2019 (5) TMI 1123 - AT - Income Tax

Penalty u/s 271(1)(c) - non specify the nature of default i.e. whether the penalty is levied for concealment of income or for furnishing of inaccurate particulars of income - defective notice - agreed additions by the assessee regarding the shortage diesel claimed by the assessee - HELD THAT - As relying on MANOJ KUMAR AGRAWAL VERSUS DCIT- 1 (1) , RAIPUR. 2018 (8) TMI 1804 - ITAT RAIPUR Such penalty is unsustainable in law legally. It is a settled legal proposition that the Assessing Officer is under obligation to specify the appropriate limb of clause (c) of section 271(1) of the Act at the time of initiation as well as at the time of levy of penalty. In view of the above deliberation on this issue, without going into the merits of the case, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the entire penalty imposed by him. - Decided in favour of assessee

Summary

Issues:
Challenge to penalty u/s 271(1)(c) for concealment of income or furnishing inaccurate particulars of income.

Analysis:
The appeal was filed against the order of the CIT(A)-II, Raipur related to the assessment year 2008-09. The main ground of appeal was the imposition of a penalty under section 271(1)(c) of ?31,300. The counsel for the assessee argued that the show cause notice did not specify the nature of default, whether it was for concealment of income or furnishing inaccurate particulars. It was contended that there was no evidence of concealment or furnishing inaccurate particulars. The counsel relied on judicial pronouncements and a specific case precedent to support the assessee's position.

The Department's representative relied on the lower authorities' orders. The Tribunal noted that in a similar case where the notice did not specify the charge under section 271(1)(c), the penalty was deleted. Citing a High Court decision, the Tribunal emphasized the importance of specifying the charge under the relevant section. The Tribunal held that since the inappropriate words were not struck off in the notice, the penalty proceedings were bad in law. Therefore, the penalty was set aside, and the Assessing Officer was directed to cancel the penalty imposed. The Tribunal stressed the obligation of the Assessing Officer to specify the appropriate limb of section 271(1)(c) at the initiation and levy of the penalty. As a result, without delving into the case's merits, the order of the CIT(A) was set aside, and the Assessing Officer was directed to delete the penalty entirely. Consequently, the assessee's appeal was allowed.

In conclusion, the Tribunal found the penalty unsustainable in law due to the failure to specify the charge under section 271(1)(c) in the notice. The decision highlighted the legal requirement for the Assessing Officer to clearly state the basis for the penalty. The Tribunal's ruling was based on legal grounds, emphasizing procedural compliance over the merits of the case. Ultimately, the penalty imposed on the assessee was deemed invalid, and the appeal was allowed.