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2021 (5) TMI 955 - AT - Income TaxPenalty u/s.271(1)(c) - Defective notice u/s 274 - HELD THAT - As per the record, the assessment order speaks about levying the penalty on account of taken the action in view of provisions u/s 274 r.w.s. 271 (1)(c) of the Act but the notice nowhere specify any limb to levy the penalty. The notice is not justifiable in view of the law settled by the Bombay High Court in the case of CIT-11 Vs. Samson Perinchery. 2013 (11) TMI 369 - ITAT MUMBAI It is quite clear that the penalty is not leviable in accordance with law. Further, we noticed that the penalty was levied on account of filing the return of income in pursuance of notice u/s 153 r.w.s 153C of the Act. In the case of Kirit Dahyabhai Patel 2015 (1) TMI 201 - GUJARAT HIGH COURT . It is quite clear that the no penalty is leviable in the said circumstances, therefore, we delete the penalty. - Decided in favour of assessee.
Issues Involved:
1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961. 2. Validity of the penalty notice issued without specifying the charge. 3. Assessment of penalty in the context of returns filed under Section 153A post-search operations. 4. Application of Explanation 5 to Section 271(1)(c) for immunity from penalty. Detailed Analysis: 1. Legitimacy of the Penalty Levied under Section 271(1)(c): The primary issue in the judgment revolves around whether the penalty of ?3,51,546/- levied under Section 271(1)(c) of the Income Tax Act, 1961, was justified. The assessee argued that the penalty was levied without considering the facts and circumstances of the case, particularly the non-filing of the return under Section 139(1) and the disclosure of income post-search under Section 132. The Tribunal noted that the penalty was confirmed by the CIT(A) based on the assessment order, which did not specify the limb under which the penalty was levied—either for concealment of income or furnishing inaccurate particulars of income. 2. Validity of the Penalty Notice: The Tribunal emphasized that the penalty notice issued did not specify the particular charge, i.e., whether the penalty was for concealment of income or for furnishing inaccurate particulars of income. This ambiguity was considered a significant flaw. The Tribunal referenced the judgment in the case of CIT-11 Vs. Samson Perinchery, which highlighted that the non-specification of the charge in the penalty notice reflects non-application of mind by the Assessing Officer. The Tribunal also cited the Supreme Court's decision in Dilip N. Shroff, which appreciated the distinction between the two limbs and stressed the necessity for the assessee to be aware of the specific charge to defend accordingly. 3. Assessment of Penalty in the Context of Returns Filed under Section 153A: The Tribunal discussed the implications of filing returns under Section 153A post-search operations. It was noted that the penalty was levied on the income declared in response to the notice under Section 153A read with Section 153C. The Tribunal referenced the Gujarat High Court's decision in Kirit Dahyabhai Patel Vs. ACIT, which stated that the return filed in response to a notice under Section 153A should be considered as a return filed under Section 139 for the purpose of penalty under Section 271(1)(c). The Tribunal concluded that since the return was filed in compliance with the notice under Section 153A, no penalty should be levied on the disclosed income. 4. Application of Explanation 5 to Section 271(1)(c) for Immunity from Penalty: The Tribunal examined the applicability of Explanation 5 to Section 271(1)(c), which provides immunity from penalty if certain conditions are met during a search operation. The Tribunal referenced multiple judgments, including the Supreme Court's decision in Gebilal Kanbhaialal (HUF) and the Delhi High Court's decision in PCIT Vs. Neeraj Jindal, which clarified that if the assessee satisfies the conditions of Explanation 5, such as making a statement under Section 132(4) and paying the tax with interest, immunity from penalty should be granted. The Tribunal concluded that the assessee had met the conditions for immunity under Explanation 5, and therefore, the penalty was not justified. Conclusion: The Tribunal concluded that the penalty levied under Section 271(1)(c) was not sustainable due to the non-specification of the charge in the penalty notice and the compliance of the assessee with the conditions of Explanation 5 to Section 271(1)(c). Consequently, the penalty was deleted for all the assessment years involved. The appeals filed by the assessee were allowed.
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