2018 (5) TMI 1262

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.... was selected for scrutiny and assessment is completed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') by assessing the total income at Rs. 7,69,207 after making additions on account of capital interest of Rs. 2,29,542/- and partners remuneration of Rs. 1,80,000/- and also disallowed agricultural income of Rs. 2,87,000/-. In the assessment order, the Assessing Officer has noted that the balance amount of Rs. 2,87,000/- from the sale of agricultural proceeds was not disclosed neither in the books of account nor in the return filed. Accordingly, assessment is completed. Addition is made and subsequently a penalty notice was issued under section 274 r.w.s. 271 of the Act. 3. On appeal, ld. CIT(A....

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....ulars of your income or furnished inaccurate particulars of such income." 8. From the above, it is not clear whether Assessing Officer has initiated penalty proceedings for concealment of particulars of income or for furnished inaccurate particulars. Therefore, the notice issued by the Assessing Officer is a vague notice and is liable to be quashed in the light of the decision of the Hon'ble Jurisdictional High Court in the case of Smt. Baisetty Revathi (supra) and also the decision of the Hon'ble Supreme Court in the case of SSA's Emerald Meadows (supra). The coordinate bench of the Visakhapatnam tribunal in the case of Konchada Sreeram Vs. ITO in ITA No. 388/VIZ/2015, by order dated 06/10/2017 has considered the validity of noti....

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....lars. As per the decision of the Hon'ble Jurisdictional High Court cited, for starting the penalty proceedings, the condition precedent is that the assessing officer must be satisfied that a person has either concealed the particulars of his income or furnished inaccurate particulars of such income. The person who is accused of the conditions mentioned in Section 271 should be made aware of the grounds on which imposition of penalty is proposed as he has a right to contest such proceedings and should have the full opportunity to meet the case of the revenue so as to show that the conditions stipulated in Section 271(1)(c) do not exist and that he is not liable to pay the penalty. The Hon'ble High Court of Karnataka in the case law cited hel....

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....r nor in the penalty notice, the assessing officer has put the assessee on notice for which offence, the penalty u/s 271 was initiated. Therefore, the case is squarely covered by the decision of the Hon'ble Jurisdictional High Court of cited (supra) wherein the Hon'ble high court held as under: "On principle, when penalty proceedings are sought to be initiated by the revenue under Section 271(1)(c) of the Act of 1961, the specific ground which forms the foundation therefore has to be spelt out in clear terms Otherwise, on assesee would not have proper opportunity to put forth his defence. When the proceedings are penal in nature resulting in imposition of penalty ranging from 100% to 300% of the tax liability, the charge must be unequivo....