2021 (9) TMI 198 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - Whether the penalty levied u/s 271(1)(c) of the Act is void as the notice u/s 271(1)(c) is bad and defective as it is issued without deleting the appropriate clause under which the penalty proposed to be imposed either for filing of inaccurate particulars of income or for concealment of particulars of income, and as such, the notice is not sustainable and not curable - HELD THAT - Following the decisions rendered in the cases of CIT vs. Manjunatha Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT ,CIT vs. SSA s Emerala Meadows 2016 (8) TMI 1145 - SC ORDER and Pr. CIT vs. Sahara India Life Insurance Company Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT we are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. We are of the considered view that when the very initiation of the penalty by way of issuance of vague and ambiguous notices u/s 271(1)(c) read with section 274 of the Act without specifically charging the assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable and as such, the appeals filed by the assessee are allowed.- Decided in favour of assessee.

Summary

Issues involved:
Appeals against penalty u/s 271(1)(c) of the Income Tax Act, 1961 for Assessment Years 2009-10 to 2012-13 due to vague and ambiguous notice specifying the grounds for penalty.

Detailed Analysis:
The appeals were filed against the levy of penalties under section 271(1)(c) of the Income Tax Act, 1961 for different assessment years. The common grievance in all appeals was related to the penalty imposed. The Assessing Officer issued notices without specifying whether the penalty was for concealing income or furnishing inaccurate particulars of income. The appeals were heard together and disposed of in a common order for convenience. The additional ground raised by the assessee challenged the validity of the penalty notice, stating it was void due to lack of clarity in specifying the grounds for the penalty.

The Revenue objected to the admission of the additional ground, arguing that the penalty was justified for earning commission through clandestine activities. However, the counsel for the assessee contended that the issue was considered by the Commissioner of Income Tax (Appeals) in his order. Upon careful consideration, the Tribunal found that the Commissioner had indeed addressed the issue and referred to relevant legal decisions in support of their conclusion.

The Tribunal proceeded to address the additional ground raised by the assessee regarding the validity of the penalty notice. It was observed that the notices issued by the Assessing Officer were vague and ambiguous, making it unclear whether the penalty was for concealing income or furnishing inaccurate particulars. Citing legal precedents, including decisions by the Supreme Court and High Courts, the Tribunal concluded that penalties initiated through such unclear notices were not sustainable.

Referring to previous judgments, the Tribunal held that penalties based on vague and ambiguous notices were not valid. They noted that similar grievances had been allowed in previous cases by drawing support from relevant legal decisions. Consequently, the Tribunal directed the Assessing Officer to delete the penalties imposed under section 271(1)(c) for all the assessment years under consideration, and the appeals filed by the assessee were allowed.