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2021 (8) TMI 468 - AT - Income TaxPenalty u/s 271(1)(c) - defective notice - non specification of charge - HELD THAT - As in the notice issued u/s 274 r.w.s 271(1)(c) there was no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income. From the notice dated 20/06/2014 (A.Y. 2006-07) produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. Besides that the Assessment Order also did not specify the charge as to whether there is concealment of income or furnishing of inaccurate particulars of income in assessee s case - we are taking up the contention of the assessee that there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 of the Act. This issue is squarely covered by the decision of the Hon ble Supreme Court in case of M/s SSA Emerald Meadow. 2016 (8) TMI 1145 - SC ORDER - thus inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. - Decided in favour of assessee.
Issues Involved:
1. Legality of the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. 2. Validity of the notice issued under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961. Detailed Analysis: 1. Legality of the Penalty Imposed Under Section 271(1)(c) of the Income Tax Act, 1961: The appeals concern the upholding of penalties imposed by the Assessing Officer (AO) under Section 271(1)(c) for various assessment years. The penalties were based on additional income disclosed before the Settlement Commission. The penalties imposed were as follows: - Assessment Year (A.Y) 2006-07: ?9,08,820/- - A.Y 2008-09: ?1,18,656/- - A.Y 2009-10: ?30,900/- - A.Y 2010-11: ?30,900/- The appellant argued that the penalties were imposed without recording clear satisfaction and without specifying the exact charge against the assessee, whether it was for "concealment of income" or "furnishing inaccurate particulars of income." The appellant relied on judicial precedents, including the Hon’ble Supreme Court's decision in SSA Emerald and the Hon’ble Delhi High Court's decision in Sahara India, to argue that the notice must unambiguously specify the charge. The tribunal noted that the AO did not specify the charge in the penalty notice or the assessment order, making the penalty order arbitrary and unsustainable. The tribunal emphasized that concealment of income and furnishing inaccurate particulars are distinct charges, and the AO must specify the charge under which the penalty is imposed. 2. Validity of the Notice Issued Under Section 274 Read with Section 271(1)(c) of the Income Tax Act, 1961: The tribunal examined the notice issued under Section 274 read with Section 271(1)(c) and found that it did not specify whether the penalty was for "concealment of income" or "furnishing inaccurate particulars of income." The tribunal referred to the Hon’ble Supreme Court's decision in M/s SSA’s Emerald Meadows, which held that such ambiguity in the notice renders it bad in law. The tribunal also cited the Hon’ble Karnataka High Court's decision in Commissioner of Income Tax v. Manjunatha Cotton & Ginning Factory, which was upheld by the Supreme Court, stating that the notice must specify the exact charge. The tribunal observed that the AO's failure to strike off the inappropriate words in the penalty notice and the lack of specific charge in the assessment order made the penalty proceedings invalid. The tribunal also noted that the AO ignored the specific penalty provision for search cases under Section 271AAB, further invalidating the penalty. In conclusion, the tribunal set aside the CIT(A)'s order and directed the AO to cancel the penalties imposed under Section 271(1)(c) for all the assessment years in question. The tribunal allowed all the appeals of the assessee, citing the lack of specific charges in the penalty notices and the assessment orders as the primary reason for quashing the penalties.
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