2019 (4) TMI 619 - AT - Income Tax

Penalty u/s 271(1)(c) - non specific finding - AO used expression or in between the concealment of income/furnishing inaccurate particulars - HELD THAT - In the case of Snita Transport P.Ltd. 2012 (12) TMI 981 - HIGH COURT OF GUJARAT as observed that while issuing notice under section 271(1)(c) r.w.s. 274 provide an opportunity to explain as to why penalty be not imposed. If an Assessing Officer used expression or in between the concealment of income/furnishing inaccurate particulars, then that show cause notice be not fatal to the proceedings, but while visiting the assessee with penalty the ld.AO ought to have recorded a specific finding, for which breach, he has visited the assessee with penalty i.e. whether he has visited the assessee with penalty for concealment of income or furnishing inaccurate particulars of income. In the penalty order he cannot use both the expression. As AO was not specific in his finding for which he has visited the assessee with penalty we allow this appeal of the assessee and quash the penalty order. - Decided in favour of assessee

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income Tax Act for the Assessment Year 2008-09.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad revolves around the imposition of a penalty by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act. The primary contention is that the ld.CIT(A) erred in confirming the penalty of ?4,55,318 imposed by the AO without specifying whether it was for concealing particulars of income or furnishing inaccurate particulars of income. The Hon'ble jurisdictional High Court's decision in the case of Snita Transport P.Ltd. Vs. ACIT is cited, emphasizing the necessity for a clear finding by the AO on the nature of the penalty. The AO's penalty order lacked specificity, as it did not conclusively state the basis for imposing the penalty, failing to differentiate between concealing income and furnishing inaccurate particulars.

Upon careful review of the records and the legal precedents, the Tribunal noted that the AO's ambiguity in specifying the grounds for the penalty contradicted the established legal principles outlined by the Hon'ble jurisdictional High Court. The Court's ruling emphasized that while the notice for penalty may use the term "and/or," the final penalty order must unambiguously state the specific grounds for imposing the penalty. In this case, the AO's failure to clearly identify whether the penalty was for concealing income or furnishing inaccurate particulars rendered the penalty order unsustainable according to the legal standards set forth by the High Court.

Consequently, the Appellate Tribunal found that the penalty order did not align with the legal requirements established by the Hon'ble jurisdictional High Court and was therefore unsustainable. The Tribunal allowed the appeal of the assessee, thereby quashing the penalty order imposed by the AO. The decision was pronounced in the Open Court on 8th April 2019, with the appeal of the assessee being allowed, thereby setting aside the penalty.