The Income Tax Appellate Tribunal (ITAT), Mumbai Bench set aside penalty order on existence of ambiguity in the mind of Assessing Officer on charge under Section 271(1)(c) of the Income Tax Act, 1961.
The appeal by the assessee, Nitin Parkash is directed against the order of CIT(A) for the Assessment Year 2011-12 confirming penalty levied u/s. 271(1)(c) of the Act.
The Authorized Representatives for the assessee, Rajiv Khandelwal and Akash Kumar submitted that for penalty levied u/s. 271(1)(c) of the Act, the notice issued u/s. 274 read with Section 271 of the Act is vague, hence defective. The notice has been issued in a Performa without striking off the irrelevant limb of section 271(1)(c) of the Act. The Authorized Representative for the assessee further submitted that the issue is squarely covered by the decision of Full Bench of Jurisdictional High Court in the case of Mohd. Farhan A. Shaikh vs. DCIT.
The Departmental Representatives vehemently defended the impugned order and prayed for dismissing the appeal of assessee.
The Bench consisting of Vikas Aswathy, Judicial Member and M Balaganesh, Accountant Member observed that “In the assessment order the Assessing Officer has recorded satisfaction for levy of penalty u/s. 271(1)(c) of the Act on the charge of ‘furnishing inaccurate particulars of income’. However, while levying penalty vide order dated 31/03/2016, the Assessing Officer has time and again mentioned both the limbs/charge of section 271(1)(c) of the Act i.e. “inaccurate particulars of income” and “concealment of income”. This expression has been used in the penalty order repeatedly in varied forms. Thus, there was ambiguity in the mind of Assessing Officer about the exact charge under section 271(1)(c) of the Act for which penalty is to be levied.”
The Bench referred to the judgment of the Apex Court in the case of T. Ashok Pai vs. CIT 292 ITR 11 has held that concealment of income and furnishing inaccurate particulars carry different connotations. Hence, these expressions cannot be used inter changeably.
“The ambiguity in the penalty order makes it legally unsustainable” the Tribunal said.
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