K B S ENTERPRISES,JAIPUR vs. ACIT (CIRCLE-6), JAIPUR

Vide impugned order, the ld. CIT(A) partly allowed the appeal of the assessee.

The assessee was before the ld. CIT(A), feeling aggrieved by the order of dated 27-01-2022 passed by the Assessing Officer, as thereby penalty of 2024 M/S. K.B.S. ENTERPRISES VS ACIT, CIRCLE-6 , JAIPUR Rs.6,05,548/- was imposed on the assessee u/s 271(1) (c) of the Income Tax Act 1961 (for short ‘’the Act’’).

Arguments heard. File perused.

The assessee is a civil contractor, which had, during the year under consideration, gross receipts from civil construction work on 27-02-2015. He was served with notice u/s 274 read with section 271(1)(c ) of the Act to show cause as to why order of penalty be not passed u/s 271(1)(c ) of the Act, the reason being that in the course of assessment proceedings pertaining to the year under consideration, it appeared that the assessee had concealed particulars of its income orthat the assessee had furnished inaccurate particulars of said income.

The only contention raised by the ld. AR for the assessee is that while issuing above said notice u/s 274 r.w.s. 271(1)(c ) of the Act, the AO was not sure if it was a case of concealment of particulars of income or that of furnishing of inaccurate particulars of income, and as such, impugned order having been passed without application of mind, deserves to be set aside, but, the ld. CIT(A) partly allowed the appeal thereby reducing the penalty to Rs.4,03,699/-, and as such, the impugned order passed by the ld. CIT(A) deserves to be set aside.

In the course of arguments, the ld DR for the Department did not dispute that in the notice dated 27-02-2015, the AO observed that it appeared to be a case of 2024 M/S. K.B.S. ENTERPRISES VS ACIT, CIRCLE-6 , JAIPUR concealment of particulars of income or furnishing of inaccurate particulars of income.

It is settled law that in such like matters, where notice is to be issued on account of violation of any provisions of law calling for levy of penalty, the concerned officer must communicate to the alleged violator of law, the particular ground, regarding which said person was required to furnish explanation or show cause.

Herein, as noticed above, the AO, while calling upon the assessee to explain the allegations levelled, did not specify the exact ground of violation. Rather, AO called for its explanation on the dual ground of factum of concealment of particulars of income or furnishing of inaccurate particulars of income. This goes to show that the AO was not sure as to what was the actual ground of violation by the assessee. Section 271(1)(c ) has two limbs. Principles of natural justice require that the assessee should be apprised of the specific limb of the said provision, which he was alleged to have violated. The object behind serving notice describing the relevant limb of the provision is that on being apprised of specific limb or ground of violation, the assessee is able to respond thereto or explain the same.

It may also be mentioned here that while imposing penalty, the AO held that he was imposing the same on account of concealment of income or furnishing of inaccurate particulars of income. Once again, this goes to show that penalty came to be imposed without satisfying as to which specific limb of the provision was found to have been violated. Result 11. In view of the above findings, the impugned order passed by the ld CIT(A) as well as penalty order, partly confirmed vide impugned order, deserve to be set aside. Consequently, this appeal is allowed and both the said orders are hereby set aside.