2019 (6) TMI 301 - AT - Income Tax

Appeal allowed, penalty cancelled under IT Act. Defective notice cited.

The appeal was allowed, and the penalty imposed under section 271(1)(c) of the I.T. Act, 1961 was cancelled. The Judicial Member found the show cause ... Levy of penalty u/s 271(1)(c) - non specification of charge - defective notice - HELD THAT:- From the perusal of the show cause notice Dated 30/31.03.2015, it is clear that the show cause notice issued by the A.O. for levy of the penalty under section 271(1)(c) of the Act to be bad in law as it did not specify in which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income. The entire penalty proceedings are, therefore, vitiated and no penalty is leviable. On this score itself, similar view is taken in the case of CIT vs. M/s. SSAs Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] as confirmed by the Hon’ble Supreme Court [2016 (8) TMI 1145 - SC ORDER] - Decided in favour of assessee Issues: Challenge to levy of penalty under section 271(1)(c) of the I.T. Act, 1961 due to defective show cause notice.Analysis:1. The appeal was filed against the Order of the Ld. CIT(A), Faridabad, challenging the penalty imposed under section 271(1)(c) of the I.T. Act, 1961 for the A.Y. 2007-2008.2. The Assessee contended that the show cause notice issued by the Assessing Officer (A.O.) before levying the penalty did not specify the limb of Section 271(1)(c) under which the penalty proceedings were initiated. Citing previous ITAT Delhi Bench orders, the Assessee argued that this defect rendered the notice invalid and the penalty should be cancelled.3. The Departmental Representative (D.R.) argued that the failure of the A.O. to specify the limb of Section 271(1)(c) in the show cause notice should not invalidate the penalty. The D.R. referred to an ITAT Chennai Bench order to support this argument.4. The Judicial Member considered the submissions and observed that the show cause notice did not specify the limb of Section 271(1)(c) under which the penalty proceedings were initiated, making the notice defective. Citing precedents from the Hon'ble Karnataka High Court and the Hon'ble Supreme Court, the Judicial Member concluded that the penalty proceedings were vitiated due to the defective notice. The Judicial Member noted that consistent views were taken by ITAT Delhi Benches in similar cases, leading to the cancellation of penalties. Consequently, the Judicial Member set aside the orders of the lower authorities and cancelled the penalty, ruling in favor of the Assessee.5. The appeal of the Assessee was allowed, and the penalty was cancelled.