The Income Tax Appellate Tribunal (ITAT), Mumbai bench, on Wednesday furnished an order which ensures that taxpayers are not charged a penalty for unspecified reasons.
The bench comprising of Shri Saktijit Dey and Shri G. Manjunatha was hearing an appeal by Jumbo Electronics Corp. Pvt. Ltd, against the attempt of the assessing officer to impose a penalty for unclear reasons.
The assessee had earlier stated a loss for the financial year 2006-07. The only income they had furnished was that of interest from fixed deposits as business income. But the assessing officer had denied them entry and considered it as income from other sources. Further, the assessing officer had passed an order calling out the appellant to pay penalty under Section 271(1)(c) of the Income Tax Act, 1961. But the order was unclear about the exact charges alleged against the appellants for which they had to pay penalty.
Considering the facts of the case, the aforementioned bench upheld the appeal and were quoted, “not specifying exact charge made against the assessee vis-à-vis sections 271(1)(c) of the Income Tax Act, makes the penalty order invalid as it contravenes the principle of natural justice.”
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