Tribunal cancels penalty under section 271(1)(c) for lack of specificity in notice

The Tribunal allowed the Assessee's appeal, canceling the penalty imposed under section 271(1)(c) of the I.T. Act for the relevant assessment year. The decision was based on the lack of specificity in the notice issued by the A.O. regarding the specific limb of penalty proceedings, rendering the penalty illegal. The Tribunal cited previous judgments and legal principles, setting aside the lower authorities' orders and canceling the penalty in line with consistent views on the issue.

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Issues:
Levy of penalty under section 271(1)(c) of the I.T. Act, 1961 for A.Y. 1994-1995.

Analysis:
The appeal was filed against the Order of the Ld. CIT(A) challenging the penalty under section 271(1)(c) of the I.T. Act. The A.O. made additions on account of unexplained gifts and premium paid for gifts, initiating penalty proceedings. The A.O. issued a notice mentioning concealment of income or furnishing inaccurate particulars. The Revenue filed an appeal which was allowed by the High Court, leading to a fresh notice for penalty. The Assessee contended that the A.O. did not specify the limb of Section 271(1)(c) under which penalty proceedings were initiated. The Assessee relied on a previous ITAT order and argued that the penalty was not leviable. The Revenue argued that the Assessee was aware of receiving bogus gifts, justifying the penalty. The Tribunal noted discrepancies in the A.O.'s notices and referenced a similar case where the notice was deemed void, leading to the cancellation of penalty proceedings.

The Tribunal observed that the A.O. failed to clarify the specific limb of Section 271(1)(c) under which the penalty was initiated. Citing a previous ITAT order and a High Court judgment, the Tribunal held that the notice issued by the A.O. without specifying the limb of penalty proceedings rendered the penalty illegal. The Tribunal set aside the orders of the lower authorities and canceled the penalty, following the consistent view taken in previous judgments. The Tribunal's decision was based on the principle that a notice lacking specificity regarding the penalty's basis makes the penalty proceedings void and illegal.

Thus, the Tribunal allowed the Assessee's appeal, canceling the penalty imposed under section 271(1)(c) of the I.T. Act for the relevant assessment year. The Tribunal's decision was in line with previous judgments and legal principles regarding the initiation of penalty proceedings under the Income Tax Act.

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