INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Validity - Defective notice under section 274 issued without specifying nature of default -

In the case of assessee, assessment was completed under section 143(3) after making addition disallowing LTCG arising from the sale of shares of Jackson Investment Ltd. by treating the same as bogus. Penalty proceedings under section 271(1)(c) were also initiated by the AO and since the explanation offered by the assessee in response to the show cause notices issued during the course of the said proceedings was not found acceptable by him, the AO imposed the penalty under section 271(1)(c). CIT(A) confirmed the said penalty. At the time of hearing before Tribunal , the counsel for the assessee had raised a new preliminary issue challenging the very initiation of the penalty proceedings by the authorities below 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 for the year under consideration by the authorities below as to whether the asseessee is 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 as liable to be quashed being invalid.Held: The 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. The issue raised by the assessee in this appeal was squarely covered by the said judicial pronouncements including the decision of the jurisdictional High Court and following the same, this Tribunal cancelled the penalty imposed upon the assessee under section 271(1)(c) and allowed the appeal of the assessee.

Followed:Pr. CIT v. Bijoy Kr. Agarwal, ITAT No. 272 of 2017 dt. 2-4-2019 : 2019 TaxPub(DT) 4425 (Cal-HC), Suvaprasanna Bhattacharya v. ACIT rendered vide its order dt. 6-11-2015 in ITA No. 1303/Kol/2010 : 2015 TaxPub(DT) 5064 (Kol-Trib), CIT & Anr. v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Karn-HC) : 2014 TaxPub(DT) 202 (Karn-HC), Amrit Foods v. CCE-UP (2005) 13 SCC 419 : 2005 TaxPub(EX) 2424 (SC) and Pr. CIT v. Dr. Murari Mohan Koley ITAT No. 306 of 2017 dt. 18-7-2018 : 2018 TaxPub(DT) 5631 (Cal-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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