9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 1081 - AT - Income TaxPenalty u/s 271(1)(c) - Defective notice u/s 274 - non striking of inappropriate/irrelevant potion in notice - HELD THAT - Notice in this case is an omnibus show-cause notice as it does not strike off/delete the inappropriate/irrelevant/not applicable portion. Such a generic notice betrays a non-application of mind. Hence, the penalty levied pursuant to such a notice is not legally sustainable in law. Hence following the aforesaid precedent from Mohammed Farhan A. Shaikh 2021 (3) TMI 608 - BOMBAY HIGH COURT we hold that the Assessing Officer was bereft of valid jurisdiction as the notice issued to assessee is unsustainable in law. Hence, the penalty levied under section 271(1)(c) of the Act is liable to be rightly deleted by Ld.CIT(A). We uphold the order of Ld.CIT(A). - Decided in favour of assessee.
Issues Involved:
1. Validity of penalty notice under Section 271(1)(c) of the IT Act, 1961. 2. Whether the non-striking off of the irrelevant portion in the penalty notice invalidates the penalty. 3. Applicability of judicial precedents and decisions in similar cases. Detailed Analysis: 1. Validity of Penalty Notice under Section 271(1)(c) of the IT Act, 1961: The Revenue's appeals questioned the deletion of penalties under Section 271(1)(c) by the CIT(A). The central argument was whether the CIT(A) was correct in deleting the penalty on the technical ground that the penalty notice was invalid since the relevant portion was not struck off. The Revenue argued that the penalty was initiated for "furnishing inaccurate particulars of income," and the penalty order was consistent with this charge. 2. Non-Striking Off of Irrelevant Portion in the Penalty Notice: The CIT(A) and the ITAT examined whether the non-striking off of the irrelevant portion in the penalty notice caused any prejudice to the assessee. The CIT(A) initially upheld the penalty, agreeing with the AO's view that the assessee had not booked any income for the relevant year due to following the percentage completion method. However, the ITAT remitted the issue back to the CIT(A) to specifically examine if the penalty notice's failure to strike off the irrelevant portion invalidated the penalty. The CIT(A), upon re-examination, noted that in the notice issued by the AO, the irrelevant limb was not struck off. The CIT(A) referred to the ITAT's decisions in similar cases involving related concerns (M/s. Sarang Property Developers P. Ltd. and M/s. Kanakia Hospitality P. Ltd.), where penalties were deleted for the same reason. The CIT(A) concluded that judicial discipline required following these precedents, leading to the deletion of the penalty. 3. Applicability of Judicial Precedents and Decisions in Similar Cases: The ITAT upheld the CIT(A)'s decision, referencing the Bombay High Court's decision in Mohammed Farhan A. Shaikh Vs. PCIT, which emphasized that an omnibus show-cause notice without striking off irrelevant portions is invalid. The ITAT noted that such a generic notice betrays non-application of mind, rendering the penalty unsustainable in law. The ITAT's decision was also influenced by the Full Bench decision of the Bombay High Court, which held that the Revenue must provide clear and specific information to the assessee about the charge in penalty proceedings. Conclusion: The ITAT dismissed the Revenue's appeals, affirming that the penalty notices were invalid due to the non-striking off of irrelevant portions, following the precedent set by the Bombay High Court. The penalty levied under Section 271(1)(c) was rightly deleted by the CIT(A), and the decision was pronounced in open court on 20/09/2021.
|
