2019 (5) TMI 285 - AT - Income Tax

Penalty u/s. 271(1)(c) - Non specification of charge - defective notice - HELD THAT - Following the decision of Coordinate Bench of this Tribunal in the case of Jeetmal Choraria Vs. ACIT 2017 (12) TMI 883 - ITAT, KOLKATA where it is held that the show cause notice issued u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - the show cause notice u/s 274 does not strike out the inappropriate words - thus in these circumstances, we are of the view that imposition of penalty cannot be sustained - Decided in favor of assessee.

Summary

Issues:
Challenge to penalty u/s. 271(1)(c) of the Income-tax Act, 1961 for AY 2014-15 based on defective show cause notice.

Analysis:
The appeal challenged the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for concealment of income or furnishing inaccurate particulars of income. The appellant's counsel argued that the notice issued by the Assessing Officer did not specify the charge against the assessee, rendering it defective. The counsel relied on various judicial precedents, including decisions by the Hon'ble Karnataka High Court and the Hon'ble Bombay High Court, to support the contention that a vague notice without specifying the charge is invalid. The Tribunal noted the arguments presented and referred to a similar decision by a Coordinate Bench in a different case to support the appellant's position.

The Departmental Representative (DR) opposed the appellant's arguments and cited several case laws to counter the appellant's reliance on previous judgments. The DR referred to decisions of the Hon'ble Bombay High Court and the Mumbai ITAT to argue that a notice need not specify the charge in a particular form as long as the assessee is informed about the proposal to levy a penalty. The DR highlighted that the principles of natural justice should not be confined to a strict format of notice issuance.

The Tribunal analyzed the arguments presented by both parties and referred to various decisions by different High Courts and ITAT benches. It noted that there were conflicting views on the issue, with some jurisdictions favoring the assessee's position while others supporting a broader interpretation of notice requirements. Ultimately, the Tribunal decided to follow the view expressed by the Hon'ble Karnataka High Court, which emphasized the importance of a clear and specific charge in the notice under section 274 of the Act.

Based on the precedents and legal principles discussed, the Tribunal concluded that the imposition of the penalty could not be sustained due to the defective show cause notice issued to the assessee. Citing the earlier decision of a Coordinate Bench, the Tribunal held that the penalty imposed and confirmed by the Ld. CIT(A) was invalid and directed its cancellation. Consequently, the appeal of the assessee challenging the penalty under section 271(1)(c) for AY 2014-15 was allowed.

In the final order pronounced on 30th April 2019, the Tribunal upheld the decision to delete the penalty, thereby resolving the issue raised by the appellant regarding the defective show cause notice and the imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961.