2019 (1) TMI 111 - AT - Income Tax

Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that - The charge on which penalty has been levied has not been specified in the assessment order, as to whether the penalty has been levied for concealment of income or furnishing of inaccurate particulars of income with regard to the addition made by the A.O. This is followed by a notice for the levy of penalty u/s.271(1)(c) in which the specific limb identifying the charge has not been identified - due to absence of satisfaction and identification of the specific charge for levy of penalty, the penalty in this case deserves to be deleted on this account also. See M/S SSA S EMERALD MEADOWS 2016 (8) TMI 1145 - SUPREME COURT - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of penalty u/s. 271(1)(c) for assessment years 2008-09.

Analysis:
1. The assessing officer observed concealment of income post search proceedings, initiating penalty proceedings u/s. 271(1)(c). The AO made additions to the total income, leading to penalty initiation separately. However, the AO failed to specify the charge of concealment or furnishing inaccurate particulars in the notice issued, which was challenged by the appellant.

2. The CIT-A deleted the penalty, citing non-identification of the specific charge in the notice as per various court decisions. The CIT-A emphasized the need for specifying the charge under section 271(1)(c) in penalty notices to ensure validity. The CIT-A relied on precedents like SSA's Emerald Meadows and CIT Vs. Manjunatha Cotton and Ginning Factory to support the deletion of penalties for the assessment years in question.

3. The Tribunal analyzed the additions made by the AO and the subsequent deletion of those additions by the CIT-A and ITAT. The Tribunal found that the penalty on the returned income was not sustainable as concealment penalties cannot be levied if the income is disclosed in the return. Additionally, the penalty on the deleted addition was deemed invalid due to lack of specification in the assessment order and penalty notice, in line with court decisions like CIT vs. SSA's Emerald Meadows and others.

4. Considering the absence of satisfaction and identification of specific charges for penalty levy, the Tribunal upheld the deletion of penalties based on legal precedents and the requirement for proper charge identification in penalty proceedings. The Tribunal dismissed the appeal, affirming the deletion of penalties for the assessment years in question.

In conclusion, the Tribunal upheld the deletion of penalties u/s. 271(1)(c) for the assessment years 2008-09 due to the lack of specific charge identification in the penalty notices, in line with established legal principles and precedents.