2021 (3) TMI 1231 - AT - Income Tax

Levying penalty u/s 271(1)(c) - whether the show cause is issued to the assessee for concealment of particulars of income or for furnishing inaccurate particulars of income? - HELD THAT - Bare perusal of the notice issued u/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 whether 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). There is no specific order as to whether any concealment of inaccurate particulars in view of the decision in the case of Reliance Petro Products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT and in the case of Manjunatha Cotton Ginning Factor 2013 (7) TMI 620 - KARNATAKA HIGH COURT - we direct the AO delete the penalty in all the captioned appeals for the years under consideration - Decided in favour of assessee.

Summary

Issues Involved:
- Appeal against order of CIT(A) for assessment years 2010-2011 to 2012-2013 & 2015-2016
- Confirming action of Assessing Officer in levying penalty u/s.271(1)(c) of the Act

Analysis:

1. Issue of Penalty Imposition:
The primary issue in all appeals was the confirmation of penalty imposition by the CIT(A) under section 271(1)(c) of the Income Tax Act. The Assessing Officer had initiated penalty proceedings for alleged concealment of income or furnishing inaccurate particulars of income. The Assessee argued that the notice did not explicitly specify the grounds for penalty, citing various judgments to support the contention that such ambiguity renders the penalty order liable for cancellation.

2. Judicial Interpretations:
The Assessee relied on judicial precedents, including the case of CIT vs. SSA's Emerald Meadows, where the Supreme Court held that failure to specify in the penalty notice whether it pertains to concealment or inaccurate particulars makes the penalty order invalid. The Assessee emphasized that the penalty notice lacked clarity, leading to a non-application of mind by the Assessing Officer.

3. Validity of Penalty Notice:
The Tribunal observed that the penalty notice issued by the Assessing Officer did not specify whether the penalty was for concealment or furnishing inaccurate particulars of income. Referring to legal precedents, the Tribunal concluded that the notice was defective, indicating a lack of application of mind by the Assessing Officer. Consequently, the penalty proceedings were deemed unsustainable.

4. Applicability of Section 292BB:
The Revenue argued that Section 292BB of the Act applied in the present case, contending that the notice issued was valid. However, the Tribunal disagreed, stating that Section 292BB did not apply as the issue was not about the issuance of notice but the lack of clarity in specifying the grounds for penalty imposition.

5. Decision and Outcome:
In line with the judicial pronouncements and the facts of the case, the Tribunal allowed all appeals of the Assessee, directing the Assessing Officer to delete the penalties imposed for the respective assessment years. The Tribunal emphasized the importance of clear and specific penalty notices to ensure fairness and compliance with legal requirements.

In conclusion, the Tribunal's detailed analysis and reliance on legal precedents highlighted the significance of clear and unambiguous penalty notices in penalty proceedings under section 271(1)(c) of the Income Tax Act, leading to the favorable outcome for the Assessee in this case.