2018 (6) TMI 510 - AT - Income Tax

Tribunal cancels penalty due to defective notice under section 271(1)(c)

The Tribunal dismissed the revenue's appeal and canceled the penalty imposed by the AO under section 271(1)(c). The decision was based on the defective ... Penalty u/s 271(1)(c) - addition made on account rent free accommodation and unexplained expenditure - defective notice - non specification of charge - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. Following the judgement in case of Jeetmal Choraria vs ACIT [2017 (12) TMI 883 - ITAT, KOLKATA] we cancel the penalty imposed by the A.O. under section 271(1)(c) and confirmed by the Ld. CIT(A) - appeal of revenue is dismissed. Issues:- Appeal against cancellation of penalty under section 271(1)(c) of the Act.Analysis:1. Background: The appeal was filed by the revenue against the cancellation of a penalty of Rs. 11,38,202 imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act.2. Assessment and Additions: The individual assessee had declared a total income of Rs. 4,92,990 for the relevant year. The AO determined the total income at Rs. 1,43,00,126 after making additions for rent-free accommodation and unexplained expenditure through credit card.3. Penalty Proceedings: The AO initiated penalty proceedings under section 271(1)(c) due to the assessee's inability to provide full evidence regarding the impugned expenses. The AO imposed the penalty as the explanation offered by the assessee was deemed unacceptable.4. CIT(A) Decision: The CIT(A) sustained the additions made by the AO to a certain extent. However, the CIT(A) canceled the penalty imposed under section 271(1)(c) based on several grounds, including the lack of evidence to prove concealment or furnishing inaccurate particulars of income.5. Tribunal Decision: The Tribunal considered the arguments of both sides and upheld the decision of the CIT(A) to cancel the penalty. The assessee contended that the notice issued by the AO for penalty proceedings was defective, as it did not clearly specify the charge against the assessee. The Tribunal relied on a previous decision and concluded that the penalty could not be sustained due to the defective notice.6. Conclusion: The Tribunal dismissed the revenue's appeal and canceled the penalty imposed by the AO under section 271(1)(c). The decision was based on the defective notice issued for penalty proceedings, in line with the precedent set by a previous case.This detailed analysis covers the issues involved in the legal judgment comprehensively, highlighting the key aspects of the case and the reasoning behind the decisions made by the authorities and the Tribunal.