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2016 (11) TMI 1727 - ITAT MUMBAIPenalty u/s 271(1)(c) - Defective notice u/s 274 - whether it is for concealment of income or for furnishing of incorrect particulars of income? - HELD THAT:- In New Sorathia Engg. Co [2006 (1) TMI 71 - GUJARAT HIGH COURT] it has been held that ‘where penalty order and order of Commissioner (Appeals) showed that no clear-cut finding had been reached as to whether penalty under section 271(1)(c) was being levied for concealment of particulars of income by assessee or whether any inaccurate particulars of income had been furnished, order of penalty could not be sustained. In CIT vs. Smt. Kaushalya [1995 (1) TMI 25 - BOMBAY HIGH COURT] has held that ‘The vagueness and ambiguity in the notice had also prejudiced the right of reasonable opportunity of the assessee since he did not know what exact charges he had to face. In this background, quashing of the penalty proceedings for the assessment year 1967-68 seems to be fully justified.’ We hold that the notice issued by the AO u/s 274 r.w.s. 271 for the AY 2003-04 for initiating penalty proceeding u/s 271(1)(c) of the Act in the present case is invalid. The order of the CIT(A) directing the AO to impose penalty u/s 271(1)(c) is thus set aside. Appeal filed by the assessee is allowed.
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