M/S ORTHONONVA HOSPITAL,JALANDHAR vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1, JALANDHAR

The brief fact of the case is that the assessment was completed and the demand was levied. The penalty was initiated u/s 271(1)(c) in relation to this demand. The grievance of the assessee is that the notice, issued by the ld. AO was defective& without jurisdiction. The notice was not specified by nature of penalty whether the concealment of income or inaccurate particular of income. Thesanctity of the notice was challenged before the ld. CIT(A) but the ld. CIT(A) upheld the order of the ld. AO and dismissed the assessee’s legal ground.

Aggrieved assessee filed an appeal before us.

During the appeal hearing, none was present on behalf of the assessee. The matter was taken up with the consent of the ld. Sr. DR for adjudication. The observation of the ld. CIT(A) vide para 7 which is reproduced as below: “7. I have considered the facts and circumstances of the case, submissions of the appellant and material available on record and various case laws, the appellant has challenged that, the Assessing Officer has erred in imposing penalty without levelling specific charge in the notice as to whether

We heard the submissions of Sr. DR. and considered both the orders of revenue authorities. The different High Courts and the Tribunal already decided the issue in favour of the assessee related to issuance of notice u/s 271(1)(c) of the Act. Section 271(1)(c) is two limbs concealed income and inaccurate particulars of the income. Before issuing the notice, the ld. AO should specify the limb related to penalty proceedings. This particular notice it is a self-defective and the ld. AO did not mention the nature of concealment in the notice issued u/s 274/271(1)(c). The counsel laid down that in the absence of such specific notice, the notice would be invalid as held in various judicial pronouncements including the decision of Hon’ble Karnataka High Court in CIT V/s SAS’s Emerald Meadows (73 Taxmann.com 241) against which Special Leave Petition (SLP) filed by the department stood dismissed by Hon’ble Supreme Court which is reported as 73 Taxmann.com 248. The notice u/s 274/271(1)(c) of the Act is not carrying the specific limb. Therefore, this is a case where both the parts of the offences i.e., concealment of income as well as furnishing of inaccurate particulars of income were involved. The decision of Jaipur Tribunal (Third Member) in the case of Grass Field Farms and Resorts P. Ltd. (159 ITD 31) was referred to confirm the impugned penalty.