2023 (4) TMI 945 - AT - Income Tax

Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - HELD THAT - Perusal of the notice shows that AO has mentioned both the charges in the notice rather than raising a specific charge on the assessee. Such type of notices where specific charges are not leveled against the assessee are found to be defective by various Hon ble Courts. AO has not specified the default and limb for which the penalty was proposed to be levied. Therefore the AO has initiated the penalty proceedings for concealment of particulars of income or furnishing inaccurate particulars of income. The AO was not sure about the default of the assessee whether it was concealment of particulars of income or furnishing inaccurate particulars of income.s Necessity of recording satisfaction - Satisfaction recorded by the AO in the assessment order it does not support the case of the revenue as the AO has stated that the penalty proceedings are initiated for inaccurate particulars whereas in the case in hand when the income was not at all declared in the return of income then it is a case of concealment of particulars of income and not furnishing inaccurate particulars of income. AO Statement that the assessee has consciously made the concealment by furnishing inaccurate particulars of his income is very vague and mixing up both the default of concealment as well as furnishing inaccurate particulars of income. Therefore the finding of the AO even in the impugned penalty order passed under section 271(1)(c) is not definite or correct. Decided in favour of assessee.

Summary

Issues involved:
The judgment involves confirming the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 without ensuring proper notice and specifying the default for which the penalty was proposed.

Issue 1: Condonation of Delay in Filing Appeal
The appeal was delayed by one day, and the reasons for the delay were explained by the assessee's representative, citing sickness of the assessee and technical problems. The Tribunal, after considering the submissions and supporting documents, condoned the delay in filing the appeal.

Issue 2: Validity of Penalty Imposed under Section 271(1)(c)
The assessee contended that the penalty levied under section 271(1)(c) was not justified as proper notice was not received, and the Assessing Officer (AO) did not specify the default for which the penalty was initiated. The AO issued a notice mentioning both concealment of income and furnishing inaccurate particulars, which was deemed defective by various courts. The AO's lack of clarity regarding the default rendered the penalty order invalid. Citing precedents, the Tribunal held that the defective notice made the penalty proceedings invalid and unsustainable in law, ultimately allowing the assessee's appeal.

Key Takeaways:
- The delay in filing the appeal was condoned due to valid reasons provided.
- The penalty imposed under section 271(1)(c) was deemed invalid as the AO failed to specify the default for which the penalty was initiated, rendering the penalty proceedings defective and unsustainable in law.
- The Tribunal allowed the assessee's appeal based on the defects in the penalty proceedings and the lack of clarity regarding the default for which the penalty was imposed.