2024 (2) TMI 1039 - AT - Income Tax

Penalty u/s 271(1)(c) - allegation of defective notice u/s 274 - charge has not been specified in the notice - Non-striking off of the irrelevant part - HELD THAT - The charge has not been specified and it is an omnibus notice. In such circumstances, in the case of Sahara India Life Insurance Co. Ltd 2019 (8) TMI 409 - DELHI HIGH COURT has held that the penalty order passed is liable to be quashed on account of this defect which is fatal. We further note that in the case of Mr. Mohd. Farhan A. Shaikh 2021 (3) TMI 608 - BOMBAY HIGH COURT has held that no specification of charge in the penalty notice leads to same becoming void and penalty on that count is to be deleted - Decided in favour of assessee.

Summary

Issues Involved: Appeal against penalty under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 2012-13 due to delay in filing, defective notice specifying charge.

Delay in Filing Appeal:
The appeal was filed with a delay of 114 days, attributed to waiting for the outcome of an application before the Income Tax Settlement Commission (ITSC) related to an amount taken in the name of the assessee as an accommodation entry. The ITSC's decision was received on 23.06.2023, following which the appeal was filed on 11.07.2023 within the statutory time period. The Tribunal condoned the delay after hearing both parties.

Defective Notice Specifying Charge:
The appellant contended that the notice issued under section 274 read with section 271(1)(c) of the Act was defective as it did not specify the charge. Citing various decisions, including the case of PCIT vs. Sahara India Life Insurance Co. Ltd., it was argued that the penalty order should be quashed due to this defect.

Judgment:
Upon review, it was observed that the penalty notice indeed lacked a specified charge, rendering it an omnibus notice. Referring to legal precedents, including the case of Sahara India Life Insurance Co. Ltd. and Mr. Mohd. Farhan A. Shaikh vs. ACIT, it was noted that the absence of a specified charge in the penalty notice renders the order liable to be quashed. The Tribunal, in line with the precedents, set aside the orders of the authorities below and ruled in favor of the assessee, directing the deletion of the penalty.

Result:
The appeal of the assessee was allowed, and the penalty under section 271(1)(c) was directed to be deleted. The order was pronounced in the open court on 19th February 2024.