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2024 (8) TMI 753 - AT - Income TaxPenalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge - assessee has made wrong claim of exemption u/s 10(23C) (vi) in absence of any valid registration - HELD THAT - As in notice it is not specified under which limb the penalty is initiated whether for concealing the particulars of income or for furnishing the inaccurate particulars of such income, and in our view the said notice suffers from incurable defect which goes to the root of the matter and the same is not legally valid. The case of the assessee is supported by the decision of CIT vs SSA Emerald Meadows 2016 (8) TMI 1145 - SC ORDER and in the case of CIT vs. Manjunatha Cotton and Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT - Decided in favour of assessee.
Issues:
1. Condonation of delay in filing the appeal. 2. Validity of penalty imposed under section 271(1)(c) of the Income Tax Act. 3. Failure to specify the grounds for penalty initiation in the notice. 4. Legal validity of the penalty notice. 5. Judicial pronouncements on concealment of income and furnishing inaccurate particulars. 6. Decision on the appeal and deletion of the penalty. Condonation of Delay: The appellant filed an appeal against the penalty imposed under section 271(1)(c) of the Income Tax Act, which was delayed by five days. The appellant explained that the delay was due to a misunderstanding regarding the jurisdiction of the tribunal. The delay was condoned, and the appeal was admitted for hearing on merits. Validity of Penalty Imposed: The penalty was imposed by the Assessing Officer (AO) for the claim of exemption under section 10(23C) (vi) of the Act, treating it as a willful act of concealment. The CIT (A) upheld the penalty, stating that the appellant made a wrong claim without valid registration. The Tribunal examined the penalty notice and found it legally invalid as it did not specify the grounds for penalty initiation, leading to the deletion of the penalty. Failure to Specify Grounds for Penalty Initiation: The AO failed to specify in the penalty notice whether the penalty was for concealment of income or furnishing inaccurate particulars. This defect was considered incurable and rendered the penalty invalid based on judicial precedents emphasizing the importance of clarity in penalty notices. Legal Validity of Penalty Notice: The Tribunal referred to judicial decisions highlighting the distinction between concealment of income and furnishing inaccurate particulars. Citing relevant case laws, the Tribunal concluded that the penalty notice lacking specificity on the grounds for penalty initiation was legally invalid, leading to the deletion of the penalty. Judicial Pronouncements on Concealment of Income: The Tribunal relied on judgments such as CIT vs. SSA Emerald Meadows and CIT vs. Manjunatha Cotton and Ginning Factory to support the decision to delete the penalty. Additionally, the Tribunal referenced a Bombay High Court judgment emphasizing the necessity for clarity in penalty notices. Decision on the Appeal and Deletion of Penalty: The Tribunal, based on the invalidity of the penalty notice and legal precedents, allowed the appeal, deleted the penalty imposed under section 271(1)(c) of the Act, and declared all other grounds of appeal as academic. The appeal was allowed, and the penalty was deleted. This judgment highlights the importance of clear and specific penalty notices in income tax proceedings and the legal consequences of failing to adhere to such requirements.
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