ground for adjudication based on the Supreme Court's ruling, ultimately ruling in favor of the assessee by quashing the penalty proceedings and deleting the imposed penalty.