2017 (5) TMI 1267 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - proof of concealment of particulars of income or furnishing inaccurate particulars of income - Held that - The department itself is not sure of the charge to be framed against the assessee u/s 271(1)(c). In this regard, it is now trite that the charge for levy of concealment penalty has to be specific, in the absence of which, no penalty u/s 271(1)(c) of the Act is leviable/sustainable. Reliance in this regard has correctly been placed on behalf of the assessee, on CIT vs. Manjunatha Cotton And Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT) wherein, it has been, inter alia, held that the assessee should know the grounds which he has to meet specifically, otherwise, the principles of natural justice are offended, else no penalty can be imposed on the assessee. It is, thus, settled that the charge as to whether the assessee is guilty of furnishing inaccurate particulars of income, or of concealment thereof, has to be specific, otherwise no penalty is leviable or sustainable u/s 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues:
Assessment of concealment penalty under section 271(1)(c) of the Income Tax Act for assessment year 2006-07.

Detailed Analysis:
1. The appeal was against the penalty of ?3,72,800 imposed on the assessee under section 271(1)(c) of the Income Tax Act for assessment year 2006-07.
2. The assessee claimed a deduction under section 54F for investing ?14,10,500 in purchasing a residential plot, but the AO found discrepancies in the purchase details.
3. The AO added an amount to the total income of the assessee, leading to the penalty imposition.
4. The assessee raised an additional ground challenging the validity of the penalty notice under section 271(1)(c).
5. The AO believed that the assessee concealed income and issued a penalty notice accordingly.
6. The penalty order stated that the assessee furnished inaccurate particulars of income and concealed the true income.
7. The CIT(A) confirmed the penalty for furnishing inaccurate particulars of income.
8. The charge for the penalty was required to be specific, as per legal precedents.
9. The department's shifting stands on the charge against the assessee were noted.
10. Legal cases like "Manjunatha Cotton And Ginning Factory" and "MAK DATA" were cited to support the specific charge requirement for penalty imposition.
11. The inconsistency in the department's stand did not make the assessee aware of the exact charge against them.
12. The Delhi High Court case "CIT vs. Zoom Communication Pvt. Ltd." was distinguished as the claim made by the assessee was found to be bona fide.
13. The penalty was cancelled based on the grievance raised by the assessee regarding the lack of specificity in the charge.
14. The penalty in both appeals was cancelled as the facts and legal arguments were similar.

This detailed analysis of the judgment highlights the key issues, arguments, and legal precedents involved in the assessment of the concealment penalty under section 271(1)(c) of the Income Tax Act for the relevant assessment year.