Defective Penalty Notice: ITAT grants relief to Ecorea and Kuroda Electric India [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench consisting of S S Godara, Judicial Member, and Dr Dipak P Ripote, Accountant Member grants relief to Ecorea and Kuroda India Private Limited as the penalty notice provided was defective.

Penalty order u/s 271(1)(c) of the Act was passed on 28/06/2017 by the Dy. Commissioner of Income Pune herein after called as Assessing Officer(AO) levying penalty of Rs. 28,57,500/-. The Assessee, Ecorea& Kuroda Electric India Private Limited, filed an appeal before the Commissioner of Income Tax(Appeal) who dismissed the appeal of the assessee. Aggrieved by the order of the Commissioner of Income Tax, the assessee filed an appeal before the Tribunal.

Krishna V Gujarathi, Counsel for the Appellant submitted that the notices under sections 274 and 271(1)(c) of the Act dated 04/05/2017 and 29/06/2017 were issued by the AO. The Counsel for the assessee also explained that the appropriate clause has not been struck out by the AO in the notice.

The Tribunal placed reliance on the judgment in Ganga Iron & Steel Trading Co. v/s Commissioner of Income Tax wherein it was held that “the Assistant Commissioner of Income-tax is not clear as to whether there was concealment of particulars of income or that the Assessee had furnished inaccurate particulars of income. We, therefore, find that issuance of such show cause notice without specifying as to whether the Assessee had concealed particulars of his income or had furnished inaccurate particulars of the same has resulted in vitiating the show cause notice.

Heavy reliance was placed on the decision in Mak Data (P.) Ltd. to urge that the penalty contemplated by section 271 (1) (c) of the said Act was in the nature of civil liability and mens rea was not essential therein.”

The Tribunal held that “the Penalty Notice is defective, therefore, the penalty levied under section 271(1)(c) of the Act, is not maintainable.”

To Read the full text of the Order CLICK HERE

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