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2019 (6) TMI 242 - AT - Income TaxLevy of the penalty u/s 271(1)(c) - HELD THAT - Levy of penalty u/s 271(1)(c) to be bad in law as it did not specify in which limb of Section 271(1)(c) the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income. The entire penalty proceedings are, therefore, vitiated and no penalty is leviable. On this score itself, similar view is taken by Hon ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows 2015 (11) TMI 1620 - KARNATAKA HIGH COURT and confirmed by 2016 (8) TMI 1145 - SC ORDER . On similar set of facts, the ITAT, Delhi Benches are taking a consistent view that in such circumstances, levy of penalty is invalid. Since the show cause notice is invalid due to the above reason and as such the entire penalty proceedings are vitiated. Thus, no penalty is leviable against the assessee. The decisions relied upon by the D.R. would not support the case of the Revenue, in view of the above, set aside the Orders of the authorities below and cancel the penalty. - Decided in favour of assessee.
Issues:
Challenge against the levy of penalty under section 271(1)(c) of the I.T. Act, 1961 based on the validity of the show cause notice issued by the Assessing Officer. Analysis: Validity of Show Cause Notice: The appeal was directed against the Order of the Ld. CIT(A)-30, New Delhi, challenging the penalty under section 271(1)(c) of the I.T. Act, 1961 for the A.Y. 2010-2011. The Assessee contended that the show cause notice issued by the Assessing Officer before the penalty was invalid and defective, rendering the penalty not leviable. The Assessee's counsel argued that the notice did not specify the grounds under which the penalty was initiated, whether for concealment of income particulars or furnishing inaccurate particulars of income. This lack of specificity in the notice was highlighted as a crucial flaw, rendering the penalty proceedings invalid. Legal Precedents and Interpretation: The Assessee relied on various decisions to support the argument that the show cause notice was deficient and, therefore, the penalty could not be sustained. The ITAT member noted that the notice indeed failed to specify the exact grounds for initiating penalty proceedings, leading to a clear violation of the law. Reference was made to the decisions of the Hon'ble Karnataka High Court and the Hon'ble Supreme Court, which confirmed that in such cases where the notice lacks specificity, the penalty proceedings are vitiated. The ITAT, Delhi Benches were also cited for consistently holding that in such circumstances, the levy of penalty is invalid. Decision and Outcome: After considering the arguments from both sides and analyzing the legal position, the ITAT member concluded that the show cause notice's deficiency in specifying the grounds for penalty initiation rendered the entire penalty proceedings invalid. Consequently, the penalty was deemed not leviable against the Assessee. The Orders of the authorities below were set aside, and the penalty was canceled, thereby allowing the Assessee's appeal. In summary, the judgment focused on the crucial issue of the validity of the show cause notice in initiating penalty proceedings under section 271(1)(c) of the I.T. Act, 1961. The lack of specificity in the notice regarding the grounds for penalty initiation was deemed a fatal flaw, leading to the cancellation of the penalty against the Assessee based on legal precedents and consistent judicial interpretations.
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