2021 (3) TMI 1231 - AT - Income Tax

Assessee wins appeals, penalties deleted by Tribunal due to unclear notice

Jay Prakash Didwania, Anita Didwania, Bina Didwania, Om Prakash Didwania Versus The ACIT, Central Circle-2, Bhubaneswar

Jay Prakash Didwania, Anita Didwania, Bina Didwania, Om Prakash Didwania Versus The ACIT, Central Circle-2, Bhubaneswar - TMI 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 ActAnalysis: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.