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2020 (4) TMI 427 - AT - Income TaxPenalty u/s 271(1)(c) - scrutiny assessment u/s 144 wherein several additions were made - as per Assessee AO has not stuck off any of the twin charges and further in the penalty order also the Assessing Officer has not specified one of the charges of penalty under Section 271(1)(c) - HELD THAT - On careful consideration of the notice issued under section 274 of the Act on 28.03.2013, it is apparent that the Assessing Officer has not stuck off any of the twin charges. In the assessment order also in para No. 12 (ii) the Assessing Officer has initiated penalty proceedings, for concealing the particulars of income as well as furnishing of inaccurate particulars of income. Further in the penalty order also he levied the penalty on both the charges, in the last para before the computation of total income. Though the above issue was raised before him, citing the decision of Hon ble Bombay High Court, CIT (Appeals) did not adjudicate on it, but confirmed the penalty on the additions confirmed. In SAHARA INDIA LIFE INSURANCE COMPANY, LTD. 2019 (8) TMI 409 - DELHI HIGH COURT has held that such penalty cannot be sustained if the show cause notice did not specify on which limb of Section 271(1)(c) of the Act the penalty has been initiated. In view of this, we direct the learned Assessing Officer to cancel the penalty levied under Section 271(1)(c). The orders of the lower authorities are reversed and appeal of the assessee is allowed.
Issues:
Confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961 amounting to ?2,12,130. Analysis: The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2010-11, specifically challenging the confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The assessee, an individual with income under the head 'business', initially filed a return of income on 30.03.2013 showing income of ?5,37,710. The case was selected for scrutiny, leading to an assessment under section 144 of the Act where various additions were made, resulting in the determination of the assessee's income at ?19,20,938. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act, alleging concealment of income or furnishing inaccurate particulars based on the disallowances made. The penalty proceedings were re-initiated after the assessee did not appeal the initial assessment order. Subsequently, the Assessing Officer passed a penalty order under section 271(1)(c) of the Act, imposing a penalty of ?2,12,130, stating that the assessee filed inaccurate particulars with the intention of concealing income. The assessee challenged this penalty order before the learned CIT (Appeals), who upheld the penalty. The assessee then appealed this decision, arguing that the penalty order was invalid as the Assessing Officer did not specify the charges of penalty under Section 271(1)(c) in the show cause notice or the penalty order itself. The Authorized Representative referred to relevant case law to support this argument. The Tribunal considered the show cause notice issued by the Assessing Officer and noted that none of the twin charges were struck off, indicating that both charges of concealing income and furnishing inaccurate particulars were maintained throughout the proceedings. Despite the argument raised by the Authorized Representative, the CIT (Appeals) did not address this issue but confirmed the penalty based on the additions upheld. The Tribunal, in line with decisions from the Delhi High Court and other relevant case law, concluded that the penalty could not be sustained if the show cause notice did not specify the grounds under Section 271(1)(c) of the Act. Consequently, the Tribunal directed the Assessing Officer to cancel the penalty levied, reversing the decisions of the lower authorities and allowing the appeal of the assessee.
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