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of <h1>Tribunal cancels penalty under I.T. Act citing lack of specificity in notice</h1> <h3>Shri Raj Kumar Through Legal Representative Shri Kapil Dev, C/o. Suresh and Associates Versus The Income Tax Officer, Ward-62 (2), New Delhi.</h3> The Tribunal ruled in favor of the Assessee, setting aside the penalty imposed under section 271(1)(c) of the I.T. Act, 1961. The Tribunal held that the ... Levy of penalty u/s 271(1)(c) - Defective notice - whether for concealment of particulars of income or furnishing inaccurate particulars of income? - HELD THAT:- The language used in the notice therefore clearly show that notice issued by the A.O. for levy of the penalty proceedings under section 271(1)(c) to be bad in Law as it did not specify in which limb of Section 271(1)(c) penalty proceedings have 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. We are fortified in our view by the Judgment in the case of Commissioner of Income Tax vs., SSA’s Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] which is confirmed by the Hon’ble Supreme Court [2016 (8) TMI 1145 - SC ORDER]. - Decided in favour of assessee. Issues:Levy of penalty under section 271(1)(c) of the I.T. Act, 1961 without specifying the grounds of penalty initiation.Analysis:The appeal was filed against the Order of the Ld. CIT(A)-20, New Delhi, challenging the penalty under section 271(1)(c) of the I.T. Act, 1961 for the A.Y. 1996-1997. The assessment was completed with an addition of &8377; 35,50,000 from loans taken, where the creditworthiness of depositors was not proven. The A.O. initiated penalty proceedings separately and the Ld. CIT(A) upheld the penalty after considering the assessee's submissions.The Assessee contended that the A.O. did not specify the grounds for penalty initiation in the assessment order or the notice. The Assessee argued that penalty cannot be levied without clarity on whether it is for furnishing inaccurate particulars of income or concealment of particulars of income. Legal precedents were cited to support this argument, emphasizing the importance of specifying the grounds for penalty initiation.The Tribunal found that the penalty was not leviable due to the lack of clarity in the A.O.'s notice before penalty levy. The notice did not specify the limb of Section 271(1)(c) under which the penalty proceedings were initiated, violating the law. Citing judgments from the Karnataka High Court and the Supreme Court, the Tribunal held that the penalty proceedings were vitiated by this lack of specificity. As the A.O. did not record satisfaction on the specific grounds for penalty initiation, the penalty was deemed unjustified. Therefore, the Tribunal set aside the Orders of the authorities below and canceled the penalty, allowing the appeal of the Assessee.In conclusion, the Tribunal ruled in favor of the Assessee, emphasizing the necessity of clearly specifying the grounds for penalty initiation under section 271(1)(c) of the I.T. Act, 1961. The lack of specificity in the notice before penalty levy rendered the penalty proceedings invalid, leading to the cancellation of the penalty.
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