2024 (1) TMI 260 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - not specification of clear charge - HELD THAT - As relying on MANJUNATHA COTTON AND GINNING FACTORY 2013 (7) TMI 620 - KARNATAKA HIGH COURT and MR. MOHD. FARHAN 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) and M/S SSA'S EMERALD MEADOWS 2016 (8) TMI 1145 - SC ORDER since, the Assessing Officer has not been specified under section 274 as to whether penalty is proposed for alleged concealment of income or furnishing of inaccurate particulars of such income , the penalty levied is hereby obliterated. Appeal of the assessee is allowed.

Summary

Issues involved:
The appeal against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2011-12 regarding the penalty levied under section 271(1)(c) by the Income-tax Officer, Ward 6(3).

Grounds of Appeal:
1. The appellant challenged the penalty of Rs. 34,34,000 confirmed by the Commissioner of Income-tax (Appeals) under section 271(1)(c).
2. Dispute arose regarding the proposed disallowance under section 14A and loss on sale of flats, with no clear satisfaction recorded during assessment.
3. Allegations of vague notice issuance without proper application of mind and violation of natural justice principles.
4. Error in confirming penalties under a wrong provision and non-compliance due to reasonable cause.
5. Lack of specific consideration of appellant's submissions and ex parte order issues.
6. Request for deletion of the illegally levied penalty.

Assessing Officer's Decision:
The Assessing Officer added Rs. 34,34,000 to the total income for concealment and inaccurate particulars, resulting in the penalty under section 271(1)(c).

Judgment Analysis:
The Assessing Officer imposed the penalty under Explanation 1(A) to section 271(1)(c) for furnishing inaccurate particulars of income and concealing true income. However, the notice issued did not specify whether the penalty was for concealment or furnishing inaccurate particulars, leading to a legal flaw as per precedents. Citing relevant judgments, including the Karnataka High Court and the Delhi High Court, the Tribunal annulled the penalty due to the vague notice failing to meet legal requirements.

Conclusion:
The Tribunal allowed the appeal, obliterating the penalty due to the notice's deficiency in specifying the grounds for penalty imposition. The decision was based on legal precedents emphasizing the importance of clearly stating the grounds for penalty in the notice issued to the taxpayer.