2017 (12) TMI 1468 - AT - Income Tax

Appellate Tribunal cancels penalty under Income Tax Act, citing lack of specificity in penalty order.

The Appellate Tribunal allowed the appeal, canceling the penalty imposed by the assessing officer and confirmed by the CIT(A) under section 271(1)(C) of ... Penalty under section 271(1)(C) - defective notice - Held that:- As decided in M/s MANJUNATHA COTTON AND GINNING FACTORY & OTHS. case [2013 (7) TMI 620 - KARNATAKA HIGH COURT] it is apparent that if the penalty proceedings have initiated on one limb and if the same are confirmed on another limb it is not proper. In the present case penalty proceedings are initiated for furnishing of inaccurate particulars of income and the penalty would have been levied stating concealment of income as well as furnishing of inaccurate particulars of income, both the charges. Therefore, it is apparent that the penalty levied by the Ld. assessing officer is vague, ambiguous and not specific. In view of this we cancel the penalty levied by the Ld. assessing officer and confirmed by the Ld. CIT (A) of ₹ 222142/– under section 271 (1) (C) of the act. In the result solitary issue raised in the appeal of the assessee is allowed. Issues involved:Challenge to confirmation of penalty under section 271(1)(C) of the Income Tax Act.Detailed Analysis:Issue 1: Challenge to CIT(A) orderThe appellant challenged the order of the Commissioner of Income-tax (Appeals) under Section 250 of the Income Tax Act, alleging dismissal of the appeal without considering submissions, provisions of law, and judicial precedents. The appellant sought to quash the order based on these grounds.Issue 2: Penalty ConfirmationThe main contention revolved around the penalty levied by the assessing officer and confirmed by the CIT(A). The assessing officer imposed a penalty of &8377; 222142 for disallowances offered by the appellant during assessment proceedings. The appellant argued against the 100% penalty levied without any inquiry or investigation by the assessing officer.Issue 3: Furnishing of Inaccurate ParticularsThe assessing officer alleged that the appellant furnished inaccurate particulars of income and concealed income, leading to the penalty imposition. The appellant contended that these charges are mutually exclusive and should not be applied together. The appellant also raised concerns about the penalty being levied for issues material to tax computation under different provisions.Issue 4: Lack of Specificity in Penalty OrderThe High Court's decision highlighted the importance of clarity in penalty proceedings. It emphasized that penalty initiation on one ground and confirmation on another is improper. In this case, the penalty was initiated for inaccurate particulars of income but confirmed for both concealment of income and furnishing inaccurate particulars, leading to ambiguity. Consequently, the penalty levied by the assessing officer was deemed vague and not specific.In conclusion, the Appellate Tribunal canceled the penalty imposed by the assessing officer and confirmed by the CIT(A) under section 271(1)(C) of the act. The decision was based on the ambiguity and lack of specificity in the penalty order, aligning with the principles outlined by the High Court regarding penalty proceedings. The appeal of the assessee was allowed, resulting in the cancellation of the penalty.