2025 (4) TMI 1896

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.... following grounds of appeal: "1. That under the facts and circumstances of the case, no penalty u/s 271(1)(c) should had been levied, hence, the impugned order levying penalty of Rs. 2,62,650/- needs to be quashed. 2. That the very initiation of penalty is bad in law as the Ld. AO has failed to record a proper or transparent satisfaction in his notice while initiating proceedings under section 271(1)(c), thus rendering the entire penalty proceedings null and void. 3. That under the facts and circumstances, the initiation of penalty proceedings under section 271(1)(c) are illegal and unsustainable in law, in view of legal interpretation and the settled judicial pronouncement by various courts and benches of tribun....

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....ccepted by the AO. Subsequently, notice u/s 274 of the Act was issued for initiation of penalty u/s 271(1)(c) of the Act. The AO imposed the penalty accordingly and this order was upheld by the ld. CIT(A). 4. Before the ld.CIT(A),the assessee claimed that the AO in the show cause notice for levying penalty did not specifically pointed out as to whether the penalty was w.r.t. concealment of income or furnishing inaccurate particular of income. Accordingly, the show cause notice was claimed to be defective on which no penalty could be imposed. The ld.CIT(A),however, rejected the contention of the assessee and held that mere not striking off of one limb in the show cause notice issued u/s 274 of the Act will not invalidate the whole penalty....

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..... 6. The learned DR has relied on the orders of lower authorities holding that penalty was rightly initiated and imposed. 7. We have carefully considered the rival submissions, contents of the penalty order, appellate orders, provisions of the Act in this regard as also the relevant case laws. It may be stated here that similar issue has already been dealt with by this Bench in its recent decision in the case of Raj Kumar Agrawal vs CIT for Assessment Years 2012-13 to 2016-17 in ITA No.255- 258/Ran/2023 dated 26th August 2024. In this case also, the assessee contested penalty order u/s 271(1)(c) on alleged defective notice issued u/s 274 of the Act. The Bench after taking note of the facts of the case and proposition of law as emergin....

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....e charge of penalty is not specific in the notice issued to the assessee u/s 274 r.w.s.271(1)(c) of the Act, meaning thereby if such notice is ambiguous as to whether penalty is levied for concealment of income or for providing of inaccurate particulars of income, then such notice is void ab initio and bad in law. This view of the Hon'ble Karnataka High Court was upheld by the Hon'ble Apex Court whereby the SLP filed by the Department was dismissed in CIT vs. SSA Emeralds Meadows (2016 )242 taxmann 180 (S.C). 6. We must reiterate and we feel appropriate in this context of adjudication also to revisit the classic decision of Hon'ble Karnataka High Court in CIT & Anr. vs. Manjunatha Cotton & Ginning Factory 359 ITR 565 (K....