2021 (11) TMI 147 - AT - Income Tax

Tribunal cancels penalty due to lack of specificity in notice & order

Samal Infra Projects P. Ltd. Versus ITO Ward-3 (3) Noida Uttar Pradesh

The Tribunal allowed the appeal and set aside the penalty imposed under Section 271(1)(c) for furnishing inaccurate particulars of income. The decision ... Penalty u/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT:- From the notice produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. Besides that the Assessment Order also did not specify the charge as to whether there is concealment of income or furnishing of inaccurate particulars of income in assessee’s case. Thus, there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 of the Act. This issue is squarely covered by the decision of the Hon’ble Supreme Court in case of M/s SSA’ Emerald Meadow. [2016 (8) TMI 1145 - SC ORDER] Since in the instant case the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. - Decided in favour of assessee. Issues:Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income.Analysis:The appellant, engaged in construction business, filed its return for AY 2014-15 showing taxable income. The Assessing Officer added a sum to the income computation due to non-payment of service tax, leading to penalty proceedings for concealment or furnishing inaccurate particulars of income. The CIT(A) modified the penalty to inaccurate particulars. The appellant argued that the penalty notice did not specify the charge under Section 271(1)(c) of the Act, relying on legal precedents. The DR contended that the penalty order clearly mentioned inaccurate particulars. The Tribunal found the penalty notice and assessment order vague on the charge, citing legal judgments. The Tribunal referred to the Supreme Court's decision and quashed the penalty, noting the notice's deficiency and lack of specificity on the penalty charge. The Tribunal emphasized the importance of a specific charge for penalty proceedings under Section 271(1)(c) and directed cancellation of the penalty imposed. The appeal was allowed, and the penalty was set aside.This detailed analysis covers the issues involved in the legal judgment regarding the penalty under Section 271(1)(c) for furnishing inaccurate particulars of income. The Tribunal's decision was based on the lack of specificity in the penalty notice and assessment order, following legal precedents and emphasizing the need for a specific charge in penalty proceedings.