2019 (6) TMI 243 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - non specification of charge - HELD THAT - Notice issued by the A.O. for 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) of the Act, 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. See M/S SSA'S EMERALD MEADOWS 2016 (8) TMI 1145 - SC ORDER 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. 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, I set aside the Orders of the authorities below and cancel the penalty. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the I.T. Act, 1961 without specifying the charge in the show cause notice.

Analysis:
The appeal was filed against the Order of the Ld. CIT(A)-40, Delhi, challenging the penalty under section 271(1)(c) of the I.T. Act, 1961 for the A.Y. 2009-2010. The Assessee contended that the show cause notice did not specify the charge for which the penalty could be levied, rendering it invalid. The A.O. initiated penalty proceedings for concealment of facts but levied the penalty for furnishing inaccurate particulars of income. The ITAT, Delhi SMC-Bench in a similar case held that such discrepancies invalidate the penalty proceedings. The A.O.'s failure to specify the charge in the notice was deemed as a ground for canceling the penalty, as per the decision of the Hon’ble Karnataka High Court and the Hon’ble Supreme Court. The ITAT, Delhi SMC-Bench reiterated that when the notice mentions both limbs of section 271(1)(c) but the penalty is levied under a different limb, the penalty proceedings are vitiated. Therefore, the penalty was canceled based on the invalid show cause notice.

The Ld. D.R. argued that the A.O.'s failure to strike-off a column in the show cause notice should not invalidate the penalty. However, the ITAT, Delhi Benches consistently held that in such cases, the levy of penalty is invalid. The decisions relied upon by the Ld. D.R. were found to be insufficient to support the Revenue's case. The ITAT concluded that since the show cause notice was defective and the penalty proceedings were vitiated, no penalty was leviable against the assessee. The Orders of the authorities below were set aside, and the penalty was canceled. The appeal of the assessee was allowed based on the above analysis.