2017 (11) TMI 1004 - AT - Income Tax

Penalty u/s 271(1)(c) - whether the notice issued by the Assessing Officer dated 27/10/2011 is valid or not? - Held that - From the reading of the notice, it is not clear whether Assessing Officer has initiated penalty proceedings for concealment of particulars of income or furnished inaccurate particulars. Therefore, the notice issued by the Assessing Officer is a vague notice and is liable to be quashed in the light of the decision of the Hon ble Jurisdictional High Court in the case of Smt. Baisetty Revathi (2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT) and also SSA s Emerald Meadows (2016 (8) TMI 1145 - SUPREME COURT). - Decided in favour of assessee.

Summary

Issues:
Validity of penalty notice under section 271(1)(c) - Whether notice specified the grounds of penalty clearly.

Analysis:

The appeal was against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2009-10. The Assessing Officer had determined the total income of the assessee at ?9,80,510/- and levied a penalty of ?2,07,237 under section 271(1)(c) of the Income Tax Act, 1961. The assessee contended that the notice issued by the Assessing Officer was vague, raising a legal issue that needed to be addressed. The Tribunal admitted the additional ground raised by the assessee, citing a Supreme Court decision that supported considering legal questions necessary for assessing tax liability. The Tribunal found that the notice issued by the Assessing Officer on 27/10/2011 was not clear whether it was for concealment of income or furnishing inaccurate particulars.

The Tribunal referred to a recent judgment by the Hon'ble Supreme Court and the Jurisdictional High Court, which emphasized the importance of specifying the grounds for penalty clearly in the notice. The Tribunal concluded that the notice issued by the Assessing Officer was vague and not valid. Citing a similar case, the Tribunal held that the notice must specify the grounds for penalty unequivocally and unambiguously. The Tribunal further stated that failure to strike off irrelevant columns in the notice rendered it invalid. Therefore, the penalty imposed by the Assessing Officer was canceled, following the legal precedents and decisions.

In summary, the Tribunal allowed the appeal filed by the assessee, holding that the notice issued under section 271 was invalid due to lack of clarity on the grounds for penalty. The decision was based on legal principles emphasizing the importance of specifying penalty grounds clearly to ensure the assessee's right to contest the proceedings effectively.