9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 712 - AT - Income TaxPenalty u/s. 271(1)(c) - Defective notice - non specification of charge - HELD THAT - Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present cases cannot be sustained and the same is directed to be cancelled. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, 2013 (7) TMI 620 - KARNATAKA HIGH COURT - Decided in favour of assessee Non recording satisfaction before initiating penalty proceedings - HELD THAT - Penalty imposed in the present cases has to be cancelled for the reason that the AO has not recorded proper satisfaction in the order of assessment for initiating penalty u/s. 271(1)(c) of the Act. In the decisions cited by the ld. counsel for the assessee on identical facts as in the case of assessee in the present appeals, CHANDRASEKARAN 2015 (4) TMI 679 - KARNATAKA HIGH COURT took the view that there has been no recording of satisfaction for initiating penalty u/s. 271(1)(c) and on that ground the penalty imposed was cancelled. - Decided in favour of assessee
Issues Involved:
1. Validity of penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961. 2. Defect in the show cause notice under Section 274 of the Income-tax Act, 1961. 3. Recording of satisfaction by the Assessing Officer before initiating penalty proceedings. Detailed Analysis: 1. Validity of Penalty Proceedings under Section 271(1)(c): The appeals concern the imposition of penalties under Section 271(1)(c) of the Income-tax Act, 1961, which were confirmed by the CIT(Appeals). The penalties were imposed because the assessee filed returns only after a survey and subsequent notices under Section 148. The Tribunal examined whether the penalties were justified given the circumstances under which the returns were filed. 2. Defect in the Show Cause Notice under Section 274: The Tribunal scrutinized the show cause notices issued under Section 274 of the Act. The notices did not specify whether the penalty was for "concealing particulars of income" or "furnishing inaccurate particulars of income," which is a requirement as per the decision in CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 218 Taxman 423 (Kar.). The Tribunal noted that the failure to strike out the irrelevant portion in the show cause notices rendered them defective. This defect was deemed fatal to the penalty proceedings, as it violated the principles of natural justice by not clearly informing the assessee of the specific charge. 3. Recording of Satisfaction by the Assessing Officer: The Tribunal also addressed the issue of whether the Assessing Officer (AO) had properly recorded satisfaction before initiating penalty proceedings. The Tribunal referred to the decision in CIT V. MWP Ltd. [2014] 41 taxmann.com 496 (Kar.), which held that a mere statement in the assessment order that "penalty proceedings are initiated separately" does not constitute a proper recording of satisfaction. The Tribunal found that the AO's statements in the assessment orders, such as "Penalty proceedings u/s. 271(1)(c), 271B, separately," did not reflect a clear and unambiguous direction to initiate penalty proceedings, thus failing to meet the legal requirements. Conclusion: The Tribunal concluded that the penalty proceedings were invalid due to the defective show cause notices and the lack of proper recording of satisfaction by the AO. The penalties imposed were therefore directed to be cancelled. The appeals of the assessee were allowed, and the penalties were annulled. Pronouncement: The decision was pronounced in the open court on February 12, 2020.
|
