2019 (9) TMI 188 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - non specification of charge - Defective notice - HELD THAT - In this case, the A.O. issued show cause notice for levy of penalty under section 271(1)(c) which is 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 2016 (8) TMI 1145 - SC ORDER . Also see M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. 2019 (8) TMI 409 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

Issues Involved:
Levy of penalty under section 271(1)(c) of the I.T. Act for furnishing inaccurate particulars of income and concealment of income.

Analysis:

1. Levy of Penalty under Section 271(1)(c):
The appeal was against the order of the Ld. CIT(A) challenging the levy of penalty under section 271(1)(c) of the I.T. Act for the assessment year 2013-2014. The Assessing Officer (A.O.) had levied penalties on three additions made, including for furnishing inaccurate particulars of income and concealment of income. The A.O. initiated penalty proceedings separately under section 271(1)(c) of the Act. The Ld. CIT(A) confirmed the levy of penalty.

2. Notice Issued by A.O.:
The issue raised was regarding the notice issued by the A.O. for the levy of penalty. The A.O. issued a notice before the penalty, mentioning that the assessee had concealed particulars of income or furnished inaccurate particulars. The assessee contended that the notice did not specify under which limb of Section 271(1)(c) the penalty proceedings were initiated. Citing relevant judgments, the assessee argued that the notice must specify whether it is for concealment of particulars of income or for furnishing inaccurate particulars of income.

3. Legal Precedents and Arguments:
The assessee relied on judgments such as CIT vs. M/surrendered SSA's Emrald Meadows and Pr. CIT vs. M/s. Sahara India Life Insurance Company Ltd. to support the contention that the notice must specify the grounds for penalty under Section 271(1)(c). The Hon'ble Delhi High Court's decision emphasized the importance of specifying the grounds for penalty initiation, as per the Karnataka High Court's ruling.

4. Decision and Conclusion:
After considering the submissions and legal precedents, the Tribunal found that the A.O.'s show cause notice for the penalty was deficient as it did not specify the grounds under Section 271(1)(c) for initiating the penalty proceedings. Citing the decisions of the Hon'ble Supreme Court and the Hon'ble Delhi High Court, the Tribunal held that the penalty proceedings were vitiated due to the lack of specificity in the notice. Consequently, the Tribunal set aside the orders of the authorities below and canceled the penalty, allowing the appeal of the assessee.

In conclusion, the Tribunal's decision focused on the legal requirement of a notice specifying the grounds for initiating penalty proceedings under Section 271(1)(c) of the I.T. Act. The judgment highlighted the significance of clarity in the notice to ensure the validity of penalty imposition, as supported by relevant legal precedents and the principles of natural justice.