2017 (6) TMI 396 - AT - Income Tax

Penalty u/s 271(1)(c) - invalid notice - defective show cause notice - Held that - We find that the penalty notice dt.30-12-2012 u/s 274 r.w.s 271(1)(c) of the Act at page no-1 does not specify the charge of offence committed by the assessee i.e whether the assessee had concealed the particulars of income or it had furnished inaccurate particulars of income. Even the column have without reasonable cause failed to comply with the notice u/s. 142(1)/143(2) of Income-tax Act, 1961 is also not struck off. Except the address of the assessee, assessment year and signature of the AO, nothing is struck off in the notice. Hence the said notice is to be held as defective. See CIT vs SSA S Emerald Meadows 2015 (11) TMI 1620 - KARNATAKA HIGH COURT - Decided in favour of assessee.

Summary

Issues Involved:
Confirmation of penalties under section 271(1)(c) of the Income Tax Act for assessment years 2008-09 and 2009-10 by the CIT(A) and the subsequent appeal by the Assessee challenging the penalties.

Detailed Analysis:

1. Issue of Penalty Confirmation:
The appeals by the Assessee arose from orders of the CIT(A) confirming penalties imposed by the AO under section 271(1)(c) of the Act for the assessment years 2008-09 and 2009-10. The primary issue was whether the CIT(A) was justified in upholding the penalties in the given circumstances.

2. Background and Facts:
A search and seizure operation was conducted at various premises, leading to the issuance of a notice under section 153A of the Act to the Assessee. The Assessee filed the return of income stating sources of income as salary, house property, and business. The AO treated the filed return as undisclosed income due to failure to file the return within the due date under section 139 of the Act.

3. Penalty Imposition and CIT(A) Confirmation:
Subsequently, penalties were imposed by the AO for both assessment years. The CIT(A) confirmed the penalties, citing the non-Sikkimese status of the Assessee and the delayed filing of returns post the search operation. The CIT(A) referred to the deeming penal explanation under section 271(1)(c) to justify the penalties.

4. Defective Penalty Notice and Legal Precedents:
The Assessee argued that the penalty notice did not specify the charge of offense committed, rendering it defective. Citing legal precedents, including a judgment by the Hon'ble Karnataka High Court, the Assessee contended that penalties based on such defective notices were not valid.

5. Judicial Precedents and Cancellation of Penalties:
The Tribunal considered the legal precedents, including the judgment of the Hon'ble Karnataka High Court and the subsequent dismissal of the Special Leave Petition by the Hon'ble Supreme Court. Following these precedents, the Tribunal canceled the penalties imposed by the AO and confirmed by the CIT(A) for both assessment years, thereby allowing the Assessee's appeals.

In conclusion, the Tribunal canceled the penalties imposed under section 271(1)(c) for the assessment years 2008-09 and 2009-10, based on the defective penalty notice and relevant legal precedents, ultimately ruling in favor of the Assessee.