2022 (9) TMI 589 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income? - HELD THAT - Penalty u/s 271(1)(c) was not leviable when the notice issued by AO did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. We, therefore, following the decision in the case of Sahara India Life Insurance Co. Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT are of the view that the AO was not justified in levying penalty under Section 271(1)(c) of the Act. We accordingly set aside the levy of penalty levied by Assessing Officer and that was confirmed by the learned Commissioner of Income-Tax (Appeals). Thus, the ground of the Assessee is allowed.

Summary

Issues:
Levy of penalty under Section 271(1)(c) of the Income Tax Act without specifying the charge.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) relating to the Assessment Year 2011-12. The Assessee, a company, had filed a return of income declaring Nil income, which was selected for scrutiny. The assessment resulted in additions and disallowances, leading to a penalty of Rs.14,17,600 under Section 271(1)(c) of the Act. The Assessee contested the penalty on various grounds, including the lack of specific charges in the notice issued. The Assessee's appeal raised multiple contentions challenging the imposition of the penalty.

The Assessee argued that the penalty proceedings were initiated without specific charges, which was a covered issue. Despite the absence of representation from the Assessee during the hearing, the issue was considered in light of the legal provisions. The Assessee relied on court decisions to support the contention that penalty proceedings without specifying the charge were not valid. The Learned DR supported the lower authorities' orders, emphasizing the importance of considering the Assessee's overall conduct in penalty imposition.

The Tribunal analyzed the issue of penalty under Section 271(1)(c) of the Act, noting the Assessee's argument regarding the lack of specification in the notice issued by the Assessing Officer. Citing a decision of the Delhi High Court in a similar case, the Tribunal found that penalty imposition without specifying the charge was not justified. The Tribunal highlighted that the Revenue failed to provide any contradictory material or binding decision to counter the precedent set by the Delhi High Court. Consequently, the Tribunal set aside the penalty levied by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals), thereby allowing the Assessee's appeal.

In conclusion, the Tribunal allowed the Assessee's appeal, emphasizing the necessity of specifying charges in penalty proceedings under Section 271(1)(c) of the Income Tax Act. The judgment highlighted the importance of adhering to legal requirements and precedents in penalty imposition, ultimately leading to the decision to set aside the penalty in this case.