2020 (5) TMI 619 - AT - Income Tax

Penalty proceedings u/s 271 (1)(c) - Defective notice - non deletion of appropriate words from notice - addition on account of sale of shares and unexplained credit - HELD THAT - There is no concealment in the present case. Assessee has also filed all the details during the regular assessment proceedings. From the notices dated 23.12.2011 and 15.03.2016 produced by the Ld. AR during the hearing, it can be seen that the AO was not sure under which provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon'ble Supreme Court in case of M/s SSA Emerald Meadows. 2016 (8) TMI 1145 - SC ORDER . Inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. - Decided in favour of assessee.

Summary

Issues Involved:
Penalty under Section 271(1)(c) of the Income Tax Act for Assessment Year 2004-05.

Detailed Analysis:
1. Levy of Penalty under Section 271(1)(c):
The appellant challenged the penalty levied under Section 271(1)(c) of the Income Tax Act, contending that inaccurate or concealed particulars of income were not filed. The issue revolved around the specificity of the penalty notice regarding the limb under which the penalty was imposed. The appellant argued that the Assessing Officer did not clearly mention whether the penalty was for furnishing inaccurate particulars of income or concealing income. Citing precedents, the appellant emphasized that the penalty notice's ambiguity rendered the penalty unsustainable. The tribunal agreed, citing relevant judgments, including the decision of the Hon'ble Supreme Court in a similar case. It was held that the penalty notice's failure to specify the particular limb of Section 271(1)(c) rendered the penalty unsustainable, leading to the decision to delete the penalty.

2. Judicial Precedents and Legal Interpretation:
The tribunal extensively analyzed judicial precedents, including the decisions of the Hon'ble Karnataka High Court and the Apex Court, to determine the legality of the penalty imposed under Section 271(1)(c). The tribunal referred to specific cases where penalties were invalidated due to the lack of clarity in the penalty notices. The tribunal highlighted the importance of specifying the exact limb under which the penalty is imposed to ensure the validity of penalty proceedings. The tribunal also differentiated the present case from other case laws cited by the respondent, emphasizing that the absence of a clear mention of the charge of concealment of income in the penalty notice made it invalid in the current scenario.

3. Final Decision and Outcome:
After considering arguments from both parties and examining the relevant legal provisions and precedents, the tribunal concluded that the penalty imposed under Section 271(1)(c) was not sustainable due to the lack of specificity in the penalty notice. Relying on established legal principles and previous judgments, the tribunal set aside the order of the CIT(A) and directed the Assessing Officer to cancel the penalty levied. Consequently, the appeal of the assessee was allowed, and the order was pronounced in the Open Court on 19th March 2020.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved, the arguments presented by both parties, the application of judicial precedents, and the final decision rendered by the tribunal.