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2018 (5) TMI 741 - AT - Income TaxPenalty u/s 271(1)(c) - non specification of charge - Held that - Notice issued by the AO u/s. 271(1) read with Section 274 of the Act is bad in law as it does not specify which limb of section 271(1) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law. SEE CIT & Anr. Vs. M/s SSA s Emerald Meadows 2016 (8) TMI 1145 Supreme Court. - Decided in favour of assessee.
Issues Involved:
1. Legality of the initiation of penalty proceedings under Section 271(1)(c) of the Income Tax Act. 2. Validity of the penalty notice issued by the Assessing Officer (AO). 3. Compliance with legal precedents concerning the specificity of charges in penalty notices. Issue-wise Detailed Analysis: 1. Legality of the initiation of penalty proceedings under Section 271(1)(c) of the Income Tax Act: The primary issue raised by the Assessee was the legality of the penalty proceedings initiated under Section 271(1)(c) without specifically mentioning whether the penalty was for "concealment of income" or "furnishing wrong particulars of income." The Assessee argued that such initiation was illegal, erroneous, and without jurisdiction, citing the Hon’ble Supreme Court's judgment in NTPC vs. CIT and M/s Jute Corporation of India Ltd. vs. CIT. The tribunal found the additional ground raised by the Assessee to be legal in nature, covered by various decisions of the Coordinate Benches of the ITAT and the Hon’ble Delhi High Court, and admitted it in the interest of justice. 2. Validity of the penalty notice issued by the Assessing Officer (AO): The Assessee contended that the notice dated 09.12.2015 issued by the AO was a standard format where the AO merely ticked the option of "concealment of income or furnishing inaccurate particulars of such income," without specifying the exact charge. The tribunal reviewed the notice and found that it did not specify which limb of Section 271(1)(c) the penalty proceedings were initiated under. This lack of specificity rendered the notice bad in law, as established by precedents from the Karnataka High Court in CIT & Anr. Vs. M/s SSA’s Emerald Meadows and the Supreme Court in the same case. 3. Compliance with legal precedents concerning the specificity of charges in penalty notices: The tribunal referenced multiple decisions to support its view that the penalty notice must clearly specify whether the penalty is for "concealment of particulars of income" or "furnishing inaccurate particulars of income." Key cases cited included: - CIT & Anr. Vs. M/s SSA’s Emerald Meadows: The Karnataka High Court and the Supreme Court held that a notice under Section 274 read with Section 271(1)(c) must specify the exact charge. - Ashok Kumar Chordia vs. DCIT: The ITAT, New Delhi, found that a penalty notice ticking both options was contrary to law. - Rajender Jain vs. ACIT: The ITAT, New Delhi, reiterated that a penalty notice must clearly state the specific charge, and a vague notice renders the penalty unsustainable. The tribunal concluded that the AO's notice was contrary to the provisions of law and thus, the penalty was not sustainable. Following the precedents, the tribunal deleted the penalty and decided in favor of the Assessee, rendering other grounds academic. Conclusion: The appeal filed by the Assessee was allowed, and the penalty imposed under Section 271(1)(c) was cancelled. The tribunal emphasized the necessity of specificity in penalty notices, aligning with established legal precedents. Order Pronounced: The order was pronounced on 02/05/2018.
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