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2021 (7) TMI 804 - AT - Income TaxPenalty u/s 271(1)(c) - additions made by AO and upheld by CIT(A) - Defective notice - non specification of charge - HELD THAT - . In the present case, the perusal of assessment order passed by the AO reveals that in the assessment order, no specific finding has been recorded by the AO as to whether it is a case of concealment of income or a case of furnishing of inaccurate particulars of income. Further in the notice dated 31.03.2004 issued u/s 274 r.w.s 271 of the Act, the inapplicable portion or limb of section 271(1)(c) of the Act has not been struck off. It is a settled law that the two limbs i.e. concealment of particulars of income and furnishing of inaccurate particulars of income carry different connotations. Various High Courts have held that AO must indicate in the notice for which of the two limbs he proposes to impose the penalty and for this the notice has to be appropriately marked. If in a printed format of the notice the inapplicable portion is not struck off thus not indicating for which limb the penalty is proposed to be imposed, it would lead to an inference as to non application of mind, thus vitiating imposition of penalty. See M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. 2019 (8) TMI 409 - DELHI HIGH COURT - Decided in favour of assessee.
Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act for Assessment Years 2010-11, 2011-12, and 2012-13. Analysis: 1. Assessee's Non-Appearance and Ex Parte Disposal of Appeals: The appeals were filed against the Commissioner of Income Tax (Appeals) order for the mentioned assessment years. The assessee did not appear during the proceedings, leading to the disposal of the appeals ex parte after considering the material on record and hearing by the Learned DR. 2. Consolidated Disposal of Appeals: The Learned DR pointed out that the issues in all three appeals were identical, differing only in the year and amounts involved. Therefore, the Tribunal decided to consolidate and dispose of all three appeals through a single consolidated order, referring to the facts of the Assessment Year 2010-11 for convenience. 3. Levy of Penalty under Section 271(1)(c) of the Act: The primary issue revolved around the levy of penalty under section 271(1)(c) of the Income Tax Act. The AO had imposed a penalty on the additions made during assessment, which was upheld by the CIT(A). The Tribunal analyzed the provisions of the Act regarding the imposition of penalties for concealment of income or furnishing inaccurate particulars of income. 4. Legal Principles and Precedents: The Tribunal emphasized that the AO must record satisfaction and make a finding on whether there was concealment of income or furnishing of inaccurate particulars. It was noted that the notice issued under section 274 r.w.s 271(1)(c) must specify the grounds for imposing the penalty, either for concealment or furnishing inaccurate particulars. Failure to strike off the inapplicable portion in the notice could lead to the penalty imposition being vitiated. 5. Judicial Precedent and Decision: The Tribunal referred to a decision by the Hon'ble Delhi High Court in a similar case, where it was held that penalty under section 271(1)(c) was not leviable if the notice did not specify the grounds for initiating penalty proceedings. Relying on this precedent and finding no material to the contrary, the Tribunal concluded that the AO was not justified in levying the penalty and set it aside. 6. Outcome and Disposal of Appeals: Based on the above analysis and following the precedent, the Tribunal allowed the assessee's appeal, setting aside the penalty for the Assessment Year 2010-11. The same reasoning was applied to the Assessment Years 2011-12 and 2012-13, leading to the setting aside of penalties for those years as well. Consequently, all three appeals of the assessee were allowed. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the levy of penalties under section 271(1)(c) of the Income Tax Act for the specified assessment years.
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