2024 (11) TMI 490 - AT - Income Tax

Penalty u/s 271(1)(C) - notice issued u/s 274 r/w section 271(1)(c)of the Act is a defective one - as submitted that the charge has not been specified in the notice - HELD THAT - We note that assessee has duly raised issue against the assumption of jurisdiction for the levy of section 271(1)(c) that in the penalty notice, relevant limb was not specified whether the penalty proceedings were initiated for concealment of income or furnishing of inaccurate particulars of income. When the same was not so specified in the penalty notice it has been held in the case laws cited before us that mention of the same in the assessment order or penalty order cannot cure fatal short-coming. When the charge has not been specified in the notice, it is an omnibus notice. In such circumstances as decided in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT has held that the penalty order passed is liable to be quashed on account of this defect which is fatal. Full Bench of Hon ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) has held that no specification of charge in the penalty notice leads to same become void and penalty on that count is to be deleted. Thus as undisputed proposition that relevant limb of the penalty notice was not specified as to whether penalty was for concealment or furnishing of inaccurate particulars of income, we direct that the penalty in this case is liable to be deleted - Decided in favour of assessee.

Summary

Issues:
Jurisdictional issue of penalty notice specification.

Detailed Analysis:

The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals) for the Assessment Year 2012-13. The Assessing Officer had completed the assessment and initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, alleging inaccurate particulars of income by the assessee to reduce tax liability. The penalty imposed was Rs. 1,05,66,374 @ 100%.

The assessee appealed to the CIT (A) and made detailed submissions, but the appeal was dismissed. Aggrieved, the assessee raised two grounds of appeal before the ITAT. The first ground challenged the confirmation of the penalty, while the second ground contended that the Assessing Officer did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars.

During the proceedings, the assessee's counsel argued that the penalty notice was defective as it did not specify the charge, citing relevant case laws. The Revenue's representative objected to these submissions and supported the lower authorities' orders.

After considering the arguments and examining the records, the ITAT noted that the relevant limb for initiating penalty proceedings was not specified in the notice issued by the Assessing Officer. Citing case laws, including decisions by the Delhi High Court and the Bombay High Court, the ITAT held that the penalty order was liable to be quashed due to this fatal defect.

Based on the precedents and the failure to specify the relevant limb in the penalty notice, the ITAT directed the deletion of the penalty. Consequently, the ITAT set aside the orders of the lower authorities and ruled in favor of the assessee, deleting the penalty.

As the penalty was quashed on the jurisdictional issue, the ITAT did not delve into the merits of the penalty imposed, deeming it academic. Therefore, the appeal filed by the assessee was allowed, and the penalty was deleted.

The order was pronounced in the open court on October 22, 2024.