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2022 (1) TMI 77 - AT - Income TaxPenalty u/s 271(1)(c) - Defective notice u/s 274 - HELD THAT:- In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 . It is true, that assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.Thus, it is clear that where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice, not striking off irrelevant matter would vitiate penalty proceedings. In the preset case notices two limbs are mentioned viz (i) concealed the particulars of income and (ii) furnished inaccurate particulars of income. The assessing officer has not ticked any of the limbs in the notice issued u/s 271(1)(c) of the Act therefore penalty proceedings are bad in law. On the identical facts our view is fortified by the judgment of the Hon`ble Gujarat High Court in the case of Jyoti Ltd, [2013 (7) TMI 173 - GUJARAT HIGH COURT], wherein it was held where Assessing Officer in order of penalty did not come to a clear finding regarding penalty being imposed on concealment of income or on furnishing inaccurate particulars of income, Tribunal was justified in setting aside impugned penalty order. Thus, respectfully following the judgment of the Hon`ble Bombay High Court and Hon`ble Gujarat High Court, we delete the penalty. - Decided in favour of assessee.
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