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2022 (4) TMI 589 - AT - Income TaxPenalty u/s 271(1)(c) - defective notice u/s 274 - non tickingoff any of limbs in notice - non striking of irrelevant portion in notice -addition of undisclosed income on account of on-money paid to Shri Mahendra B Chavda on purchase of land - HELD THAT - None of the limbs has been ticked by the assessing officer. That is, assessing officer has not ticked any of the limbs, therefore it is not clear whether assessing officer has initiated the penalty on account of furnishing inaccurate particulars of income or concealment of particulars of income. Thus, from the above notice for initiation of penalty under section 271(1)(c ) of the Act, we see that there is no fix charge whether assessee has concealed the particulars of income or furnished inaccurate particulars of income. It is by now well settled that while issuing a notice under section 271(1)(c) of the Act, the Assessing Officer is required to specify as to what is the default on the part of the assessee, as to whether the case is one of furnishing inaccurate particulars, or whether it is a case of concealment of income, or both. As stated above, no clear finding was given by the assessing officer regarding the invocation of the limb in the penalty notice. We note that Hon ble Supreme Court in the case of T Ashok Pai 2007 (5) TMI 199 - SUPREME COURT held that concealment of income and furnishing of inaccurate particulars of income carry different connotations. From the facts of the present case, it is abundantly clear that Assessing Officer has not fixed the charge on the assessee. Notice under section 271(1)(c) of the Act, issued by the assessing officer, does not speak about any specific charge for which the penalty on the assessee is to be levied. It is not clear as to whether the assessee is being penalized for the concealment of income or for the furnishing of inaccurate particulars of income.Assessing Officer did not strike off the irrelevant portion in the notice, therefore it is not clear for which particular default the assessee is being penalized. Considering these facts, and the precedents applicable to these facts, we are of the view that penalty should not be imposed on the assessee. Accordingly, we delete the penalty. - Decided in favour of assessee.
Issues Involved:
1. Legality of the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961. 2. Timeliness of the penalty proceedings. 3. Defectiveness of the penalty notice under Section 271(1)(c). Issue-wise Detailed Analysis: 1. Legality of the Penalty Levied under Section 271(1)(c) of the Income Tax Act, 1961: The primary issue revolves around the penalty of ?9,96,260/- levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2005-06. The AO imposed this penalty on the grounds of concealment of income, specifically relating to an unaccounted investment of ?30,00,000/-. The AO concluded that the assessee knowingly and deliberately concealed particulars of his income, warranting the penalty. 2. Timeliness of the Penalty Proceedings: The assessee argued that the penalty proceedings were time-barred. The timeline of events provided by the assessee indicated that the penalty order was passed beyond the prescribed time limit. The key dates include: - 06.09.2013: ITAT dismissed the appeal for non-prosecution. - 11.02.2014: Penalty show-cause notice issued. - 12.03.2014: Penalty order passed. - 30.07.2014: Miscellaneous application filed before the Tribunal. - 25.05.2015: CIT(A) order passed. - 10.10.2016: Tribunal allowed the Miscellaneous Application filed by the assessee. The assessee contended that after the Tribunal recalled its order, the AO should have issued a fresh notice under Section 271(1)(c), which was not done, rendering the penalty order time-barred. 3. Defectiveness of the Penalty Notice under Section 271(1)(c): The assessee also argued that the penalty notice issued under Section 271(1)(c) was defective as it did not specify the charge—whether it was for furnishing inaccurate particulars of income or concealment of income. The notice failed to tick any of the limbs, leading to ambiguity. The Tribunal observed that the AO did not clearly specify whether the penalty was for furnishing inaccurate particulars or for concealment of income. This lack of clarity was deemed a significant defect. The Tribunal referred to the Supreme Court's decision in T Ashok Pai (292 ITR 11) and the Bombay High Court's decision in Mohd. Farhan A. Shaikh (125 taxmann.com 253), which emphasized the need for clear specification of the charge in the penalty notice. The Tribunal concluded that the defective notice vitiated the penalty proceedings. Conclusion: The Tribunal found merit in the assessee's alternative argument that the penalty notice was defective due to the lack of specificity regarding the charge. Consequently, the Tribunal decided to delete the penalty imposed by the AO. The Tribunal did not address other arguments raised by the assessee, as the decision was based on the defective notice. Order: The appeal of the assessee was allowed, and the penalty was deleted. The order was pronounced on 08/04/2022 by placing the result on the notice board.
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