2019 (6) TMI 141 - AT - Income Tax

Assessee's Appeal Dismissed, Penalty Deleted due to Invalid Proceedings

Mohinder Singh Malik Versus ACIT, Circle 36 (1), New Delhi.

The Tribunal dismissed the assessee's appeal in quantum proceedings for the assessment year 2010-11 as not pressed. The penalty imposed under Section ... Penalty u/s 271(1)(c) - no specific charge had been mentioned in the show cause notices issued u/s 274 r/w 271(1)(c) - HELD THAT:- It is evident from the both the notices u/s 274 r.w.s. 271 for the impugned year that the AO has not specifically mentioned as to under which limb of Section 271(l)(c) the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Hon’ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton & Ginning Factor [2013 (7) TMI 620 - KARNATAKA HIGH COURT] We are of the considered view that the AO is required to specify which limb of Section 271 (1)(c), the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. From the perusal of the notices, it is clear that the AO has not specified as to under which limb of the section the penalty was imposable. The notices, in fact, are in the standard pro forma wherein the irrelevant clauses have not been struck off. This indicates non application of mind on the part of the AO while issuing the penalty notices. Thus, in the circumstances and facts of the case, the penalty proceedings initiated by the AO are bad in law - Decided in favour of assessee. Issues Involved:1. Dismissal of the assessee’s appeal in quantum proceedings.2. Confirmation of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961.3. Validity of penalty notices and orders issued by the Assessing Officer.Issue-wise Detailed Analysis:1. Dismissal of the Assessee’s Appeal in Quantum Proceedings:The assessee filed ITA 6739/Del/2018 challenging the order dated 16.11.2015 by the Commissioner of Income Tax (Appeals)-32, New Delhi, which dismissed the assessee’s appeal in quantum proceedings for the assessment year 2010-11. The quantum appeal was not pressed by the assessee’s Authorized Representative (AR) during the hearing, resulting in its dismissal as not pressed.2. Confirmation of Penalty Imposed Under Section 271(1)(c):The assessee also filed ITA No. 110/Del/2019 against the order dated 8.10.2019 by the Commissioner of Income Tax (Appeals)-12, New Delhi, which confirmed the penalty of Rs. 15,50,000 imposed under Section 271(1)(c) of the Income Tax Act, 1961. The CIT(A) reduced the penalty amount to Rs. 15,16,800 due to incorrect computation by the Assessing Officer (AO).3. Validity of Penalty Notices and Orders Issued by the Assessing Officer:The AR argued that the penalty proceedings were invalid due to non-specific charges in the show cause notices issued under Section 274 read with Section 271(1)(c) of the Act. The notices failed to specify whether the penalty was for 'concealment of income' or 'furnishing inaccurate particulars of income.' This was evidenced by the irrelevant portions not being crossed out in the notices and inconsistencies in the penalty order.The AR cited the Supreme Court's decision in CIT vs. SSA’s Emerald Meadows (2016) and the Karnataka High Court’s decision in CIT vs. Manjunatha Cotton & Ginning Factory (2013), which held that such non-specific notices are bad in law. The AR emphasized that this jurisdictional defect could not be cured, making the penalty unsustainable.The Departmental Representative (DR) contended that both charges were applicable and that the penalty could not be deleted solely on the ground of non-specification in the penalty notice. However, the Tribunal found that the AO had not specified the precise charge under Section 271(1)(c), indicating non-application of mind.Judgment:The Tribunal concluded that the penalty proceedings initiated by the AO were invalid due to the lack of specific charges in the notices, as required by law. Consequently, the penalty was deleted, and the impugned order was set aside.Final Result:- ITA 6739/Del/2018 was dismissed as not pressed.- ITA 110/Del/2019 was allowed, and the penalty was deleted.Order Pronounced:The order was pronounced in the open court on 31.05.2019.