2025 (1) TMI 1735 - AT - Income Tax

Penalty notice under section 271(1)(c) invalid for failing to specify limb, resulting in dismissal of revenue appeals

Notice under section 271(1)(c) read with section 274 failed to specify which limbconcealment of particulars of income or furnishing inaccurate ... Penalty u/s 271(1)(c) - Validity of notice on non specifying limb of section 271(1)(c) - AR submitted that the notice issued by AO u/s 271 r/w section 274 of the Act, not specify that in which of the reasons penalty was proposed to impose i.e. whether for concealment the particulars of income or furnishing inaccurate particulars of such income HELD THAT:- We find that notice u/s 271(1)(c) r/w 274 of the Act itself bad in law which was unable to specify that in which limb of section 271(1)(c) penalty processed to be imposed and in that case foundation of imposing of penalty in question legally missing, which is mandatory required by law. It is relevant to mention here in the instant case, perusal of notice placed on record, evident the Ld. AO had not struck off or ticked the relevant portion thereon mentioning the specific offence committed by the assessee and above legal infirmity cannot be ignored. Appeals of the Revenue are dismissed. Issues: Whether the notice issued under section 274 read with section 271(1)(c) of the Income-tax Act, 1961 is invalid for failing to specify which limb of section 271(1)(c) (concealment or furnishing inaccurate particulars) the penalty proceedings were initiated under, and whether the penalty imposed by the Assessing Officer should therefore be sustained or deleted.Analysis: The Tribunal examined the penalty notices on record and relevant precedents addressing the requirement that a notice initiating proceedings under section 271(1)(c) must specify the particular limb under which penalty is proposed. The Tribunal noted that the notices did not indicate or mark which limb of section 271(1)(c) was invoked, creating a foundational defect in the proceedings. The Tribunal considered binding decisions holding that absence of such specificity renders the notice bad in law and found that the Assessing Officer had not cured this deficiency.Conclusion: The notice under section 274 read with section 271(1)(c) is invalid for lack of specific charge; the penalty founded on that notice cannot be sustained and the Revenue's appeals are dismissed in favour of the assessee.