Initiation of Penalty Proceedings u/s.271(1)(c) on a Defective Notice is Invalid: ITAT [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal has held that initiation of penalty proceedings u/s.271(1)(c) on a defective notice is invalid.

The assessee, Shri R. Sathiamurthy, is an individual appealed before CIT (A) against the imposition of penalty u/s 271(1)(c) by issuing a defective notice by AO. The CIT (A) rejected the plea and stated that the content of the entire assessment order itself is sufficient reason for initiating penalty proceedings u/s.271(1)(c). Aggrieved by the order, the assessee filed appeal before ITAT.

The counsel for the appellant Mr. D. Anand submitted before the Tribunal that the AO has not strike out the relevant portion and it is not clear for which charge the AO has levied the penalty, whether for concealment of particulars of income or for furnishing of inaccurate particulars of income.

The Coram of Mr. Mahavir Singh, Vice President and Mr. Manoj Kumar Aggarwal, Accountant Member by relying the decision of Jurisdictional High Court in the cases of Babuji Jacob and Original Kerala Jewellers, observed that the very initiation of penalty proceedings on a defective notice is invalid and it do not warrant imposition of penalty u/s.271(1)(c) of the Act on the assessee.

The Tribunal held that “the assessee is vigilant from the beginning and raised this issue of defect in notice for the first time before CIT(A) and assessee being individual, the issue is squarely covered by the decision of Jurisdictional High Court in the case of Babuji Jacob, and hence, we delete the penalty and allow the appeal of assessee”.

Mr. AR.V. Sreenivasan, appeared on behalf of the revenue.

To Read the full text of the Order CLICK HERE

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