2019 (11) TMI 135 - AT - Income Tax

Penalty u/s.271(1)(c) - Defective notice - non striking of irrelevant words in Notice - HELD THAT - Assessing Officer has issued notice under section 274 r.w.s. 271(1)(c) of the Act dated 28.02.2014 without striking off the irrelevant words, the penalty proceedings show a non-application of mind by the Assessing Officer and is, thus, unsustainable. The facts of the present appeal are identical to the facts of the case before the Hon'ble Supreme Court in the case of SSA's. Emarld Meadows 2016 (8) TMI 1145 - SC ORDER and, therefore, the decision of Hon'ble Supreme Court squarely applies to the case of the assessee. Hence, respectfully following the same, we set aside the order passed by the CIT(A) and cancel the order of the Assessing Officer levying penalty - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the penalty imposed by the Assessing Officer under section 271(1)(c) of the Act. The main contention was whether the penalty notice clearly specified whether it was for concealment of income or furnishing inaccurate particulars. The Assessing Officer's notice did not explicitly mention the nature of the penalty proceedings, which led to a challenge by the assessee.

The Authorized Representative argued that the penalty should be cancelled based on a Supreme Court judgment where it was held that failure to specify the nature of penalty proceedings in the notice makes the penalty order liable for cancellation. The Departmental Representative did not counter this submission.

The Tribunal reviewed the lower authorities' orders and found that the penalty was levied by the Assessing Officer without specifying whether it was for concealment of income or furnishing inaccurate particulars. Reference was made to a Supreme Court judgment dismissing a Special Leave Petition by the Revenue on a similar issue. The Tribunal observed that the notice issued by the Assessing Officer did not clearly indicate the basis for the penalty, rendering it invalid.

The Tribunal highlighted that penalty provisions under section 271(1)(c) are attracted when there is concealment of income or furnishing inaccurate particulars. It emphasized the importance of specifying the exact nature of the charge in the penalty notice to allow the assessee to respond appropriately. Citing legal precedents, including a Karnataka High Court case and a Supreme Court case, it concluded that the Assessing Officer's failure to strike off irrelevant clauses in the notice indicated a lack of application of mind, rendering the penalty unsustainable.

Based on the legal principles established in previous judgments, including a decision by the Hon'ble Supreme Court, the Tribunal set aside the order confirming the penalty and cancelled the penalty imposed by the Assessing Officer. The grounds of appeal by the assessee were allowed, and the appeal was decided in favor of the assessee.