INCOME TAX ACT, 1961

Section 271(1)(c) Section 274

Penalty under section 271(1)(c) - Cancellation of penalty - Non-specification of charge in notice under section 274 -

Penalty proceedings under section 271(1)(c) were initiated by the AO and since the explanation offered by the assessee in response to the show-cause notice issued during the course of the said proceedings was not found acceptable by the AO. He imposed a penalty under section 271(1)(c) being 100% of the tax sought to be evaded by the assessee in respect of the additional income declared in the return of income filed in response to the notice issued under section 153A consequent to the search and seizure action. CIT(A) confirmed the said penalty. The assessee had raised a preliminary issue challenging the very initiation of the penalty proceedings by the AO under section 271(1)(c) on the ground that in the absence of any specific mention in the show-cause notice issued under section 274 as to whether the assessee was guilty of having 'furnished inaccurate particulars of income' or of having 'concealed particulars of such income', the initiation of penalty proceedings itself was bad in law and the penalty order passed in pursuance thereof was liable to be quashed being invalid.Held: Notice issued under section 271(1)(c) without specifying which of the two contraventions the assessee was guilty of, was defective and the penalty imposed in pursuance of such defective notice was not sustainable. Hence, the penalty imposed upon the assessee under section 271(1)(c) was cancelled and appeal of the assessee was to be allowed.

Followed:CIT & Anr. v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Karn) : 2014 TaxPub(DT) 202 (Karn-HC), Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya v. Asstt. CIT ITA No. 1303/Kol/2010, Pr. CIT v. Bijoy Jr. Agarwal IRAR No. 272 of 2017, dated 2-4-2019, Amrit Foods v. Commr. of Central Excsie UP (2005) 13 SCC 419 as well as their own decision in the case of Pr. CIT v. Dr. Murari Mohan Koley ITAT No. 306 of 2017, dated 18-7-2018.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

SUBSCRIBE FOR FULL CONTENT