INCOME TAX ACT, 1961

Section 271(1)(c) Section 274

Penalty under section 271(1)(c) - Validity - Non-specification of change in notice issued under section 274 read with section 271(1)(c) -

After completing assessment penalty proceedings under section 271(1)(c) were initiated for concealing the income by furnishing wrong particulars of income thereafter penalty proceedings under section 271(1)(c) were completed levying penalty for the alleged payments made out of undisclosed sources of income for purchase of immovable property. CIT(A) upheld order of penalty.Held: Though in the instant appeal the AO had made proper satisfaction in the body of the assessment order but in the notice issued under section 274 read with section 271(1)(c) he failed to mention the limbs for which penalty proceedings had been initiated. It was the negligence of the AO in not making proper specific charge in the notice under section 274 about the addition for which penalty proceedings had been initiated. AO should be clear as to whether the alleged addition goes under the limb of 'concealment of particulars of income' or 'furnishing inaccurate particulars of income'. Merely issuing notice in general proforma would negate the very purpose of natural justice. Alleged notice issued under section 274 read with section 271(1)(c) was, therefore, invalid.

Followed:CIT v. Kulwant Singh Bhatia ITA No. 9/2018, dt. 9-5-2018, CIT v. SSA's Emeralad Meadows ITA No. 380/2015, dt. 23-11-2015, CIT v. Majunatha Cotton Ginning Factory (2013) 359 ITR 565 (Karn-HC) : 2014 TaxPub(DT) 202 (Karn-HC) and Dilip N Shraf 161 Taxmann 218(SC).

REFERRED : Chandra Prakash Babna (2015) 64 taxmann.com 155 (Kol-Trib), Baroda Tin Works (1996) 221 ITR 661 (Guj-HC) : 1996 TaxPub(DT) 493 (Guj-HC), M.M. Gujamgadi (2007) 162 Taxman 211 (Jar.) and T. Kodeeswaran (2009) 33 SOT 3 (Chen-Trib) (URO)Dhanya Kumar Jain (2016) 27 ITJ 505 (Trib. Indore) Jayash Parmar (2016) 27 ITJ 515 (Trib. Indore).

FAVOUR : In assessee's favour.

A.Y. : 2008-09

SUBSCRIBE FOR FULL CONTENT