ASST COMMISSIONER OF INCOME TAX, VISAKHAPATNAM vs. VISAKHAPATNAM PORT AUTHORITY, VISAKHAPATNAM

These appeals were filed by the appellant/Revenue and the common issue is levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961 (“the Act”). Apart from challenging the penalty order on merits, in all these appeals the appellant has taken one additional ground of appeal in all these assessment years to the effect that the notice issued u/s 271(1)(c) is invalid and ambiguous, because the Ld.AO has not struck a portion of the two limbs which is not relevant in this case and both limbs are different and distinct. The contention of the appellant in all these cases is that unless the Revenue gives a specific notice, the appellant cannot file reply as to what type of mistake was committed by the appellant. In other words, the Revenue has to pinpoint the mistake committed by the appellant and then only penalty can be levied. In all these cases, penalty was initiated by the Revenue u/s 271(1)(c) and it was mentioned in those notices that the appellant has concealed the particulars of income or furnished inaccurate particulars of income. Since there is ambiguity in the notice and the same goes to the root of the matter, the appellant has argued that the notice issued by the Revenue itself is ambiguous and consequently invalid in the eyes of law. It was also argued that different meanings are attributed to the words “concealment” and “inaccurate”. The Ld.AO has issued these notices mechanically without proper application of law. As the Ld.AO himself does not know the purpose of issuing these notices, the same should be held as invalid and all the consequential penalty proceedings also become invalid, it was argued. The Ld.AR of the appellant has also submitted a brief note in this case, which is reproduced below : BRIEF NOTE 1. All the above appeals filed by the Appellant / Revenue are directed against penalty levied by the Assessing Officer u/s 271(1(c) of the Act. The appellant filed one additional ground of appeal in all the above assessment years to the effect that the notice issued u/s 271(1)(c) of the Act without striking off the irrelevant portion of the two limbs suffers from ambiguity and hence invalid. The additional ground is extracted hereunder for the sake of convenience: "Whether on the facts and in the circumstances of the case, the order dt.24.04.2024 levying penalty u/s 271(1)(c) is liable to be cancelled in as much as the notice dt.23.03.2015 initiating the penalty proceedings did not specify clearly as to whether the penalty proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars of income"

The Ld.DR relied on the orders of the Ld.AO/Ld.CIT(A).

We have heard both sides. After hearing the case and perusing the copies of notices filed by the Ld.AR of the appellant and a note enclosed with these notices, the Bench decides that penalty notices issued u/s 271(1)(c) suffer from the infirmity and ambiguity. In other words, the notices issued by the Revenue did not specifically mention the violation of law committed by the appellant for which, the penal provisions were invoked. Here, one of the notices in these appeals, issued by the Department is reproduced below for the sake of clarity.

In the result, the appeals of the assessee are allowed for A.Y. 2009-10, 2010-11, 2011-12, 2012-13, 2014-15 & 2015-16 and the appeals of the Revenue are dismissed for the A.Y.2012-13 & 2014-15.