Tribunal overturns penalty for income concealment due to procedural error.

M/s. Sony DADC Manufacturing (India) Pvt. Ltd. Versus Assistant Commissioner of Income Tax, Range-11 (1), Mumbai

M/s. Sony DADC Manufacturing (India) Pvt. Ltd. Versus Assistant Commissioner of Income Tax, Range-11 (1), Mumbai - TMI Issues:
- Appeal against penalty under section 271(1)(c) of the Act.

Analysis:
1. The appeal was filed by the assessee against the penalty imposed under section 271(1)(c) of the Act for the assessment year 2003-04. The only issue raised was regarding the upholding of the penalty by the Ld. CIT(A). The penalty was initiated in the assessment order for furnishing inaccurate particulars of income and concealment of income. The notice under section 274 read with section 271(1)(c) was issued without specifying the particular limb for the penalty, leading to a challenge by the assessee on legal and merit grounds.

2. The Ld. CIT(A) dismissed the appeal after considering submissions, prompting the assessee to appeal further. The Ld. A.R. argued that the penalty order was invalid as the AO failed to specify the limb for the penalty in the notice. The penalty was levied for concealment of income, which was deemed incorrect based on legal precedents cited by the Ld. A.R. The case laws cited supported the argument that a penalty order without specifying the limb is flawed and against established legal principles.

3. On the other hand, the Ld. D.R. supported the penalty imposed by the AO, stating that the penalty proceedings were correctly initiated. The Ld. D.R. cited various legal decisions to support the position that the penalty order was in accordance with the provisions of the Act and the assessee had ample opportunity to respond during the proceedings.

4. After hearing both parties and reviewing the case, the Tribunal observed that the penalty proceedings were flawed as the AO did not specify the limb for the penalty in the notice. The penalty was imposed for concealment of income without proper notification to the assessee, violating principles of natural justice. The Tribunal found the penalty order to be legally unsustainable based on the cited legal precedents and directed the AO to delete the penalty. The appeal of the assessee was allowed, and the order was pronounced in favor of the assessee on 16.05.2019.