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2024 (4) TMI 456 - AT - Income TaxPenalty levied u/s 271(1)(c) - non assigning specific charge - defective notice u/s 274 - Counsel submits that the AO did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income - HELD THAT - The notice issued by the AO was bad in law if it did not specify under which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Ratio of the full bench decision in MR. MOHD. FARHAN A. SHAIKH 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus, we hold that the penalty order passed u/s. 271(1)(c) of the Act by the AO is bad in law and accordingly the penalty order passed u/s. 271(1)(c) is quashed. Decided in favour of assessee.
Issues Involved:
1. Validity of the penalty order due to non-specification of the exact charge u/s 271(1)(c) of the Act. 2. Legal precedents regarding the requirement to specify the exact charge in penalty notices. Summary: Issue 1: Validity of the penalty order due to non-specification of the exact charge u/s 271(1)(c) of the Act. The assessee challenged the penalty order on the grounds that the penalty proceedings were initiated and levied without specifying the exact charge under section 271(1)(c) of the Act. The AO did not clarify whether the penalty was for "concealment of particulars of income" or "furnishing of inaccurate particulars of income". The Tribunal observed that the penalty notice issued u/s 274 r.w.s. 271(1)(c) was mechanical and vague, failing to specify the exact limb of the charge. Issue 2: Legal precedents regarding the requirement to specify the exact charge in penalty notices.The Tribunal referenced several legal precedents to support its decision. The Hon'ble Bombay High Court in Mr. Mohd. Farhan A. Shaikh vs. ACIT [434 ITR 1] held that an omnibus notice suffers from vagueness and does not meet the statutory requirement. The Hon'ble Delhi High Court in PCIT Vs. Sahara India Life Insurance Co. Ltd. [432 ITR 84] and PCIT Vs. Gopal Kumar Goyal [153 taxmann.com 534] upheld that a penalty notice must specify the exact charge under section 271(1)(c) to be valid. In conclusion, the Tribunal held that the penalty order passed u/s 271(1)(c) was bad in law due to the failure to specify the relevant limb of the charge in the notice. Consequently, the penalty order for AY 2014-15 was quashed, and the appeal of the assessee was allowed. Order pronounced in the open court on 09.04.2024.
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