2022 (6) TMI 1053 - AT - Income Tax

Penalty imposed u/s 271(1)(c) - defective notice - non specification of clear charge - ambiguity in the satisfaction recorded as well as the reasons on which the Assessing Officer imposed penalty - HELD THAT - As in satisfaction recorded by the Assessing Officer in the Assessment Order, it is observed that Assessing Officer has stated that assessee has furnished inaccurate particulars of his income by concealing the true particulars of his income. Whereas, in the show-cause-notice issued under Section 274 read with Section 271(1)(c) of the Act on 31.12.2010, the Assessing Officer has not specified the charge for which he intended to impose penalty under Section 271(1)(c) of the Act by striking off the inappropriate words. On a reading of satisfaction recorded in the assessment order of the Assessing Officer and the observations in the penalty order passed under Section 271(1)(c) it is evident that the AO himself was not sure what is the exact offence committed by the assessee. Thus ambiguity in the satisfaction recorded as well as the reasons on which the Assessing Officer imposed penalty coupled with the fact that the show-cause-notice issued in the printed format does not specify the exact charge for which penalty under Section 271(1)(c) of the Act was imposed, it has to be held that the order imposing penalty is not valid. Appeal of assessee allowed.

Summary

Issues involved:
Appeal against penalty under Section 271(1)(c) of the Income-Tax Act, 1961 for the assessment year 2009-10.

Analysis:
The appellant, a resident company, filed its return of income for the assessment year declaring a loss which was subsequently revised twice. The Assessing Officer disallowed certain expenses claimed by the appellant and made additional additions to the income. Penalty proceedings were initiated under Section 271(1)(c) of the Act based on the disallowances and additions made. The Assessing Officer imposed a penalty which was upheld by the learned Commissioner (Appeals). The appellant contended that the penalty order was invalid as the specific charge for imposing the penalty was not mentioned in the show-cause notice. The appellant argued that there was no concealment of income or furnishing of inaccurate particulars. The Departmental Representative, however, argued that the Assessing Officer had clearly recorded the satisfaction for imposing the penalty. The Tribunal observed that the Assessing Officer's satisfaction and the charge for imposing the penalty were not clearly specified, leading to ambiguity. Citing legal precedents, the Tribunal held that the penalty order was not valid and proceeded to delete the penalty imposed under Section 271(1)(c) of the Act.

Conclusion:
The Tribunal allowed the appeal, pronouncing the order on 11th March, 2022.