“Section 132(1)(c)”
The decision most relied on for Section 132(1)(c) is Godrej & Boyce Mfg. Co. Ltd. v. DCIT (328 ITR 81), cited in 1,183 judgments on BharatTax.
Leading authorities on Section 132(1)(c)
Rule 8D, for computing disallowance under Section 14A for expenses related to exempt income, applies from Assessment Year 2008-09 onwards; for prior years, a reasonable disallowance must be made. The disallowance under Section 14A cannot exceed the actual exempt income earned.
A notice issued under Section 274 read with Section 271(1)(c) is invalid if it fails to specify whether penalty proceedings are for concealment of particulars of income or furnishing inaccurate particulars of income. Such lack of specificity vitiates the penalty proceedings.
A penalty notice issued under Section 271(1)(c) is invalid if the Assessing Officer fails to strike out the inapplicable limb (concealment or furnishing inaccurate particulars) from the standard proforma, indicating non-application of mind. The initial burden of proving concealment or inaccurate particulars rests on the Revenue.
A penalty levied under Section 271(1)(c) for concealment or furnishing inaccurate particulars of income is not invalidated by the Assessing Officer's failure to strike off irrelevant portions in the show cause notice, provided the assessee understood the exact charge and suffered no prejudice, indicating an application of mind by the AO.
When levying a penalty under Section 271(1)(c), the Assessing Officer must clearly specify whether it is for concealment of income or furnishing inaccurate particulars. An ambiguous notice or order using "and/or" for these limbs, or a standard proforma without striking irrelevant clauses, indicates non-application of mind and renders the penalty unsustainable.
Once the Assessing Officer records satisfaction regarding concealment or furnishing inaccurate particulars of income, the onus shifts to the assessee, and if not discharged, penalty under Section 271(1)(c) can be levied without requiring separate detailed satisfaction.
The assessment order must clearly specify the reason for initiating penalty proceedings under Section 271(1)(c) and explicitly state whether it is for concealment of income or furnishing inaccurate particulars. Failure to identify the specific limb under which penalty is initiated renders the penalty unsustainable.
Minor defects or mistakes in a penalty notice issued under Section 274 do not invalidate penalty proceedings under Section 271(1)(c) if the assessee suffers no prejudice and is aware of the charge. However, significant vagueness or ambiguity that demonstrates non-application of mind or causes prejudice can still render the notice invalid.
