AO must specify exact charges in penalty proceedings under section 271(1)(c) - defective notices cannot be cured

The ITAT Chennai ruled that penalty proceedings under section 271(1)(c) were defective due to the AO's failure to specify exact charges against the assessee. The tribunal held that "concealment of income" and "furnishing inaccurate particulars" are distinct charges requiring specific identification before penalty imposition. The AO cannot leave charge determination to presumption or guesswork. Similarly, "under-reporting" and "misreporting" of income constitute separate charges that must be specifically framed. The tribunal deleted the penalties for all assessment years, citing the defective notice as fatal to proceedings and not curable under section 292BB.

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Issues Involved: The judgment deals with the issue of penalty levied under section 271(1)(c) for concealment of income and furnishing inaccurate particulars of income in assessment years 2016-17, 2017-18, and 2018-19.

Assessment Year 2016-17:
- The penalty was initiated based on the assessment order where the assessee admitted undisclosed income.
- The assessee argued that the penalty could not be levied based solely on a confessional statement.
- The contention that assessed income was the same as returned income was rejected.
- The Tribunal found that specific charges of concealment of income or furnishing inaccurate particulars were not properly framed by the Assessing Officer (AO).
- The Tribunal held that non-framing of specific charges would invalidate the penalty proceedings.
- Citing various judicial precedents, the Tribunal emphasized the importance of specifying the charge for levying a penalty.
- The penalty for concealment of income was deleted due to the failure to frame specific charges against the assessee.

Assessment Years 2017-18 & 2018-19:
- Penalty proceedings were initiated for under-reporting of income, and separate notices were issued for both years.
- The AO proposed penalties for under-reporting/misreporting of income without specifying the exact charge.
- The Tribunal, applying the same logic as in the previous year, deleted the penalties due to the lack of specific charges being framed.
- The penalties were deemed unsustainable in the eyes of the law.

In conclusion, the Appellate Tribunal held that the failure to frame specific charges of concealment of income or furnishing inaccurate particulars of income invalidated the penalty proceedings for all the assessment years in question. The penalties were deleted, and the appeals were allowed.

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