Appeal allowed, penalty canceled under Section 271(1)(c) of Income Tax Act due to invalid notice.

The Tribunal allowed the appeal of the assessee, directing the Assessing Officer to cancel the penalty of Rs. 2,12,130 imposed under Section 271(1)(c) of the Income Tax Act. The Tribunal held that the penalty order was invalid as the show cause notice did not specify the charges of penalty, violating the requirements of the Act. The decision was based on the principle that penalties cannot be sustained if the grounds are not clearly outlined in the notice, following precedents from the Delhi High Court and other relevant case law.

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Issues:
Confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961 amounting to Rs. 2,12,130.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2010-11, specifically challenging the confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The assessee, an individual with income under the head 'business', initially filed a return of income on 30.03.2013 showing income of Rs. 5,37,710. The case was selected for scrutiny, leading to an assessment under section 144 of the Act where various additions were made, resulting in the determination of the assessee's income at Rs. 19,20,938. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act, alleging concealment of income or furnishing inaccurate particulars based on the disallowances made. The penalty proceedings were re-initiated after the assessee did not appeal the initial assessment order.

Subsequently, the Assessing Officer passed a penalty order under section 271(1)(c) of the Act, imposing a penalty of Rs. 2,12,130, stating that the assessee filed inaccurate particulars with the intention of concealing income. The assessee challenged this penalty order before the learned CIT (Appeals), who upheld the penalty. The assessee then appealed this decision, arguing that the penalty order was invalid as the Assessing Officer did not specify the charges of penalty under Section 271(1)(c) in the show cause notice or the penalty order itself. The Authorized Representative referred to relevant case law to support this argument.

The Tribunal considered the show cause notice issued by the Assessing Officer and noted that none of the twin charges were struck off, indicating that both charges of concealing income and furnishing inaccurate particulars were maintained throughout the proceedings. Despite the argument raised by the Authorized Representative, the CIT (Appeals) did not address this issue but confirmed the penalty based on the additions upheld. The Tribunal, in line with decisions from the Delhi High Court and other relevant case law, concluded that the penalty could not be sustained if the show cause notice did not specify the grounds under Section 271(1)(c) of the Act. Consequently, the Tribunal directed the Assessing Officer to cancel the penalty levied, reversing the decisions of the lower authorities and allowing the appeal of the assessee.

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