2019 (7) TMI 1027 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - defective notice without striking irrelevant columns in the notice in the pre-printed proforma - HELD THAT - In the instant case, the AO initiated penalty by issue of defective notice without striking irrelevant columns in the notice in the pre-printed proforma thus causing ambiguity to the assessee for which act of the assessee the AO sought explanation whether it is for concealment of income or for furnishing inaccurate particulars. It is settled issue by Hon ble High Court of Andhra Pradesh SMT. BAISETTY REVATHI 2017 (7) TMI 776 - ANDHRA PRADESH HIGH that the penalty proceedings initiated without indicating the specific charge is invalid. The Ld.CIT(A) considered the decision of jurisdictional High Court and the decision of this Tribunal and held that the initiation of penalty proceedings are invalid and accordingly cancelled the penalty There is no dispute that in the instant case, the AO had initiated the penalty without striking irrelevant columns and created ambiguity with regard to which act of the assessee, penalty was initiated whether for concealment of income or for furnishing inaccurate particulars. The case laws relied upon by the Ld.CIT(A) are squarely covered in favour of the assessee and against the revenue

Summary

Issues Involved:
Levy of penalty u/s 271(1)(c) of the Income Tax Act based on defective notice without specifying the charge of concealment of income or furnishing inaccurate particulars.

Detailed Analysis:

1. Penalty Initiation and Proceedings:
The appeals were filed by the revenue against the orders of the CIT(A) regarding the levy of penalty u/s 271(1)(c) for the A.Y. 2009-10, 2011-12 to 2013-14. The Assessing Officer (AO) initiated penalty proceedings without specifying whether it was for concealment of income or furnishing inaccurate particulars. The penalty amounts were imposed for each assessment year. The assessee contended that the notice issued by the AO was defective, leading to ambiguity, and sought for its quashing.

2. CIT(A) Decision and Legal Precedents:
The CIT(A) examined the facts, arguments, and referred to legal precedents like SSA's Emerald Meadows case, Manjunatha Cotton and Ginning Factory case, and others. The CIT(A) held that the penalty proceedings were not validly initiated due to the defective notice, following the decisions of the jurisdictional High Court and Tribunal. Consequently, the penalty was canceled, and the appeal of the assessee was allowed.

3. Tribunal's Decision:
The revenue appealed against the CIT(A) order before the Tribunal. The Tribunal considered the arguments of both parties and reviewed the material on record. It found that the initiation of penalty without specifying the charge was invalid, as per legal precedents cited by the CIT(A). The Tribunal upheld the CIT(A)'s decision to cancel the penalty, citing the lack of clarity in the initiation of penalty proceedings.

4. Final Outcome:
The Tribunal dismissed the appeals filed by the revenue and upheld the decision of the CIT(A) to cancel the penalty. The cross objections filed by the assessee were deemed infructuous and dismissed as well. Consequently, the appeals of the revenue and the cross objections of the assessee for the A.Ys. 2009-10, 2011-12 to 2013-14 were all dismissed.

In conclusion, the judgment focused on the importance of clearly specifying the charge while initiating penalty proceedings under section 271(1)(c) of the Income Tax Act, emphasizing the need for unambiguous notices to avoid ambiguity and ensure fair assessment processes.