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2020 (12) TMI 987 - AT - Income TaxPenalty order u/s 271(1)(c) - Defective notice - HELD THAT - In the present case, AR demonstrated the notice, we find that the AO is not sure whether he was to proceed on the basis that the assessee has concealed the particulars of his income or furnished inaccurate particulars of income. The Hon ble High Court in M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, 2013 (7) TMI 620 - KARNATAKA HIGH COURT also observed that in such a situation, the levy of penalty suffers from non-application of mind. Considering the legal position and the action of the AO in passing the penalty order u/s 271(1)(c) shows that there is non-application of mind thereby the penalty order is not sustainable - See M/S SSA S EMERALD MEADOWS 2015 (11) TMI 1620 - KARNATAKA HIGH COURT - Decided in favour of assessee.
Issues involved:
1. Condonation of delay in filing the appeal challenging the penalty order under sections 271(1)(c) and 250 of the Income Tax Act, 1961. 2. Validity of penalty notice issued by the Assessing Officer under section 274 r.w.s. 271 of the Act. 3. Whether the penalty order under section 271(1)(c) is sustainable for concealment of income or furnishing inaccurate particulars of income. 4. Interpretation of penalty provisions under section 271(1)(c) of the Act and the necessity for clarity in specifying the limb of the charge. Detailed Analysis: 1. The delay in filing the appeal was condoned after considering the reasons provided by the appellant and the absence of serious objections from the Departmental Representative. The appeal was admitted and heard by the Tribunal. 2. The appellant, a non-resident foreign company registered in Mauritius, challenged the penalty order levied under section 271(1)(c) of the Act. The Assessing Officer observed discrepancies in the income declared by the appellant, leading to the initiation of penalty proceedings. The appellant contended that the penalty notice was defective as it did not specify whether it was for concealment of income or furnishing inaccurate particulars. 3. The Tribunal referred to a judgment by the Hon'ble Karnataka High Court in a similar case, emphasizing the importance of specifying the nature of the charge in the penalty notice. It was noted that penalty provisions under section 271(1)(c) are attracted when there is concealment of income or furnishing inaccurate particulars. The Tribunal held that the penalty order must specify the exact charge to allow the assessee to respond appropriately. In this case, as the penalty notice did not clearly indicate the nature of the charge, the Tribunal concluded that there was non-application of mind by the Assessing Officer, leading to the quashing of the penalty order. 4. The Tribunal relied on legal precedents and decisions to support its conclusion that the penalty order was not sustainable due to the lack of clarity in specifying the charge in the notice. Citing relevant judgments, including those of the Hon'ble Supreme Court and the Hon'ble High Court of Karnataka, the Tribunal set aside the order of the CIT(A) and allowed the appeal in favor of the assessee. The penalty order was quashed based on the principle that clarity in specifying the charge is essential for a penalty under section 271(1)(c) to be valid and sustainable. This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the legal principles applied by the Tribunal in reaching its decision to quash the penalty order.
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