Penalty under I.T. Act for defective notice cancelled, Assessee's appeal successful

The penalty under section 271(1)(c) of the I.T. Act for A.Y. 2011-2012 was cancelled as the show cause notice was deemed defective for not specifying the exact reason for initiating penalty proceedings. The Assessee's appeal was successful, overturning the decisions of the lower authorities.

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Issues:
Challenge against levy of penalty under section 271(1)(c) of the I.T. Act, 1961 for A.Y. 2011-2012.

Analysis:
The appeal was filed against the order of the Ld. CIT(A)-20, New Delhi, challenging the penalty under section 271(1)(c) of the I.T. Act, 1961. The A.O. had initiated penalty proceedings for concealing income and furnishing inaccurate particulars. The penalty was levied for non-disclosure of provisional receipts in the return of income. The Assessee argued that the show cause notice was vague as it did not specify the exact reason for initiating penalty proceedings. The Assessee relied on a previous ITAT Delhi Bench case where it was held that penalty proceedings are void if the notice does not specify the exact reason for penalty. The Assessee's counsel contended that the penalty should be cancelled due to the defective notice.

The Departmental Representative (D.R.) argued that the Assessee had surrendered an amount on account of professional receipts not shown in the original return of income. However, the Assessee's mere surrender was deemed insufficient. The A.O. had initiated penalty proceedings for concealing income and furnishing inaccurate particulars. The language used in the assessment order, penalty order, and show cause notice was consistent. The Assessee contended that the show cause notice did not specify the exact limb of Section 271(1)(c) under which penalty proceedings were initiated, rendering the notice defective. The ITAT Delhi Bench's previous decision was cited in favor of the Assessee, emphasizing that a vague notice vitiates penalty proceedings. Consequently, the penalty was cancelled due to the defective notice.

In conclusion, the penalty levied under section 271(1)(c) of the I.T. Act was cancelled as the show cause notice was found to be defective for not specifying the exact reason for initiating penalty proceedings. The Assessee's appeal was allowed, setting aside the orders of the authorities below.

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