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2019 (4) TMI 773 - AT - Income TaxPenalty u/s 271(1)(c) - non specification of exact charge - whether the show cause is issued to the assessee for concealment of particulars of income or for furnishing inaccurate particulars of income? - HELD THAT - Bare perusal of the notice issued u/s 27I(1)(c) apparently goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) 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. The penalty provisions of section 27l(1)(c) are attracted where the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it was imperative for the Assessing Officer to strike- off the irrelevant limb so as to make the assessee aware as to what is the charge made against him so that he can respond accordingly. See COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee
Issues Involved:
Levy of penalty under section 271(1)(c) of the Income Tax Act based on the notice issued by the Assessing Officer. Analysis: The appeal before the Appellate Tribunal ITAT Delhi involved the sole issue of confirming the penalty of ?43,260 imposed by the Assessing Officer under section 271(1)(c) of the Act. The Assessing Officer had completed the assessment for the relevant year, making an addition to the income from undisclosed sources. The penalty was imposed for concealment of income, which was later confirmed by the Ld. CIT(A). The authorized representative of the assessee argued that the penalty notice did not specify whether it was for concealment of income or furnishing of inaccurate particulars, citing a Supreme Court judgment. The Departmental Representative relied on various case laws to support the penalty proceedings based on the claim made in the return being ex-facie bogus. Upon hearing the submissions and reviewing the lower authorities' orders, the Tribunal found that the penalty was levied without specifying the nature of the offense in the notice issued by the Assessing Officer. The Tribunal referred to a judgment by the Hon'ble Apex Court in a similar case where the penalty notice was deemed invalid due to lack of specificity. The Tribunal dismissed the appeal, citing that no substantial question of law arose, as the matter was covered by a Division Bench judgment. The notice issued under section 271(1)(c) was considered invalid as it did not specify the relevant limb of the section for initiating penalty proceedings. The Tribunal emphasized the importance of clearly specifying whether the penalty was for concealment of income or furnishing inaccurate particulars, as the two carry different meanings. Citing legal precedents, including judgments by the Karnataka High Court and the Supreme Court, the Tribunal concluded that the Assessing Officer's failure to strike off irrelevant clauses in the notice indicated a lack of application of mind. Following the legal position established in previous cases, the Tribunal canceled the penalty imposed by the Assessing Officer and allowed the assessee's appeal based on the similarity of facts to the case before the Hon'ble Supreme Court. In conclusion, the Tribunal canceled the penalty of ?43,260 imposed under section 271(1)(c) due to the Assessing Officer's failure to specify the nature of the offense in the penalty notice, following legal precedents emphasizing the importance of clarity in such notices. Judgment: The appeal filed by the assessee was allowed, and the penalty order was canceled by the Tribunal.
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