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Dispute over cancellation of penalty under section 271(1)(c) of the IT Act, 1961 by the CIT(A) based on lack of opportunity granted to the assessee. Analysis: The judgment revolves around the dispute raised by the Revenue regarding the cancellation of a penalty of Rs. 34,100 imposed by the ITO under section 271(1)(c) of the IT Act, 1961. The assessment year in question is 1975-76, where the ITO added two cash credits without confirmatory letters, leading to the penalty imposition. However, the assessment order did not mention the penalty for concealment under section 271(1)(c) initially. Subsequently, a show cause notice was issued, but the CIT(A) canceled the penalty citing lack of opportunity granted to the assessee as required under section 274(1). The departmental representative argued that the grant of opportunity is procedural, citing cases such as Guduthur Bros. vs. ITO, Ram Gopal Neotia vs. ITO, and Addl. CIT vs. Boina Surenna. On the other hand, the assessee's counsel contended that no penalty proceedings were initiated during the assessment, emphasizing the lack of mention of penalty initiation in the assessment order. The CIT(A) based the cancellation on the absence of proper opportunity granted to the assessee, as mandated by section 274(1). The Tribunal analyzed the facts and submissions, concluding that the notice given to the assessee regarding the cash credits did not amount to the initiation of penalty proceedings under section 271(1)(c). The subsequent show cause notice lacked proper opportunity as it was served on the same day as the hearing, violating the requirements of section 274(1). The Tribunal rejected the departmental representative's reliance on previous cases, highlighting the distinctions in facts and emphasizing the time-barred nature of the penalty proceedings in the present case. Ultimately, the Tribunal upheld the CIT(A)'s decision to cancel the penalty, dismissing the Revenue's appeal.
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