2019 (10) TMI 76 - AT - Income Tax

Penalty appeal dismissed due to vague notice - importance of clear penalty notices

ACIT, Circle-2 (1), Rajamahendravaram. Versus M/s. The Aryapuram Co-operative Urban Bank Ltd. And (Vice-Versa)

ACIT, Circle-2 (1), Rajamahendravaram. Versus M/s. The Aryapuram Co-operative Urban Bank Ltd. And (Vice-Versa) - TMI Issues Involved:Validity of notice issued by the Assessing Officer under section 271(1)(c) for concealment of income or furnishing inaccurate particulars.Issue Analysis:1. Delay in filing appeal:The Revenue filed an appeal against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2011-12, with a delay of 09 days. The Tribunal condoned the delay after finding sufficient cause presented by the Revenue in the affidavit.2. Background and Assessment:The assessee, a cooperative society engaged in banking, filed its return of income declaring total income. The assessment was completed under section 143(3) of the Income Tax Act, 1961, with certain additions. Subsequently, a penalty notice under section 271(1)(c) was issued, leading to a penalty order.3. Appeal and Penalty Deletion:The CIT(A) allowed the appeal of the assessee based on a previous ITAT order and deleted the penalty. The Revenue appealed to the Tribunal, contesting the deletion of the penalty.4. Validity of Notice:The main issue before the Tribunal was the validity of the notice issued by the Assessing Officer under section 271(1)(c). The notice was challenged by the assessee, arguing that it was vague and did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars.5. Judicial Precedents and Tribunal Decisions:The Tribunal referred to judgments of the Hon'ble Supreme Court and the High Court of Telangana & A.P., which emphasized the importance of clarity in penalty notices. It was noted that the notice issued by the Assessing Officer was not specific, leading to confusion about the grounds for penalty imposition.6. Decision and Dismissal of Appeal:Based on the precedents and the specific issue of the notice's validity, the Tribunal dismissed the appeal filed by the Revenue. The notice issued under section 271(1)(c) was deemed invalid, leading to the cancellation of the consequential penalty order. The cross objection filed by the assessee was also dismissed as it supported the CIT(A) order, which had become infructuous.7. Conclusion:The Tribunal's decision highlighted the importance of clear and specific penalty notices to ensure that the assessee has a fair opportunity to contest the proceedings. The judgment emphasized adherence to legal principles and judicial precedents in determining the validity of penalty imposition based on the notice issued by the Assessing Officer.This comprehensive analysis of the judgment focuses on the issues involved, the legal arguments presented, the relevant judicial precedents, and the Tribunal's decision regarding the validity of the notice and the consequent penalty order.