2025 (7) TMI 30 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - Defective notice - as alleged notice issued by the AO was a vague notice in as much as the AO has not specified the charge against the assessee - HELD THAT - We observe that similar issue has been decided by the co-ordinate bench in the case of Riyas Nelliyote 2025 (4) TMI 661 - ITAT COCHIN as held that undisputed fact that the assessment order and the notice issued u/s. 274 is vague and is not clear under which limb the penalty has been initiated. Notice issued u/s. 274 is bad in law and consequentially the order imposing penalty u/s. 271(1)(c) of the Act arising therefrom is unsustainable - Assessee appeal allowed.

Summary

The Appellate Tribunal (ITAT Cochin) in the appeal concerning assessment year 2013-2014 addressed the sole issue of levy of penalty under section 271(1)(c) of the Income-tax Act. The assessee contended that the notice issued by the Assessing Officer (AO) under section 274 was vague and failed to specify the charge for penalty proceedings. The Tribunal relied on a precedent from a co-ordinate bench in Riyas Nelliyote (ITA No.767/Coch/2024), which held that a notice that does not specify whether the penalty is for "concealment of income" or "furnishing inaccurate particulars of income" is defective. Citing the jurisdictional High Court's ruling in PCIT v. Shri Ambady Krishna Menon, the Tribunal emphasized that such a defective notice renders the penalty under section 271(1)(c) "cannot be legally sustained." Applying this legal reasoning, the Tribunal held that since the notice and assessment order were vague and non-specific, the penalty imposed was unsustainable and quashed the penalty order. The appeal was allowed on this legal ground.