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2023 (1) TMI 222 - AT - Income TaxPenalty u/s. 271(1)(c) - Defective notice u/s 274 - disallowance of sundry balances written off made by AO - As argued notices referred to above, issued u/s 274 read with 271(1)(c) by the AO are vague, having not specified any particular limb of the penalty and, therefore, the penalty is not leviable - HELD THAT:- In the instant case, the AO initiated the penalty under section 271(1)(c) of the Act for furnishing inaccurate particulars of Income and thereafter issued the notices u/s 274 r.w.s. 271(1)(c) of Act referred to above, for concealment of the particulars of income or filling of inaccurate particulars of income but without specifying any particular limb and finally vide penalty order dated 30.03.2019 imposed the penalty on furnishing of inaccurate particulars of income. Assessee by way of raising the plea which is legal in nature, challenged the Imposition of penalty mainly on the basis of notice itself, therefore we deem it appropriate to decide the legal issue involved in the instant case first, before dwelling into the merits of the case. Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] observed where AO proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court also held that the standard proforma of notice under section 274 of the Act without striking of the irrelevant clause would lead to an inference of non-application of mind by the Assessing Officer and levy of penalty would suffers from non-application of mind. The penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware as to what is the charge made against him, so that he can respond accordingly. Having regard to the manner in which the AO has issued the notices referred to above, under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb, under which the penalty proceeding has been initiated and proceeded with, apparently goes to prove that notices in this case have been issued in a stereotyped manner without applying mind which is bad in law, hence cannot be considered valid notices sufficient to impose penalty u/s 271(1)(c) - Appeal filed by the Assessee stands allowed.
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