INCOME TAX ACT, 1961

Sections 271(1)(c) & 274

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars of income - Initiation of penalty proceedings on one limb but penalty imposed on other limb -

AO initiated penalty proceedings for furnishing of inaccurate particulars of income by issuing notice under section 274 read with section 271, but the penalty was imposed for concealment of particulars of income. Assessee's contention was that the AO had not mentioned particular limb under which the penalty was proposed to be levied. Therefore, the notice was issued in a standard format without any application of mind and the inappropriate/redundant words were not deleted by the AO, but CIT(A) upheld action of the AO. Held: The AO initiated penalty proceedings for furnishing of inaccurate particulars of income, but the penalty was imposed for concealment of particulars of income, which was different from the limb on which the penalty was initiated in the assessment order. Acts of the AO in not striking off the inappropriate limb in the notice and initiating the penalty on one limb and imposing penalty finally on the other limb was clear-cut in violation of principles of natural justice as the assessee was deprived of reasonable opportunity to respond and deal with the particular charge on which the penalty was levied. Therefore, the penalty order in such a scenario was clearly bad in law and could not be sustained. Thus, the AO was directed to delete the penalty.

Followed:Samson Perinchery v. CIT (Bom HC) 392 ITR 4 (Bom) : 2017 TaxPub(DT) 0672 (Bom-HC), dt. 5-1-2017; CIT v.Mrs. Piedade Perinchery (BomHC) ITANo. 1310 of 2014, dt. 10-1-2017; CIT v. SSA's Emerald Meadows (SC) 73 taxmann.com 248, dt. 5-8-2016

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2008-09

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