2020 (6) TMI 804 - AT - Income Tax

Tribunal cancels penalty due to lack of specificity in notice

The tribunal dismissed the Revenue's appeal against the cancellation of the penalty imposed under section 271(1)(c) for Assessment Year 2008-09. It held ... Penalty u/s 271(1) - defective notice u/s 274 - inappropriate words in the penalty notice has not been struck off - non specification of clear charge - HELD THAT:- It is pertinent to note that there is no concealment in the present case. The Assessee filed all the details during the regular assessment proceedings. From the notice dated 10.05.2010 produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon'ble Supreme Court in case of M/s SSA’ Emerald Meadows [2016 (8) TMI 1145 - SC ORDER] Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon’ble Karnataka High Court in the case of SSA’S Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] where the SLP filed by the Revenue has been dismissed is directly on the issue contested herein by the Assessee [2016 (8) TMI 1145 - SC ORDER] Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon’ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. [2019 (8) TMI 409 - DELHI HIGH COURT] will be applicable in the present case. The CIT(A) relying upon the decision of the Hon’ble Apex Court in case of CIT vs. Reliance Petro Products Pvt. Ld. [2010 (3) TMI 80 - SUPREME COURT] held that it is not the Assessing Officer’s case that the details supplied in the return are inaccurate. Merely because the assessee claimed the expenditure by virtue of a change of head of income and the claim was not acceptable to the Assessing Officer cannot per se attract penalty u/s 271(1)(c) of the Act. Thus, the CIT(A) has rightly deleted the penalty. The appeal of the Revenue is dismissed. Issues:- Appeal against order passed by CIT(A)-24, New Delhi for Assessment Year 2008-09.- Cancelation of penalty u/s 271(1)(c) without proper appreciation of confirmed additions.- Validity of penalty notice specifying charges under Section 271(1)(c).- Application of legal precedents in determining the validity of penalty imposition.Analysis:1. The appeal was filed by the Revenue against the order passed by CIT(A)-24, New Delhi for Assessment Year 2008-09. The grounds of appeal included the contention that the CIT(A) canceled the penalty u/s 271(1)(c) without properly appreciating the fact that the quantum of additions was confirmed, indicating inaccurate particulars of income by the assessee.2. The case involved the filing of the return of income in 2008, which was processed under section 143(1) of the Income Tax Act. Subsequently, the assessment was completed under section 143(3) with additions made for disallowances. The penalty proceedings under section 271(1)(c) were initiated, leading to the imposition of a penalty on the assessee.3. The key argument raised by the Revenue was that the penalty should not have been canceled as the additions were confirmed, indicating inaccurate particulars of income. The Revenue relied on the decision of the Delhi High Court in a specific case to support its position.4. The assessee, on the other hand, contended that the penalty notice was invalid as it did not specify the charges under section 271(1)(c) clearly. Legal precedents from the Karnataka High Court and the Apex Court were cited to support this argument.5. After hearing both parties and examining the material on record, the tribunal noted that there was no concealment in the case, as all details were provided during the assessment proceedings. The tribunal referred to legal precedents to emphasize the importance of specifying the charges clearly in the penalty notice under section 271(1)(c).6. The tribunal concluded that the penalty imposed under section 271(1)(c) was not sustainable due to the lack of clarity in the penalty notice regarding the specific charges. Legal decisions were cited to support this conclusion, highlighting the significance of specifying the grounds for penalty imposition clearly. The tribunal dismissed the appeal of the Revenue, upholding the cancellation of the penalty.7. In the final order, the tribunal dismissed the appeal of the Revenue, emphasizing the importance of clarity in penalty notices and the need to specify the charges under section 271(1)(c) accurately. The decision was pronounced in an open court session on 17th June 2020.