TMI Blog2020 (6) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... HIGH COURT] has held that if the penalty notice is vague, then the penalty order is also bad in the eyes of law. Reasonable cause u/s 273B - Held that:- The assessee explained that delay happened due to the fact that for earlier year [i.e. AY 2014-15] the audit report could not be completed on time and could be completed only on 23-03-2016. This happened because the accountant of the assessee, who used to handle the accounts had suddenly left the office/service in earlier year without properly handing over the books maintained by the assessee. - Moreover, we also note that there has been several mistakes which has crept in the impugned penalty order of the AO, which shows total non- application of mind of necessary facts by the AO. Appeal of assessee is allowed. - I.T.A. No. 184/Gau/2019 - - - Dated:- 17-6-2020 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For the Appellant : Shri Sanjay Modi, FCA, ld.AR For the Respondent : Shri M. K.Das,Addl. CIT, Sr. DR ORDER PER SHRI A.T.VARKEY, JM This is an appeal preferred by the assessee against the order of Ld. CIT(Appeals), Dibrugarh dated 14-03-2019 for the AY 2015-16, confirming the penalty lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee the left the services without finalizing the accounts and another accountant was appointed in his place that resulted in delay in finalizing accounts as well as getting the accountants audited and hence caused delay in submission of Audit Report. 3. The explanation submitted by the assessee not acceptable penalty u/s 271 B of the Income Tax Act 1961 is hereby imposed. 4. In this background penalty u/ s 271 B @ 0.50% or ₹ 1,50,000/- of the total turnover whichever in less, the gross receipt of the assessee ₹ 2,08,57,841/- and penalty U/s 271 B of the Income Tax Act, 1961 is levied at ₹ 1,04,289/- with the prior approval of the Joint Commissioner of Income Tax for not obtaining and furnishing audit report before the specified date u/s 44AB of the Act. Accordingly demand notice, challan along with copy of the order is issued. 4. Aggrieved by the aforesaid order of penalty levied u/s. 271B of the Act, the assessee preferred an appeal before the ld. CIT(A), who was pleased to confirm the same by passing the impugned order. Aggrieved, the assessee is before us and pressed ground nos. 2, 3 7 of the grounds of appeal, which has been reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had been caught. He had simply stated that the assessee had no objection for the proposed penal action. Before a penalty is imposed, the assessee must be apprised of the precise charge brought against him. In the absence of a precise charge, the levy of the impugned penalty was not justified. 7. Moreover, the ld.AR also submitted that pursuant to the show cause notice issued by the AO proposing levy of penalty u/s. 271B of the Act, it was brought to the notice of AO that assessee s accountant had left the service/office without finalizing the accounts for the preceding FY i.e AY 2014-15 which was, therefore, completed only on 23-03-2016 and, therefore, for the year under consideration i. e AY 2015-16, the audit could not be completed within the stipulated date and could be completed only on 28-03-2016. Thus, according to ld AR the assessee could submit the TAR on 31-03-2016 along with return of income. Therefore, according to the ld. AR there was reasonable cause for not filing the tax audit report (TAR) within the stipulated time i.e by 30-09-2015. However, according to ld. AR the AO has not given any reason for rejecting the explanation as given by the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had filed return of income for the AY 2015-16 on 31-03-2016 along with TAR. Thereafter, we note the department accepted the return of income filed by the assessee by issuing intimation u/s. 143(1) of the Act on 28-05-2016. After two years on 15-05-2018, the AO had issued notice u/s. 274 read with section 271B of the Act proposing to levy of penalty u/s. 271B for the following faults: i) failed to get accounts audited or ii) failed to furnish a report of such audit as required u/s. 44AB of the Act . 11. Thus, we note that the AO has given a show cause notice, which is per-se vague. Thus, we note that the AO by issuing penalty notice u/s. 271B has not spelt out what was the fault for which the assessee is being proceeded against for levy of penalty. Since the AO has not struck down the irrelevant portion/fault which is not applicable in the facts and circumstances of the case, the notice reproduced (supra) is vague and therefore, bad in law as held by the Co-ordinate Bench of the Tribunal in the case of Parkinson Electrical Corprn (supra). We are of the opinion that notice proposing penalty should clearly spell out the fault/charge for which the assessee is put on no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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