2020 (6) TMI 610 - AT - Income Tax

Penalty u/s 271(1)(c) - non specification of charge - defective notice - HELD THAT - 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. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of SSA S Emerald Meadows 2015 (11) TMI 1620 - KARNATAKA HIGH COURT where the SLP filed by the Revenue has been dismissed 2016 (8) TMI 1145 - SC ORDER is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down in case of M/s. Sahara India Life Insurance Company Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT will be applicable in the present case wherein held notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. CIT(A) relying upon the decision of the Hon ble Apex Court in case of CIT vs. Reliance Petro Products Pvt. Ld. 2010 (3) TMI 80 - SUPREME COURT held that it is not the Assessing Officer s case that the details supplied in the return are inaccurate. Merely because the assessee claimed the expenditure by virtue of a change of head of income and the claim was not acceptable to the Assessing Officer cannot per se attract penalty u/s 271(1)(c) of the Act. Thus, the CIT(A) has rightly deleted the penalty - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

Analysis:
The appeal was filed by the Revenue against the order passed by CIT(A)-24, New Delhi for Assessment Year 2009-10. The case involved the imposition of penalty under section 271(1)(c) for furnishing inaccurate particulars of income. The return of income was filed declaring total income, which was processed under section 143(1) and later scrutinized under section 143(3) resulting in additions to the income. The Assessing Officer imposed a penalty for evasion of tax, which was challenged by the assessee before the CIT(A).

During the proceedings, the Revenue argued that the penalty should not be cancelled as the additions to income were confirmed, indicating inaccurate particulars furnished by the assessee. The assessee contended that the penalty notice was defective as it did not specify the charges clearly, citing relevant case laws to support their argument. The Tribunal noted that there was no concealment in the case, and all details were provided during assessment proceedings.

The Tribunal referred to judgments by the Hon'ble Supreme Court and High Courts, emphasizing the importance of clearly specifying the charges in penalty notices. It was observed that the penalty notice in this case did not specify under which limb of section 271(1)(c) the penalty proceedings were initiated, rendering it invalid. The Tribunal held that the penalty levied was not sustainable and had to be deleted, as per legal precedents and the specific facts of the case.

The Tribunal dismissed the appeal of the Revenue, upholding the decision of the CIT(A) to delete the penalty. The case law cited by the Revenue was deemed inapplicable due to the lack of specific charges mentioned in the penalty notice. The Tribunal concluded that the penalty was rightly deleted by the CIT(A) and upheld the decision, ultimately dismissing the appeal of the Revenue.

In conclusion, the Tribunal ruled in favor of the assessee, holding that the penalty under section 271(1)(c) for furnishing inaccurate particulars of income was not sustainable due to the defective penalty notice. The appeal of the Revenue was dismissed, and the penalty was deleted.