2022 (11) TMI 121 - AT - Income Tax

Levy of penalty u/s 271 (1)( c) - defective notice u/s 274 - non specification of clear charge - AO initiated penalty u/s 271(1)(c) on both aspects, first on returned income as per section 153A of the Act as well as addition of 5% of obtaining accommodation entries - Before final computation of income, AO has initiated penalty proceedings in respect of the same for concealment of income, thereafter, after computing the income, he held that penalty proceedings are initiated separately for furnishing of inaccurate particulars of income - HELD THAT - As held by higher courts that unless the charge upon the assessee is specific, penalty u/s 271(1)(c) is not leviable on this account also. In this view of the matter also, in our considered opinion and on the facts and circumstances of the case, the assessee s case does not deserves to be visited the rigors of penalty u/s 271(1)(c) of the Act. Hence, we set-aside the order of the CIT(A) and deleted the penalty. Appeal filed by the assessee stands allowed.

Summary

Issues:
Levy of penalty u/s 271(1)(c) - Specific charge for concealment or furnishing inaccurate particulars of income - Proper satisfaction recorded by Assessing Officer - Merits of the case - Consideration of written submission and explanation.

Analysis:

1. Levy of Penalty u/s 271(1)(c):
The appeal contested the confirmation of a penalty of Rs. 15,24,915 under section 271(1)(c) by the Ld. CIT(A). The appellant argued that no specific charge for concealment or furnishing inaccurate particulars of income was framed before levying the penalty. The Assessing Officer initiated penalty proceedings for both aspects - the returned income as per section 153A and an addition related to commission paid for obtaining accommodation entries. The AO was uncertain about the charge, mentioning both inaccurate particulars and concealment. The ITAT Delhi found that a specific charge is necessary for imposing a penalty under section 271(1)(c). The tribunal held that the appellant's case did not warrant the penalty, setting aside the CIT(A)'s order and deleting the penalty.

2. Proper Satisfaction Recorded by Assessing Officer:
The appellant contended that no proper satisfaction was recorded by the Assessing Officer for initiating the penalty under section 271(1)(c). The ITAT Delhi did not find a clear satisfaction recorded by the AO, emphasizing the importance of specific charges for penalty imposition. The tribunal considered this lack of proper satisfaction as a factor in deciding that the penalty was not justified in this case.

3. Merits of the Case and Consideration of Written Submissions:
The appellant argued that on the merits of the case, no penalty under section 271(1)(c) was warranted, and the written submissions and explanations were not adequately considered. The ITAT Delhi reviewed the case, noting discrepancies in the AO's approach and the lack of specific charges. The tribunal found that the penalty was not justified based on the facts and circumstances presented, ultimately allowing the appeal and overturning the penalty decision.

In conclusion, the ITAT Delhi ruled in favor of the appellant, setting aside the penalty imposed under section 271(1)(c) for lack of specific charges, proper satisfaction by the Assessing Officer, and merit-based considerations. The judgment highlighted the importance of clarity in initiating penalty proceedings and considering all aspects of the case before levying penalties.