2025 (2) TMI 971 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice u/s 274 - assessee offered undisclosed income during search operation - HELD THAT - The assessee contested penalty order u/s 271(1) (c) on alleged defective notice issued u/s 274 of the Act. The Bench in the case of Raj Kumar Agrawal 2024 (8) TMI 1531 - ITAT RANCHI after taking note of the facts of the case and proposition of law as emerging from cited decisions above cancelled all the penalty orders. Since the issue in hand which basically hinges on the alleged defective show cause notice issued in terms of section 274 of the Act we direct the AO to delete the penalty imposed on the assessee. Decided in favour of assessee.

Summary

The appeals by the assessee were directed against the orders of the Commissioner of Income Tax (Appeals) for the Assessment Year 2015-16. The primary issue was whether a penalty under section 271(1)(c) should have been levied on the assessee. The appeals were clubbed and heard together due to common facts and grounds. The key grounds of appeal raised by the assessee included challenging the initiation of penalty proceedings, alleging defects in the notice issued for penalty, and arguing that no concealment or inaccurate particulars of income were involved.The Tribunal noted a one-day delay in filing the appeal, which was condoned as not inordinate. The assessee contended that the penalty was imposed based on a defective notice under section 274 of the Income Tax Act, which did not specify whether it was for concealment of income or furnishing inaccurate particulars. The assessee relied on case law to support the argument that such a defective notice rendered the penalty proceedings null and void.The Tribunal considered the arguments presented by the revenue and the assessee, along with relevant legal provisions and case law. It referenced a previous decision where penalties were canceled due to similar defects in the notice. The Tribunal highlighted the importance of specific charges in penalty notices to ensure the principles of natural justice are followed.Based on the precedent and legal principles, the Tribunal concluded that the defective show cause notice issued by the Assessing Officer invalidated the penalty proceedings. Therefore, the penalty imposed on the assessee was set aside, and the Assessing Officer was directed to delete the penalty.In summary, the Tribunal allowed both appeals by the assessee, emphasizing the necessity for clear and specific charges in penalty notices to uphold the principles of natural justice and ensure fair proceedings. The decision was based on established legal principles and precedents, highlighting the importance of procedural fairness in tax penalty cases.