2020 (6) TMI 320 - AT - Income Tax

Penalty u/s. 271(1)(c) - Defective notice - not spelt out the specific fault/charge as to whether assessee had concealed the particulars of his income or furnished inaccurate particulars of such income - 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. See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, 2017 (12) TMI 883 - ITAT, KOLKATA 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. Imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. We, therefore, hold that imposition of penalty and subsequently confirmed by the Ld. CIT(A) in the present case cannot be sustained and the same is hereby deleted. Appeal of assessee is allowed.

Summary

Issues:
Appeal against penalty imposed u/s. 271(1)(c) of the Income-tax Act, 1961 based on defective notice specifying charges.

Analysis:
The appeal was filed against the penalty imposed u/s. 271(1)(c) of the Income-tax Act, 1961, for AY 2014-15 due to an invalid notice served upon the assessee. The appellant contended that the notice did not clearly specify whether the assessee had concealed income particulars or furnished inaccurate income particulars. Citing various case laws, the appellant argued that the defective notice rendered subsequent actions invalid. The appellant referred to decisions by the Hon'ble Karnataka High Court and the Hon'ble Bombay High Court, emphasizing the necessity of a specific charge in the notice for penalty imposition. The appellant also highlighted a decision by ITAT supporting the same proposition.

The Departmental Representative (DR) opposed the appellant's submission, presenting various case laws to counter the appellant's arguments. However, the Coordinate Bench of the Tribunal had previously addressed and dismissed similar arguments in the case of Jeetmal Choraria Vs. ACIT for AY 2010-11. The DR referenced decisions by Mumbai ITAT and the Hon'ble Bombay High Court, arguing that a notice need not follow a specific format as long as it informs the assessee of the penalty proposal. The DR also cited cases where penalties were upheld despite defects in the notice.

The Tribunal, in line with the previous decision, held that the penalty imposition based on the defective notice could not be sustained. Referring to the conflicting views of different High Courts and Tribunals, the Tribunal followed the view of the Hon'ble Karnataka High Court, emphasizing the importance of a specific charge in the notice for penalty proceedings. Consequently, the penalty imposed and confirmed by the Ld. CIT(A) was deleted, and the appeal of the assessee was allowed.

In conclusion, the Tribunal's decision was based on the necessity of a clear and specific charge in the notice for imposing penalties under section 271(1)(c) of the Income-tax Act, 1961. The judgment emphasized the importance of adhering to procedural requirements and ensuring that notices adequately inform the assessee of the charges against them to maintain the validity of penalty proceedings.