2018 (10) TMI 803 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - non specification of charge - Held that - From the perusal of the notice u/s 274 r.w.s. 271(1)(c ) of the Act dated 5.3.2014 we observe that both the charges have been mentioned in the notice i.e. the assessee have concealed the particulars of income or furnished inaccurate particulars of such income . View taken by the coordinate bench in the case of Keti Sangam Infrastructure (I) Ltd and others V/s DCIT 2018 (6) TMI 1525 - ITAT INDORE holding that where the specific charge has not been mentioned in the notice u/s 274 r.w.s. 271(1)(c) of the Act i.e. when one of the charge is not striked off then such notice did not satisfy the requirement of law, therefore the penalty proceedings becomes void ab initio. - Decided in favour of assessee.

Summary

Issues:
Validity of penalty under section 271(1)(c) of the Income Tax Act based on the notice issued to the assessee.

Detailed Analysis:
The appeal before the Appellate Tribunal pertained to the assessment year 2010-11 and challenged the penalty of ?71,500 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act. The assessment was conducted after a search and seizure operation under section 132 of the Act in the case of a specific group. The penalty was levied on the disallowance of depreciation made during the assessment. The assessee contended that the notice issued under section 274 r.w.s. 271(1)(c) was erroneous as it did not specify whether the assessee had concealed income particulars or furnished inaccurate income particulars. The assessee relied on a Co-ordinate Bench judgment and a High Court judgment to support this argument.

The Departmental Representative supported the lower authorities' decision to uphold the penalty. The Tribunal considered the validity of the penalty in question. The notice issued to the assessee under section 274 r.w.s. 271(1)(c) mentioned both charges of concealing income particulars and furnishing inaccurate income particulars. The assessee argued that the notice did not meet the legal requirement as it lacked a specific charge against the assessee. The Tribunal referred to a judgment by the jurisdictional High Court and decisions by other courts to support its decision.

The Tribunal cited the judgment of the jurisdictional High Court in a similar case and referred to decisions by other High Courts and the Apex Court. It concluded that the notice did not meet the legal requirements as it did not specify the charges against the assessee. Relying on previous judgments, the Tribunal held that the penalty proceedings were void ab initio due to the defective notice. Consequently, the Tribunal set aside the order of the lower authorities and deleted the penalty of ?71,500 imposed on the assessee. The appeal of the assessee was allowed, and the penalty was removed.

In conclusion, the Appellate Tribunal, after thorough consideration of legal precedents and the specific circumstances of the case, found the penalty notice to be defective due to the lack of specific charges against the assessee. Relying on established legal principles, the Tribunal deemed the penalty proceedings void and consequently deleted the penalty imposed on the assessee.