Invalid penalty notice under Sections 274 & 271(1)(c) deleted for lack of specificity.

The Tribunal found the penalty notice issued under Section 274 read with Section 271(1)(c) to be invalid due to lack of specificity regarding the charge for penalty. The notice did not comply with the requirement to specify whether the penalty was for "concealment of particulars of income" or "furnishing inaccurate particulars of income." Consequently, the penalty of Rs. 12,50,000 imposed for the Assessment Year 2012-13 was deleted, and the appeal of the assessee was allowed. Other arguments on the merits of the penalty were deemed academic.

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Issues Involved:
1. Legality of the penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act, 1961.
2. Specificity of the charge for penalty, i.e., whether for "concealment of particulars of income" or "furnishing inaccurate particulars of income."

Detailed Analysis:

Issue 1: Legality of the Penalty Proceedings
The appellant challenged the legality of the penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Year 2012-13. The penalty of Rs. 12,50,000 was imposed by the Assessing Officer (A.O.) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The appellant contended that the A.O. failed to specify whether the penalty was for "concealing the particulars of income" or "furnishing inaccurate particulars of income," which is a crucial requirement under Section 271(1)(c).

Issue 2: Specificity of the Charge
The appellant argued that the A.O. did not clearly specify the charge in the penalty notice issued under Section 274 read with Section 271(1)(c). The notice merely mentioned the section without specifying whether the penalty was for "concealment of particulars of income" or "furnishing inaccurate particulars of income." This lack of specificity was claimed to be a violation of the principles of natural justice, as it did not provide the appellant with a clear understanding of the charge to defend against.

Tribunal's Findings:
The Tribunal examined the penalty notice issued on 01.04.2015 and found that it did not specify the exact charge. The notice was generic, mentioning only the section without clarifying whether the penalty was for "concealment of particulars of income" or "furnishing inaccurate particulars of income."

The Tribunal referred to similar cases, including the decision in Varad Mehta (ITA No.693/Ind/16 dated 06.12.2018) and the judgment of the Hon'ble Jurisdictional High Court in PCIT Vs Kulwant Singh Bhatia (ITA No.9 of 2018 dated 9.5.2018). In these cases, it was held that a penalty notice must clearly specify the charge to comply with the principles of natural justice. A generic notice that does not specify the charge is invalid and untenable in law.

The Tribunal also cited the judgment in CIT V/s Manjunatha Cotton Ginning Factory, where the Hon'ble High Court of Karnataka held that a notice under Section 274 read with Section 271(1)(c) must specifically mention whether the penalty is for "concealment of income" or "furnishing inaccurate particulars of income." A generic notice fails to meet the legal requirements and denies the taxpayer the opportunity to defend against the specific charge.

Conclusion:
The Tribunal concluded that the penalty notice issued under Section 274 read with Section 271(1)(c) was invalid due to the lack of specificity regarding the charge. The notice suffered from the infirmity of non-application of mind by the Assessing Officer. Consequently, the Tribunal directed the deletion of the penalty of Rs. 12,50,000 imposed for the Assessment Year 2012-13.

The Tribunal allowed the appeal of the assessee, rendering other arguments on the merits of the penalty academic in nature.

Result:
The appeal of the assessee was allowed, and the penalty of Rs. 12,50,000 was deleted.

Order pronounced in the open Court on 30.04.2019.

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