2019 (5) TMI 1551 - AT - Income Tax

Tribunal Cancels Penalties for Lack of Specificity in Notices

Sanjay Mittra Versus DCIT Central Circle-26 New Delhi

The Tribunal allowed all three appeals, canceling penalties imposed by the Assessing Officer and upheld by the CIT (A) for the assessment years 2008-09, ... Levy of penalty u/s. 271 (1) (c) - defective notice - non specification of charge - inappropriate words in the notice issued u/s 274 r.w.s. 271 have not been struck off - printed notice - HELD THAT:- As decided in assessee's own case [2018 (10) TMI 132 - ITAT DELHI] when the inappropriate words in the notice issued u/s. 274 r/w 271 (1) (c) have not been struck off and notice does not specify under which limb of the provisions, the penalty u/s. 271 (1) (c) has been initiated, therefore, the penalty so levied by the Assessing Officer and upheld by the CIT(A) is not sustainable. Impugned appeals are identical to the facts of the case decided by the Tribunal in assessee’s own case for A. Y. 2009-10, therefore, following similar reasoning we cancel the penalty levied by the Assessing officer and upheld by the CIT(A) since the inappropriate words in the notices issued for all the above three years have not been struck off and these are only printed notices. - Decided in favour of assessee Issues:Levy of penalty u/s. 271 (1) (c) of the IT Act for A. Y. 2008-09, 2010-11, and 2011-12.Analysis:Issue 1: Levy of penalty u/s. 271 (1) (c)The appeals were against the penalty orders dated 03.08.2016 of the CIT (A)-29, New Delhi for the assessment years 2008-09, 2010-11, and 2011-12. The penalty was imposed by the Assessing Officer and upheld by the CIT (A) under section 271 (1) (c) of the IT Act. The penalty amounts were Rs. 2,42,638/-, Rs. 4,49,151/-, and Rs. 3,40,435/- for the respective years. The Assessing Officer initiated penalty proceedings as the assessee did not appeal against the additions made during assessment. The assessee challenged the penalty stating that the show cause notice did not specify the charge against the assessee clearly. The assessee relied on various decisions to support this argument.Issue 2: Legal ArgumentsThe assessee argued that the notice issued under section 274 r/w. 271 (1) (c) did not specify the charge clearly, rendering the penalty invalid. The assessee cited previous decisions to support this claim. The Department, however, supported the penalty orders, citing legal precedents where notices with minor errors were deemed valid. The assessee emphasized that if two views are possible on an issue, the one favorable to the assessee should be followed. The assessee also referred to Section 292 BB, stating it would not rescue the revenue if the notice did not conform to the intent of the IT Act.Issue 3: Tribunal's DecisionThe Tribunal found merit in the assessee's argument, noting that the inappropriate words in the penalty notice were not struck off, and the notice did not specify the provision under which the penalty was initiated. Referring to a previous decision in the assessee's case for A. Y. 2009-10, where a similar issue was decided in favor of the assessee, the Tribunal ruled to cancel the penalty for all three years. The Tribunal emphasized that if two views are available on an issue, the one favorable to the assessee should be followed. The Tribunal considered the absence of jurisdictional High Court decisions on the issue and relied on the decision of the Hon'ble Supreme Court in the case of Vegetable Products Limited.ConclusionThe Tribunal allowed all three appeals filed by the assessee, canceling the penalties imposed by the Assessing Officer and upheld by the CIT (A) for the assessment years 2008-09, 2010-11, and 2011-12. The Tribunal based its decision on the lack of specificity in the penalty notices issued, following a similar ruling in the assessee's case for A. Y. 2009-10. The Tribunal emphasized the need to favor the view beneficial to the assessee in case of ambiguity. The penalties were canceled due to the inadequacy of the notices issued under section 274 r/w. 271 (1) (c).