2020 (12) TMI 494 - AT - Income Tax

Penalty u/s.271(1)(c) - Defective notice - AO not mentioned in which limb the penalty - HELD THAT - Assessment order was passed ex-parte and the CIT(A) and the AO have not mentioned any reason for initiating the penalty u/s.271(1)(c) - as seen from the copy of the notice issued u/s.274 r.w.s.271(1)(c) of the Act, the AO has not struck-off the irrelevant portion in the notice i.e., whether the penalty is being levied for concealment of income or for furnishing of inaccurate particulars or for both. In view of the same, respectfully following the decision of the Hon'ble Supreme Court in the case of CIT Vs. SSA s Emerald Meadows 2016 (8) TMI 1145 - SC ORDER and case of Pr.CIT Vs. Baisetty Revathi 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT the penalty order passed by the AO is set aside. Accordingly, the appeal of assessee is allowed.

Summary

Issues:
Challenge to validity of penalty notice under section 271(1)(c) of the Income Tax Act.

Analysis:
The case pertains to an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals) confirming the penalty levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act for the assessment year 2015-16. The assessee raised grounds challenging the validity of the penalty notice issued by the AO, contending that the AO did not strike off the irrelevant portion of the notice for the penalty. The assessee argued that the AO did not express satisfaction for initiating the penalty proceedings either in the assessment order or the notice. The assessee relied on various judicial decisions, including a Supreme Court case and a High Court decision, to support their contentions.

Upon hearing both parties, the tribunal noted that the assessment order was passed ex-parte, and neither the CIT(A) nor the AO provided any reasons for initiating the penalty under section 271(1)(c) of the Act. Additionally, the tribunal observed that the notice issued by the AO did not specify whether the penalty was for concealment of income, furnishing inaccurate particulars, or both, as the irrelevant portion was not struck off. Citing the Supreme Court's decision and the jurisdictional High Court's ruling, the tribunal set aside the penalty order passed by the AO. Consequently, the appeal of the assessee was allowed, and the penalty was revoked.

In conclusion, the tribunal's decision was based on the failure of the AO to specify the grounds for penalty initiation and the lack of clarity in the penalty notice issued. The tribunal relied on legal precedents to support its decision to set aside the penalty order under section 271(1)(c) of the Income Tax Act for the assessment year in question.