2021 (4) TMI 816 - AT - Income Tax

Penalty u/s 271(1)(c) - initiation of penalty is bad in law for the reason that penalty notice is vague as it does not specify the charge of penalty that whether the same is being levied for concealment of particulars of income or furnishing inaccurate particulars of income - HELD THAT - It is pertinent to note that the actual limb of Section 271(1)(c) is not mentioned by the Assessing Officer and from the perusal of the penalty order it can be seen that the reasoning and satisfaction imposing penalty is not as per the provisions of penalty under Income Tax Statute. As per the Ld. AR on merit as well the penalty cannot be levied and when we have seen the order of the Tribunal confirming the addition made by the Commissioner of Income Tax, it appears that the same does not tantamount for imposing penalty as the assessee was under bonafide belief while not quantifying the said amount in the income of the assessee. Tribunal in quantum has deleted the addition with reference to which impugned penalty was imposed vide order in assessee s own case bearing 2019 (12) TMI 1035 - ITAT DELHI -Thus, the addition upon which the penalty is imposed no longer sustains and hence, the penalty also does not survive. Hence, the appeal of the assessee is allowed.

Summary

Issues:
- Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 without proper jurisdiction and satisfaction.
- Lack of specificity in penalty notice regarding the charge of penalty.
- Barred by limitation as per section 275(1)(b) of the Income Tax Act, 1961.

Imposition of Penalty without Proper Jurisdiction and Satisfaction:
The appeal was filed against the order passed by the CIT(A) imposing a penalty under section 271(1)(c) of the Income Tax Act, 1961. The grounds of appeal highlighted that the penalty was imposed without assuming proper jurisdiction, lacking the necessary satisfaction, and not adhering to the principles of natural justice. The CIT observed that the assessment was done without adequate inquiry and subsequently passed an order under section 263. The penalty notice was issued, and the penalty was imposed by the Commissioner of Income Tax without specifying the charge of penalty, leading to a challenge by the appellant regarding the legality of the penalty imposition.

Lack of Specificity in Penalty Notice:
The appellant raised concerns regarding the penalty notice's vagueness as it did not specify whether the penalty was initiated for "concealment of income" or "furnishing inaccurate particulars of income." The appellant contended that the penalty notice's lack of clarity rendered it invalid and illegal. The argument was supported by citing various judicial decisions, emphasizing the importance of clearly specifying the grounds for imposing a penalty under section 271(1)(c) of the Income Tax Act, 1961.

Barred by Limitation as per Section 275(1)(b):
The appellant further argued that the penalty order was barred by limitation under section 275(1)(b) of the Income Tax Act, 1961. It was contended that the penalty order should have been passed within six months from the end of the month in which the revision order was issued. The appellant relied on legal provisions and a High Court decision to support the argument that the penalty order, passed after the specified time frame, was not in compliance with the statutory requirements.

Conclusion:
After considering the arguments presented by both parties, the Tribunal found that the penalty imposition lacked proper jurisdiction and satisfaction. The Tribunal noted that the addition upon which the penalty was imposed no longer sustained as per the earlier order, leading to the conclusion that the penalty itself did not survive. Consequently, the appeal of the assessee was allowed, and the penalty order was set aside, emphasizing the importance of adhering to legal procedures and ensuring clarity in penalty notices to maintain the integrity of the penalty imposition process.

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