2022 (4) TMI 104 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - HELD THAT - Penalty under Section 271(1)(c) was not leviable when the notice issued by Assessing Officer did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. Appeal of assessee allowed.

Summary

Issues:
Levy of penalty under Section 271(1)(c) of the Income-Tax Act, 1961 for concealment of income or furnishing inaccurate particulars of income.

Analysis:
The judgment involved a group of nine appeals by different assessees for various assessment years. The issues in all these appeals were found to be identical. The authorized representative argued that the penalty notices issued by the Assessing Officer did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income, citing relevant case laws. The Departmental Representative did not contest this argument but emphasized considering the overall conduct of the assessee for penalty imposition.

The Tribunal examined the show-cause notice issued by the Assessing Officer and referenced judgments by the Delhi High Court and Bombay High Court. The Delhi High Court's decision in the Sahara India Life Insurance case emphasized the necessity of specifying the grounds for penalty under Section 271(1)(c) in the notice. Similarly, the Bombay High Court's ruling in the Mohd. Farhan Sheikh case highlighted the importance of precise notices without ambiguity, disapproving of issuing generic notices without deleting irrelevant parts.

The Tribunal noted that the Revenue did not provide any material to challenge the aforementioned court decisions. Consequently, the Tribunal concluded that the Assessing Officer was unjustified in levying the penalty under Section 271(1)(c) without specifying the grounds in the notice. Therefore, the Tribunal set aside the penalty imposed by the Assessing Officer and upheld by the Commissioner of Income-Tax (Appeals) in all the appeals.

In summary, the Tribunal allowed all the appeals of the assessees, ruling that the penalty under Section 271(1)(c) could not be levied due to the lack of specificity in the penalty notices. The judgment highlighted the importance of clear and unambiguous notices in penalty proceedings to ensure fairness and justice.