2022 (3) TMI 467 - AT - Income Tax

Tribunal revokes penalty for lack of clarity in specifying tax offense

The Tribunal ruled in favor of the assessee, holding that the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 without specifying the ... Penalty u/s 271(1)(c) - defective notice u/s 274 - Non specification of charge - whether the penalty can be imposed without specifying the guilt either for concealment of income or for furnishing of inaccurate particulars of income in the present facts and circumstances of the case? - HELD THAT:- It was incumbent upon the Assessing Authority to come to a definite finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by them. If no such clear cut finding is reached by the authority, penalty cannot be levied. The principles laid down in case Snita Transport Pvt. Ltd. vs. ACIT [2012 (12) TMI 981 - HIGH COURT OF GUJARAT] are squarely applicable to the facts of the case in hand. At the cost of repetition we observe that the AO has not mentioned the specific charge/guilt in its penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. 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. - Decided in favour of assessee. Issues:1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 without specifying the guilt for concealment of income or furnishing inaccurate particulars of income.Analysis:The appeal was filed against the penalty order dated 08.05.2015 passed by the ITO, Ahmedabad under Section 271(1)(c) of the Income Tax Act, 1961 for A.Y. 2012-13. The assessee contended that the penalty proceeding did not meet the criteria laid down under Section 271(1)(c) of the Act. The Learned AO imposed the penalty mentioning both limbs of furnishing inaccurate particulars of income and concealment of income, which was deemed vague and ambiguous. The argument was supported by judgments from the Hon'ble Jurisdictional High Court and the Gujarat High Court. The CIT(A) confirmed the penalty order without considering the legal precedents cited by the assessee, leading to the appeal seeking quashing of the penalty order.During the hearing, the DR relied on the orders passed by the authorities below. The Tribunal considered whether the penalty could be imposed without specifying the guilt for concealment of income or furnishing inaccurate particulars of income. The penalty was levied for both aspects by the ITO and confirmed by the CIT(A) without making specific allegations against the assessee. However, Section 271(1)(c) restricts the initiation and imposition of penalty on the specific guilt committed by the assessee, either for concealment of income or for furnishing inaccurate particulars of income.The Tribunal referred to the judgment in the case of Snita Transport Pvt. Ltd. vs. ACIT, emphasizing that it was essential for the Assessing Authority to reach a definite finding on whether there was concealment of income or furnishing of inaccurate particulars. Since the AO did not specify the charge in the penalty order, the penalty was deemed unsustainable in the eyes of the law. Consequently, the penalty was deleted, and the appeal by the assessee was allowed.In conclusion, the Tribunal held that the penalty imposed without specifying the guilt for concealment of income or furnishing inaccurate particulars of income was not sustainable. The judgment highlighted the importance of clear findings by the Assessing Authority before levying penalties under Section 271(1)(c) of the Income Tax Act, 1961.