2023 (5) TMI 913 - AT - Income Tax

Penalty u/s 271(1)(c) - Whether assessee furnished inaccurate particulars of income and concealed his income? - defective notice u/s 274 - mandation of specification of charge - curable defect u/s 292BB - HELD THAT - The penalty could be levied only for a specific charge. Furnishing of inaccurate particulars of income would arise in a situation where the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are found to be incorrect whereas concealment of particulars of income would mean that the assessee has concealed the income and has not reflected certain income at all in its return of income. For each of the addition Ld. AO has to specify as to which limb was applicable to the facts of the case and it could not be left to mere presumption or guess work of the assessee. Framing of specific charges is sine-qua-non for levy of penalty since the assessee must be put to allegations for which the penalty was being levied. In the absence of such a specific charge the penalty would be bad in law and the same is not a curable defect u/s 292BB. This position has been settled in numerous binding judicial precedents. Considering the same we would have no hesitation in holding that these two charges are quite different charges and carry different connotation / meaning. The non-framing of specific charge would make the notice defective. It did not specify the ground under which the penalty is proposed. The notice does not delete the appropriate words and in the assessment order as well as in the penalty order both limbs have been pressed against the assessee. Therefore we would hold that the notice was issued in a mechanical manner and hence not sustainable in the eye of law. We would hold that there was failure on the part of Ld. AO to frame specific charge against the assessee and accordingly the penalty would not be sustainable in the eyes of law. By deleting the impugned penalty we allow the appeal.

Summary

Issues Involved:
1. Validity of Show-Cause Notice for Penalty Proceedings.
2. Specific Charge for Penalty Proceedings.
3. Opportunity of Hearing and Legal Requirements.

Summary:

1. Validity of Show-Cause Notice for Penalty Proceedings:
The assessee challenged the penalty under Section 271(1)(c) on the grounds that the show-cause notice was invalid and lacked jurisdiction. The notice did not specify the exact charge against the assessee, which was argued to vitiate the penalty proceedings. The Tribunal noted that the notice issued was vague and did not delineate whether the penalty was for "concealment of income" or "furnishing inaccurate particulars of income," leading to a lack of clarity and precision required by law.

2. Specific Charge for Penalty Proceedings:
The Tribunal emphasized that concealment of income and furnishing inaccurate particulars of income are distinct charges with different connotations. The failure to specify the exact charge in the show-cause notice and the penalty order rendered the proceedings defective. The Tribunal held that framing a specific charge is essential for the validity of penalty proceedings, and the absence of such specificity makes the penalty order unsustainable.

3. Opportunity of Hearing and Legal Requirements:
The Tribunal rejected the argument that the opportunity of hearing could be given orally or through informal means. It stressed that the statutory requirement under Section 274 necessitates a written notice specifying the charge against the assessee. The Tribunal concluded that the vague and omnibus nature of the notice issued to the assessee did not meet the legal standards for providing a reasonable opportunity of being heard, thereby violating principles of natural justice.

Conclusion:
The Tribunal held that the penalty proceedings were vitiated due to the failure to frame a specific charge and the issuance of a vague show-cause notice. Consequently, the penalty imposed under Section 271(1)(c) was deleted, and the appeal was allowed in favor of the assessee.