2019 (12) TMI 28 - AT - Income Tax

Specific charge essential in penalty orders under IT Act: ITAT Rajkot ruling

The Appellate Tribunal ITAT Rajkot ruled in favor of the assessee, emphasizing the requirement for a specific charge in penalty orders under section ... Penalty u/s 271(1)(c) - whether it was levied for concealment of income or for furnishing inaccurate particulars of income? - HELD THAT:- Authorities below has failed to come to a definite finding regarding the charge/guilt committed by the assessee as mandated under section 271(1)(c) while either issuing of show-cause under section 271(1)(c) r.w.s. 274 of the Act or at the final stage of issuing penalty both of which suffer from ambiguity in the light of the judgment passed in the matter of Snita Transport Pvt. Ltd.-vs-ACIT [2012 (12) TMI 981 - HIGH COURT OF GUJARAT] whereby and whereunder the principle of specifying the guilt committed by the assessee in the show-cause under section 271(1)(c) as well as in the penalty order by the AO has been directed to be applied. AO has not mentioned the specific charge in its penalty orders as to whether it was levied for concealment of income or for furnishing inaccurate particulars of income. No such definite finding is reflecting from the orders impugned before us. Therefore, in our considered view, the penalty levied by the AO and confirmed by the Learned CIT (A) is not sustainable in the eye of law. The penalty is, thus, deleted. Hence, the ground of appeal of the assessee is allowed. Issues Involved:Penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2012-13 based on alleged concealment or furnishing of inaccurate particulars of income.Detailed Analysis:1. Reopening of the Case and Penalty Initiation:The case involved the reopening of the assessee's case in 2013 under section 148 of the Income Tax Act, followed by the determination of total income and initiation of penalty proceedings under section 271(1)(c) for alleged concealment or furnishing of inaccurate particulars of income. The penalty was confirmed by the first appellate authority, leading to the appeal before the Appellate Tribunal.2. Legal Criteria and Allegations:During the appeal hearing, the assessee's counsel argued that the penalty proceedings did not meet the criteria specified in section 271(1)(c) of the Act. The counsel contended that the penalty order lacked specificity regarding whether the assessee was guilty of concealing income or furnishing inaccurate particulars. Citing relevant judgments, including one from the Jurisdictional High Court, the counsel emphasized the necessity for a clear finding on the alleged guilt in penalty proceedings.3. Tribunal's Observations and Decision:The Tribunal noted that both the show-cause notice and the penalty order failed to specify the exact nature of the alleged guilt committed by the assessee. The Tribunal highlighted the ambiguity in the penalty order where both concealment of income and furnishing inaccurate particulars were mentioned without a clear determination. Drawing from legal precedents, the Tribunal emphasized the importance of a definite finding on the nature of the offense in penalty orders.4. Legal Precedents and Rulings:The Tribunal referenced judgments from the Jurisdictional High Court and other cases to underline the necessity for a clear and specific charge in penalty orders under section 271(1)(c) of the Act. It reiterated that without a conclusive finding on whether there was concealment of income or furnishing of inaccurate particulars, the penalty cannot be sustained. Consequently, the Tribunal concluded that the penalty imposed by the Assessing Officer and confirmed by the CIT(A) was not legally sustainable and proceeded to delete the penalty.5. Final Decision and Outcome:Based on the technical ground of lack of specific charge in the penalty order, the Tribunal allowed the assessee's appeal and deleted the penalty. As a result, the Tribunal refrained from adjudicating the grounds of appeal raised on merits, as the penalty deletion was the primary basis for the decision.In conclusion, the Appellate Tribunal ITAT Rajkot ruled in favor of the assessee, highlighting the necessity for a clear and specific charge in penalty orders under section 271(1)(c) of the Income Tax Act, ultimately leading to the deletion of the penalty in this case.