2020 (1) TMI 350 - AT - Income Tax

Penalty u/s 271(1)(c) - Non specification of charge - HELD THAT - We find that the notice issued u/s 274 r.w.s.271(1)(c) of the Act apparently goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s.274/271(1)(c) of the Act without specifying the assessee has concealed particulars of income or assessee has furnished inaccurate particulars of income so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law hence is not a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act. See M/S SSA S EMERALD MEADOWS 2016 (8) TMI 1145 - SC ORDER - Decided in favour of assessee.

Summary

Issues Involved:
Appeals against penalty imposition under section 271(1)(c) of the Income Tax Act for various assessment years.

Analysis:

1. Identical Issues in Appeals:
The appeals filed by the assessee were against the consolidated order of CIT(A)-2, Bhubaneswar, for multiple assessment years. The issues involved in all the appeals were similar, differing only in figures. With the consent of both parties, the appeals were heard together and disposed of by a consolidated order.

2. Penalty Imposition and Grounds Raised:
The primary issue revolved around the imposition of penalties under section 271(1)(c) of the Income Tax Act. The assessee challenged the penalty imposed by the Assessing Officer (AO) and upheld by the CIT(A) for various assessment years. The grounds raised by the assessee included objections to the penalty imposition based on lack of undisclosed income findings, absence of concealment of income, and reliance on legal decisions to support their case.

3. Background and Assessment Details:
The assessee derived income from consultancy fees and other sources, initially declaring income in the original return. Following a search and seizure action, the AO issued notices under section 153C of the Act, leading to revised income declarations and subsequent assessments. Penalties were imposed under section 271(1)(c) for different assessment years.

4. Appellate Proceedings and Legal Arguments:
The assessee appealed to the CIT(A) against the penalty orders, which were upheld. Subsequently, the appeals were brought before the Income Tax Appellate Tribunal (ITAT). During the proceedings, legal arguments were presented, highlighting the need for clear indications in penalty notices regarding the specific allegations leading to penalty imposition.

5. Tribunal's Decision and Legal Precedents:
After considering submissions and legal precedents, the ITAT found that the penalty proceedings initiated by the AO lacked specificity in indicating the grounds for penalty imposition. Citing relevant case law, including the decision of the Hon'ble Karnataka High Court in a similar case, the ITAT concluded that the penalty notices were invalid due to non-application of mind by the AO.

6. Tribunal's Ruling and Outcome:
Based on the legal principles established in previous judgments, the ITAT set aside the penalty orders for all assessment years under consideration. The ITAT canceled the penalties imposed by the AO and upheld by the CIT(A) for the respective years, allowing the sole ground raised by the assessee in all appeals.

7. Conclusion:
In conclusion, the ITAT allowed all appeals of the assessee, emphasizing the importance of clear and specific penalty notices in accordance with legal requirements. The decision highlighted the necessity for assessing officers to apply due diligence and provide adequate opportunity for the assessee to respond to allegations before imposing penalties under section 271(1)(c) of the Income Tax Act.