SHRI PANKAJ KUMAR RAI,KATNI vs. INCOME TAX OFFICER, WARD -2, KATNI

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ITA 96/JAB/2022Status: DisposedITAT Jabalpur30 November 2023AY 2011-124 pages
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What did the Tribunal hold?

The Tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) was bad in law because it did not specify whether the penalty was for concealment of income or for furnishing inaccurate particulars. Following various High Court judgments, the Tribunal quashed the penalty.

What were the facts?

The Assessing Officer made an addition to the assessee's income, leading to a tax demand and a penalty of Rs. 25,000 under Section 271(1)(c). The penalty proceedings were initiated for furnishing inaccurate particulars of income.

What were the issues?

Whether a penalty notice under Section 271(1)(c) is valid if it does not specifically state the ground for penalty (concealment or inaccurate particulars).

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

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Income Tax Appellate Tribunal, JABALPUR BENCH ‘DB’, JABALPUR

Before: Dr. B. R. R. KumarSh. Yogesh Kumar US

For Appellant: Adv. Sh. B K Nema, Adv
Hearing: 29.11.2023Pronounced: 30.11.2023

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by assessee against the order of ld. NFAC/CIT(A), New Delhi dated 23.09.2022.

2.

The assesse has raised the following grounds of appeal are as under:-

1. Order imposing penalty u/s 271(1)(c) of I.T. Act 1961 is illegal invalid and bad in law.

2. The learned CIT(A) erred in upholding the penalty levied u/s 271(1)(c) of I.T. Act 1961.

3. On the facts and evidence on record no penalty u/s 271(1)(c) of 4. The notice issued for levy of penalty u/s 271(1)(c) of I.T. Act 1961 is bad in law and consequent penalty levied thereupon is liable to be cancelled.

Pankaj Kumar Rai The Assessing Officer made addition which lead to levy of 3. tax of Rs. 23,877/- on the income concealed during the Financial Year2010-11. Consequent to the addition, penalty of Rs. 25,000/- u/s 271(1)(c) has been levied by the AO.

4.

Heard the arguments of both the parties and perused the material available on record.

5.

We find that the page no. 4 below para 3.1, the Assessing Officer has also mentioned “Penalty proceedings u/s. 271(1)(c) of the I.T. Act, 1961 is being initiated separately on this issued for furnishing inaccurate particulars of income.

6.

We also find that the para no. 7 of the penalty order reads as under:

“7. In view of the above discussions, I am satisfied that the assessee has furnished inaccurate particulars of his income and thereby concealed his income within the meaning of sec. 271(1)(c) of the Act. The assessee is therefore liable to be imposed penalty under section 271(1)(c) of the I.T Act 1961. 7. We have gone through the penalty notice issued by the AO u/s. 274 r.w.s. 271 of the Income Tax Act, 1961. It reads……..

* Have concealed the particulars of your income or ……… furnished inaccurate particulars of such income.

The above said penalty notice did not specify as to whether penalty is proposed for concealment of income or furnishing inaccurate of such income.

8.

On this issue, we are guided by the following judgments:

Pankaj Kumar Rai 1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180]

9.

Hence, respectfully following the order of the H on’ble Jurisdictional High Court, since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated.

Pankaj Kumar Rai 10. In the result, the appeal of the assesse is allowed. Order Pronounced in the Open Court on 30/11/2023.

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