2020 (4) TMI 322 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - non specification of charge - Legality of notice issued u/s 274 r.w.s 271(1)(c) - HELD THAT - From perusal of the above notice, we find that both the charges i.e. concealing particulars of income and furnishing inaccurate particulars of income are mentioned. None of them is striked down which shows that assessing officer has not satisfied himself about the charge to be leveled against the assessee. in the similar set of facts and the legal issue raised before us, we find that Hon'ble jurisdictional High Court in the case of Pr. CIT vs. Kulwant Sing Bhatia 2018 (5) TMI 960 - MADHYA PRADESH HIGH COURT allowed the assessee s appeal and deleted penalty levied u/s 271(1)(c) of the Act, since the show cause notice did not satisfied the requirement of law as it was not specific. Assessing officer failed the level specific charge against the assessee by issuing defective notice and this being a fatal error renders the notice liable to be quashed. - Decided in favour of assessee.

Summary

Issues:
1. Validity of notice issued under section 274 r.w.s 271(1)(c) of the Income Tax Act, 1961.
2. Levy of penalty under section 271(1)(c) on addition under section 68.

Analysis:

Issue 1: Validity of Notice
The appeal pertains to the Assessment Year 2005-06, challenging the penalty imposed under section 271(1)(c) of the Income Tax Act. The appellant contested the validity of the notice issued under section 274 r.w.s 271(1)(c) of the Act, arguing that the notice did not specify the exact charge for imposing the penalty. The appellant relied on legal precedents, including the judgment of the Hon'ble Apex Court and the jurisdictional High Court, to support the contention that the notice was defective. The appellant provided evidence to establish the genuineness and creditworthiness of the donor, emphasizing that the alleged gift was adequately explained. The Departmental Representative opposed the appellant's arguments, supporting the lower authorities' decisions.

Issue 2: Penalty under Section 271(1)(c)
The assessment for the relevant year included an addition for an unexplained gift, leading to the initiation of penalty proceedings under section 271(1)(c) of the Act. The appellant's challenge to the penalty levy was twofold, raising legal issues and questioning the merits of the penalty. The Tribunal noted that the notice issued by the assessing officer did not clearly specify the charges against the appellant, failing to satisfy the legal requirements. Citing relevant case law, the Tribunal concluded that the defective notice rendered the penalty invalid and ordered the deletion of the penalty amount. As a result, the Tribunal allowed the appellant's appeal, emphasizing that addressing the legal issue made discussing the merits of the case unnecessary.

In conclusion, the Tribunal's judgment focused on the procedural irregularity in the notice issued for imposing the penalty, ultimately leading to the deletion of the penalty amount levied under section 271(1)(c) of the Income Tax Act for the Assessment Year 2005-06.