2018 (1) TMI 288 - AT - Income Tax

Levy of penalty u/s.271(1)(c) - invalid notice - non striking of irrelevant words from notice - Held that - Bare perusal of the notice issued u/s 271(1)(c) of the Act apparently goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act without specifying whether the assessee has concealed particulars of income or assessee has furnished inaccurate particulars of income , so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act. Thus having regard to the manner in which the Assessing Officer has issued notice under section 274 r.w.s. 271(1)(c) of the Act dated 31.12.2009 without striking off the irrelevant words, the penalty proceedings show a non-application of mind by the Assessing Officer and is, thus, unsustainable. - Decided in favour of assessee.

Summary

Issues Involved:
Levy of penalty u/s.271(1)(c) of the Act for concealment of income or furnishing inaccurate particulars of income.

Analysis:
The appeal was filed against the order of the CIT(A) confirming the penalty imposed by the Assessing Officer. The key issue was whether the penalty notice clearly specified if it was for concealment of income or furnishing inaccurate particulars. The authorized representative argued that the notice lacked clarity, citing a Supreme Court case where such ambiguity rendered the penalty order cancelable. The Departmental Representative did not counter this argument. The Tribunal found that the penalty of ?2,73,922 was imposed without specifying the nature of the offense in the notice, which is crucial for the assessee's defense. Referring to a High Court judgment, it was held that the penalty notice must indicate the specific charge to allow the assessee to respond appropriately.

The Tribunal highlighted the distinction between concealing income and furnishing inaccurate particulars under section 271(1)(c) of the Act. It referenced a Karnataka High Court case emphasizing the need for clarity in the penalty levy. Citing a Supreme Court case, it noted that issuing a notice without deleting irrelevant clauses indicates a lack of application of mind by the Assessing Officer. Given the legal precedents and the ambiguous penalty notice in this case, the Tribunal concluded that the penalty proceedings lacked proper consideration and were unsustainable. Drawing parallels with a Supreme Court decision, the Tribunal canceled the penalty order, aligning with the legal principles established.

The judgment emphasized the importance of clarity in penalty notices under section 271(1)(c) to inform the assessee of the specific charge. It underscored that a notice lacking specificity hampers the assessee's ability to respond effectively. By following legal precedents and principles, the Tribunal ruled in favor of the assessee, canceling the penalty order due to the Assessing Officer's failure to specify the nature of the offense in the notice.