2023 (4) TMI 373 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice u/s 274 - Non specification of charges against the assessee for visiting with penalty - HELD THAT - It is very debatable issue across the country, whether penalty could be imposed upon an assessee in the absence of any specific charge in the show-cause notice issued u/s 274 r.w.s. 271(1)(c) of the Income Tax Act. AO is required to specify the charge on which an assessee has to give explanation, namely whether penalty is to be imposed upon the assessee for concealment of income or for furnishing of inaccurate particulars. In the judgments cited before us, this question has been answered in favour of the assessee, i.e. in case, the charge is not specified in the show-cause notice, then penalty would not be imposable upon the assessee. Thus we are of the view that penalty imposed upon the assessee is not sustainable, it is deleted. Appeal of the assessee is allowed.

Summary

Issues involved: Appeal against penalty imposed u/s 271(1)(c) of the Income Tax Act for A.Y. 2013-14.

Summary:

Issue 1: Lack of specificity in show-cause notice

The assessee appealed against the penalty imposed under section 271(1)(c) of the Income Tax Act, contending that the Assessing Officer did not specify the charges in the show-cause notice. The Counsel for the assessee argued that the lack of specific charges in the notice made it debatable whether the penalty could be imposed. The Tribunal noted that the Assessing Officer is required to specify the charge for which an explanation is required from the assessee, whether for concealment of income or furnishing inaccurate particulars. Referring to relevant judgments, the Tribunal held that in the absence of specific charges in the show-cause notice, the penalty would not be sustainable. Consequently, the penalty of Rs.77,65,050/- imposed on the assessee was deemed not sustainable and was deleted.

Decision:

The Tribunal, after considering the arguments presented by both parties and examining the relevant show-cause notice, concluded that the penalty imposed on the assessee was not sustainable due to the lack of specificity in the notice. Therefore, the appeal of the assessee was allowed, and the penalty of Rs.77,65,050/- was deleted.