2019 (7) TMI 228 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - non-striking of the irrelevant column - from the notice it was not clear whether notice is for concealment of income or furnished inaccurate particulars - HELD THAT - Respectfully following the decision of the Hon'ble Supreme Court in the case of SSA s Emerald Meadows 2016 (8) TMI 1145 - SC ORDER and also the decision of Hon'ble High Court of Telangana A.P. in the case of Smt. Baisetty Revathi 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT and also the decision of the coordinate bench of the tribunal in the case of Konchada Sreeram 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM , I hold that the notice issued u/sec. 274 read with section 271 is invalid and, therefore penalty order passed by the AO is hereby cancelled.

Summary

Issues:
Validity of notice issued by Assessing Officer under section 271(1)(c) for concealment of income or furnishing inaccurate particulars.

Analysis:
The appeal was filed against the order of Commissioner of Income Tax (Appeals) for the Assessment Year 2011-12. The Assessing Officer had issued a notice under section 271(1)(c) of the Income Tax Act, 1961, leading to penalty proceedings. The issue in contention was whether the notice was valid, as it was not clear if it was for concealment of income or furnishing inaccurate particulars. The assessee argued that the notice was vague, citing relevant judgments from the Hon'ble Supreme Court and the High Court of Telangana & A.P. The Departmental Representative contended that the notice was premature but valid. The Tribunal analyzed the notice and relevant case laws, including decisions from the Hon'ble Supreme Court and jurisdictional High Court, to determine the validity of the notice.

The Tribunal found that the notice issued by the Assessing Officer was indeed vague, as it did not specify whether the penalty proceedings were for concealment of income or furnishing inaccurate particulars. Citing relevant case laws and a similar decision by a Coordinate Bench, the Tribunal held that the notice was invalid. The Tribunal emphasized the importance of clearly specifying the grounds for penalty proceedings under section 271(1)(c) to ensure the principles of natural justice are upheld. As the notice failed to meet these requirements, the penalty order passed by the Assessing Officer was canceled. The decision was based on the precedents set by the Hon'ble Supreme Court, the High Court of Telangana & A.P., and the Coordinate Bench of the Tribunal. Consequently, the appeal filed by the assessee was allowed, and the penalty order was revoked.

In conclusion, the Tribunal's detailed analysis focused on the clarity and specificity required in notices issued for penalty proceedings under section 271(1)(c) of the Income Tax Act, emphasizing the need to uphold principles of natural justice and provide the assessee with a fair opportunity to contest the allegations. The decision was in line with established legal precedents and aimed to ensure procedural fairness in tax penalty cases.