2008 (2) TMI 542 - AT - Income Tax

Summary

Issues involved: Appeal against order u/s 263 of the IT Act for the assessment year 2005-06.

Grounds raised by the assessee:
1. Lack of proper opportunity u/s 263, violation of natural justice.
2. AO already considered and decided on the issues during penalty proceedings u/s 271(1)(c).

Assessee's arguments:
- CIT did not provide proper opportunity for hearing.
- CIT did not verify if notice was served to the assessee.
- CIT did not follow the requirements of s. 263.
- AO already found no penalty leviable based on Expln. 5(2) to s. 271(1)(c) and relevant case law.

Departmental Representative's stance:
Supports CIT's order and seeks dismissal of the appeal.

Key points from the judgment:
- CIT's order u/s 263 challenged for lack of proper opportunity given to the assessee.
- CIT's failure to verify service of notice and follow s. 263 requirements highlighted.
- Assessee offered additional income during search, which was later included in the return in response to notice u/s 148.
- AO found no penalty leviable based on Expln. 5(2) to s. 271(1)(c) and relevant case law.
- CIT's haste in passing the order without proper opportunity to the assessee noted.
- Tribunal sets aside CIT's order, allowing the appeal of the assessee.

This summary provides a detailed overview of the issues involved, the arguments presented by both parties, and the key points from the judgment, focusing on the lack of proper opportunity given to the assessee and the failure to follow the legal requirements under s. 263.