Appeal allowed due to defective notice, penalty deleted under Section 271(1)(c). Precedents cited.

The Tribunal allowed the appeal, deleting the penalty imposed under Section 271(1)(c) due to the defective show cause notice that did not specify the charge of concealment of income or furnishing inaccurate particulars of income. Relying on precedents, including decisions from the Karnataka High Court, the Tribunal canceled the penalty, overturning the AO and CIT(A)'s decision. The order was pronounced on 8th February 2019.

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Issues Involved:
1. Validity of the show cause notice issued under Section 274 read with Section 271(1)(c) of the Income-tax Act, 1961.
2. Specificity of the charge in the show cause notice—whether it pertains to concealment of income or furnishing inaccurate particulars of income.
3. Legal precedents and their applicability to the case.

Issue-wise Detailed Analysis:

1. Validity of the Show Cause Notice:
The primary issue raised by the assessee was the validity of the show cause notice issued under Section 274 read with Section 271(1)(c) of the Income-tax Act, 1961. The assessee contended that the notice did not specify the exact charge—whether it was for concealment of particulars of income or for furnishing inaccurate particulars of income. The notice used a standard proforma without striking out the irrelevant portion, making it ambiguous and non-specific. This argument was supported by the submission of a copy of the show cause notice, which lacked clarity regarding the specific charge against the assessee.

2. Specificity of the Charge:
The assessee's counsel referenced several judicial decisions to support the argument that a penalty under Section 271(1)(c) cannot be imposed if the show cause notice is defective and does not specify the charge. Key cases cited included:
- CIT vs. SSA’s Emerald Meadows, where the Karnataka High Court held that a penalty is invalid if the show cause notice does not specify the charge.
- CIT vs. Manjunatha Cotton and Ginning Factory, which established that a vague notice without a specific charge is not compliant with the law.
- CIT vs. Shri Samson Perinchery, where the Bombay High Court followed the Karnataka High Court's decision, reinforcing that a defective notice cannot sustain a penalty.
- Suvaprasanna Bhattacharya vs. ACIT and Pr. CIT-19 vs. Dr. Murari Mohan Koley, where similar views were upheld by the ITAT and Calcutta High Court, respectively.

3. Legal Precedents and Applicability:
The Department's Representative (DR) opposed the assessee's submission by citing various case laws, including:
- Dr. Syamal Baran Mondal vs. CIT, where the Calcutta High Court held that the satisfaction of the AO need not be in specific terms.
- Decisions from the Mumbai ITAT and the Bombay High Court, such as CIT vs. Kaushalya and Earthmoving Equipment Service Corporation vs. DCIT, which suggested that a mistake in the language of the notice does not by itself invalidate the notice.

The Tribunal, however, noted that these cases were either not directly relevant or did not address the specific issue of the ambiguity in the show cause notice. The Tribunal emphasized that where two views exist, the one favorable to the assessee should be followed, as established in the case of Jeetmal Choraria vs. ACIT.

Conclusion:
The Tribunal concluded that the penalty imposed under Section 271(1)(c) could not be sustained due to the defective show cause notice, which did not specify whether the charge was for concealment of income or furnishing inaccurate particulars of income. The Tribunal followed the decisions of the Karnataka High Court and other supporting judgments, directing the cancellation of the penalty.

Result:
The appeal of the assessee was allowed, and the penalty imposed by the AO and confirmed by the CIT(A) was deleted.

Order Pronouncement:
The order was pronounced in the open court on 8th February 2019.

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