Appeal granted, penalty canceled due to vague notice.

The Tribunal allowed the appeal, canceling the penalty imposed under section 271(1)(c) due to the lack of specificity in the notice issued by the Assessing Officer. The decision emphasized the necessity of a clear notice specifying the exact charge, following legal precedent. The Tribunal concluded that the penalty proceedings lacked proper application of mind and were therefore unsustainable.

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Issues Involved:
Levy of penalty under section 271(1)(c) of the Income Tax Act based on inaccurate particulars of income without specifying the exact charge in the notice.

Analysis:

Issue 1: Levy of Penalty
The appeal was filed against the order confirming the levy of penalty under section 271(1)(c) of the Act. The Assessing Officer (AO) had added a certain amount to the income of the assessee as long-term capital gains, treating it as income under section 68 of the Act. Subsequently, a notice was issued to the assessee under section 274 read with section 271, alleging concealment or furnishing of inaccurate particulars of income. The penalty was imposed based on this notice. The CIT(A) upheld the penalty, leading to the appeal.

Issue 2: Legal Precedents
The authorized representative of the assessee cited the judgment of the Hon'ble Karnataka High Court in a similar case, where it was held that a notice under section 274 must specify the exact charge, either for furnishing inaccurate particulars of income or concealing income. Failure to do so renders the penalty unsustainable. This ruling was also supported by a decision of the Kolkata ITAT. Additionally, the Supreme Court dismissed the revenue's SLP against the Karnataka HC judgment on the law of penalty, further emphasizing the importance of a valid notice specifying the charge.

Issue 3: Validity of Penalty Notice
The Tribunal noted that the notice issued by the AO did not specify whether the charge was for furnishing inaccurate particulars of income or concealing income. Citing a judgment related to a similar issue, the Tribunal held that a notice must clearly indicate the charge to provide the assessee with an opportunity to respond adequately. The failure to strike off irrelevant portions of the notice indicated a lack of application of mind by the AO, rendering the penalty unsustainable.

Issue 4: Decision and Conclusion
The Tribunal observed that the facts of the present case mirrored those of the Karnataka HC judgment. As the AO failed to specify the charge in the penalty notice, the Tribunal canceled the penalty levied and allowed the appeal of the assessee. By following the legal precedent and emphasizing the necessity of a clear notice, the Tribunal concluded that the penalty proceedings lacked proper application of mind and were therefore unsustainable.

In conclusion, the Tribunal allowed the appeal of the assessee, canceling the penalty imposed under section 271(1)(c) due to the lack of specificity in the notice issued by the Assessing Officer. The judgment highlighted the importance of a valid notice specifying the exact charge to ensure fairness and compliance with legal requirements.

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