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of <h1>Delhi HC upholds deletion of penalty under Section 271(1)(c) for defective notice lacking specific charges</h1> <h3>Pr. Commissioner of Income Tax Delhi 1 Versus M/s. Blackroak Securities Pvt. Ltd.</h3> Pr. Commissioner of Income Tax Delhi 1 Versus M/s. Blackroak Securities Pvt. Ltd. - TMI Issues involved:The appeal concerns Assessment Year (AY) 2014-15. The main issue is the penalty amounting to Rs. 7,99,90,570/- imposed under Section 271(1)(c) of the Income Tax Act 1961. The Tribunal set aside the findings of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer to delete the penalty due to lack of clarity in specifying the limb under which the penalty is proposed to be levied.Details of the Judgment:*Issue 1: Lack of clarity in specifying the limb under Section 271(1)(c)*The Tribunal set aside the penalty order as the Assessing Officer (AO) failed to clearly specify whether the penalty was proposed for concealment of income or furnishing inaccurate particulars. The lack of clarity in the penalty order led to confusion regarding the charge against the respondent/assessee. The Tribunal emphasized the necessity of clearly indicating the specific limb of Section 271(1)(c) under which penalty proceedings are initiated, citing various judgments supporting this view.*Issue 2: Importance of specifying the limb of penalty*The judgment highlighted the significance of specifying the limb of penalty under Section 271(1)(c) to ensure clarity for the assessee and to determine the appropriate pecuniary burden. The AO's failure to indicate the specific limb in the penalty notice and assessment order was deemed crucial, as it impacts the severity of the penalty imposed. The Tribunal stressed that penalty proceedings entail civil consequences, requiring the AO to apply his mind and clearly communicate the nature of the charge to the assessee.*Issue 3: Consequences of ambiguity in penalty proceedings*Ambiguity in penalty proceedings, particularly regarding the specific limb of Section 271(1)(c) under which penalty is imposed, can lead to legal challenges and potential invalidation of the penalty order. The judgment emphasized that in cases where concealment of income is involved, a heavier penalty may be warranted compared to situations involving inaccurate particulars. The Tribunal reiterated that specifying the relevant limb in penalty proceedings is essential to ensure fairness and transparency in tax assessments.*Conclusion:*The High Court upheld the Tribunal's decision to set aside the penalty order due to the lack of clarity in specifying the limb under Section 271(1)(c). The judgment underscored the importance of clearly indicating the nature of the charge in penalty proceedings to safeguard the rights of the assessee and ensure a fair assessment process. As no substantial question of law arose, the appeal was closed, and the application for condonation of delay was rendered infructuous. Parties were instructed to act based on the digitally signed copy of the order.
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