Appeal successful for 2010-11 assessment, penalty nullified due to unclear notice. AO lacked jurisdiction for 2011-12 penalty.

The Tribunal allowed the appeal of the assessee for the assessment year 2010-11, citing invalid penalty imposition due to the notice not specifying the grounds clearly. The appeal against the penalty for the assessment year 2011-12 was dismissed as the AO lacked jurisdiction to levy the penalty. The Tribunal emphasized the importance of a penalty notice specifying grounds for penalty imposition under section 271(1)(c), resulting in the quashing of the penalty in both appeals.

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Issues:
1. Appeal against penalty under section 271(1)(c) for assessment year 2010-11.
2. Appeal against penalty under section 271(1)(c) for assessment year 2011-12.
3. Validity of penalty notice specifying the grounds for penalty imposition.

Analysis:

Issue 1: Appeal against penalty under section 271(1)(c) for assessment year 2010-11:
The appeal in this case arose from the order of the learned CIT(A) confirming the penalty under section 271(1)(c) for an amount of Rs. 11,22,318 due to a mistake by the staff of consultants in not filing the income tax return on time. The appellant argued that reliance was placed on the expertise of the consultants and the penalty should not be levied. The appellant also contended that the penalty was confirmed based on Explanation 3 to section 271(1)(c) without considering that non-compliance before the Assessing Officer did not vitiate the reasonable cause. The Tribunal allowed the appeal of the assessee for the assessment year 2010-11, citing a Supreme Court decision where it was held that the notice issued by the AO did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, rendering the penalty invalid.

Issue 2: Appeal against penalty under section 271(1)(c) for assessment year 2011-12:
For the assessment year 2011-12, the appeal against the penalty under section 271(1)(c) was dismissed by the Tribunal. Although the order of the learned CIT(A) was found to be reasoned and without infirmity, the Tribunal held that the AO did not have jurisdiction to levy the penalty based on a Supreme Court decision. The appeal of the Revenue for the assessment year 2011-12 was therefore dismissed.

Issue 3: Validity of penalty notice specifying the grounds for penalty imposition:
The Tribunal referred to a decision of the Hon'ble Supreme Court and a Division Bench of the Karnataka High Court, which emphasized the importance of the penalty notice specifying the grounds for penalty imposition under section 271(1)(c). It was held that the notice issued by the AO in this case did not specify the grounds clearly, leading to the quashing of the penalty imposed. The Tribunal concluded that the AO lacked jurisdiction to levy the penalty in both the appeals, resulting in the allowance of the assessee's appeal for the assessment year 2010-11 and the dismissal of the Revenue's appeal for the assessment year 2011-12.

In summary, the Tribunal allowed the appeal of the assessee for the assessment year 2010-11, dismissed the appeal of the Revenue for the assessment year 2011-12, and held the cross-objection as infructuous due to the lack of surviving appeals.

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