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2021 (7) TMI 721 - AT - Income TaxPenalty levied u/s. 271(1)(c) or 271(1)(b) - CIT(A) while deleting the penalty has given a finding that the notice issued for levy of penalty had not specified the Section for which the penalty was levied as to whether it was u/s. 271(1)(c) or 271(1)(b) of the Act? - HELD THAT - We find that CIT(A) while deleting the penalty has given a finding that the notice issued for levy of penalty had not specified the Section for which the penalty was levied as to whether it was u/s. 271(1)(c) or 271(1)(b). As also given a finding that the notice issued was silent as to whether it was for concealment of particulars of income or was for furnishing inaccurate particulars of income. He has further given a finding that in the penalty order AO had initiated penalty for furnishing of inaccurate particulars of income but in the penalty order it was for concealment of income. The penalty imposed suffered from legal flaws and thus the imposition of penalty was untenable and thus deleted the penalty levied by AO. We for the reasons stated hereinabove while dismissing the appeal of the Revenue for A.Y. 2006-07 and for similar reasons dismiss the appeal of Revenue for A.Y. 2007-08 also. Thus appeal of Revenue is dismissed.
Issues involved:
Appeals against penalty order under section 271(1)(c) of the Act for Assessment Years 2006-07 & 2007-08. Analysis: Issue 1: Penalty imposition under section 271(1)(c) - AY 2006-07 The AO initiated a penalty under section 271(1)(c) based on additions made during assessment. However, the CIT(A) deleted the penalty citing flaws in the penalty notice, which did not specify the section under which the penalty was imposed or the nature of the default. The CIT(A) found discrepancies between the grounds for penalty initiation and the actual penalty imposed. The Tribunal upheld the CIT(A)'s decision, noting that the penalty imposition lacked legal validity due to these flaws. Issue 2: Grounds of appeal by Revenue - AY 2006-07 The Revenue raised multiple grounds challenging the CIT(A)'s decision. They argued that the CIT(A) erred in considering that no additions were made during assessment, thereby questioning the penalty under section 271(1)(c). The Revenue also contended that the CIT(A) overlooked specific mentions in the penalty notice and relied on general statements. Additionally, the Revenue disputed the application of explanation 1(A) to section 271(1)(c) by the CIT(A) and criticized the characterization of the notice as vague despite clear references to penalty initiation under section 271(1)(c). Issue 3: Identical issue for AY 2007-08 The issue raised for AY 2007-08 mirrored that of AY 2006-07, with the CIT(A) deleting the penalty for similar reasons. The Tribunal, finding no fault in the CIT(A)'s decision for AY 2006-07, dismissed the Revenue's appeal for AY 2007-08 as well. In conclusion, the Tribunal dismissed both appeals filed by the Revenue against the penalty orders for AY 2006-07 & 2007-08. The decisions were based on the flaws in the penalty notices and discrepancies in penalty imposition highlighted by the CIT(A), leading to the penalties being deemed untenable and subsequently deleted. The Tribunal upheld the CIT(A)'s findings, emphasizing the importance of legal validity in penalty imposition under section 271(1)(c) of the Act.
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