Assessee wins appeal, penalty deleted due to inadequate notice. Decision on July 26, 2018.

The Tribunal ruled in favor of the assessee, directing the deletion of the penalty imposed under section 271(1)(c) due to the inadequacy of the penalty notice in specifying the nature of the offense. The appeal was allowed, and the decision was pronounced in open court on July 26, 2018.

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Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order of the CIT(A) upholding the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2009-10. The Assessing Officer reopened the assessment due to discrepancies between receipts as per Form No.26AS and the income tax return. The assessee voluntarily disclosed additional income during the assessment proceedings. The penalty was imposed as 100% of the tax sought to be evaded. The CIT(A) upheld the penalty, stating that voluntary disclosure does not absolve the assessee from penal provisions, especially in cases involving suspicious transactions. The assessee challenged this decision before the Tribunal.

During the appeal, the assessee argued that the penalty notice did not specify whether it was for concealing particulars or furnishing inaccurate particulars of income. The assessee contended that in such cases, where inappropriate words in the notice are not deleted and the nature of the penalty is not specified, penalty under section 271(1)(c) cannot be levied. The Department, however, supported the CIT(A)'s decision, asserting that the assessee had concealed particulars by not declaring correct short term capital gains.

After considering both sides' arguments, the Tribunal found merit in the assessee's contention regarding the penalty notice. Citing a decision of the Hon'ble Karnataka High Court, the Tribunal held that if the penalty notice does not specify whether the assessee concealed particulars or furnished inaccurate particulars of income, the penalty under section 271(1)(c) should be deleted. The Tribunal referred to a Supreme Court order dismissing the Revenue's Special Leave Petition in a similar case. Consequently, the Tribunal set aside the CIT(A)'s order and allowed the assessee's appeal.

In conclusion, the Tribunal ruled in favor of the assessee, directing the deletion of the penalty imposed under section 271(1)(c) due to the inadequacy of the penalty notice in specifying the nature of the offense. The appeal was allowed, and the decision was pronounced in open court on July 26, 2018.

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