2022 (5) TMI 1148 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge - HELD THAT - As notable that in the assessment order the Assessing Officer alleges allegation of concealment of particulars of income whereas penalty has been imposed on the allegation of furnishing of inaccurate particulars of income and in the notice the Assessing Officer has not struck down / struck off irrelevant allegation and has made both the allegations simultaneously. Therefore, the issue is covered in favour of the assessee by the judgement of Sahara India Life Insurance Company Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT - Respectfully following the same penalty imposed by the Assessing Officer and confirmed by the ld. CIT (Appeals) is cancelled and the Assessing Officer is directed to delete the penalty. - Decided in favour of assessee.

Summary

Issues:
Challenge against penalty imposed under Section 271(1)(c) of the Income Tax Act for assessment year 2014-15 based on conflicting allegations of concealment and furnishing inaccurate particulars of income in the penalty notice.

Analysis:
The appeal was filed against the penalty order dated 21.11.2019 under Section 271(1)(c) of the Income Tax Act for the assessment year 2014-15. The assessee contested the penalty relying on the judgment of the Hon'ble Delhi High Court in a specific case. The Assessing Officer had issued a notice under Section 274 read with Section 271(1)(c) without specifying whether the penalty was for concealing particulars of income or furnishing inaccurate particulars of income. The Assessing Officer alleged concealment in the assessment order but imposed the penalty for furnishing inaccurate particulars of income. The assessee argued that the penalty notice was defective and cited relevant judgments, including the Hon'ble Delhi High Court's decision, to support the cancellation of the penalty.

The Senior Departmental Representative supported the penalty and the first appellate order. Upon careful consideration, the Judicial Member referred to the judgment of the Hon'ble Delhi High Court in another case where it was held that the penalty notice must specify the limb of Section 271(1)(c) under which the penalty proceedings were initiated. The court emphasized that the notice should clearly state whether the penalty was for concealment of income particulars or furnishing inaccurate particulars. In the present case, the Assessing Officer's notice did not differentiate between the two allegations, leading to a discrepancy between the allegation in the assessment order and the penalty imposed. The Judicial Member relied on the precedent set by the Hon'ble Delhi High Court and concluded that the penalty should be cancelled as the issue was covered in favor of the assessee. Consequently, the penalty imposed by the Assessing Officer was revoked, and the Assessing Officer was directed to delete the penalty.

In conclusion, the appeal of the assessee was allowed, and the penalty under Section 271(1)(c) for the assessment year 2014-15 was cancelled based on the defective penalty notice and the conflicting allegations of concealment and furnishing inaccurate particulars of income.