The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that non specifying of specific limb in penalty notice would not invalidate penalty proceedings when assessee had been a non-filter.
The assessee Moola Padmaja is an individual and co-owner of a parcel of land. The assessee along with other co-owners entered into a land development agreement with M/s. Western Constructions on 03.05.2007. As per the supplementary development agreement dated 26.03.2010 the landlords were supposed to get 40% of the total built up area. Accordingly, capital gains would arise in the hands of the assessee on sale of individual flats.
The Assessing Officer on perusal of the records and returns of income, noted that assessee failed to file his return of income for the AY 2012-13 admitting the income under the head capital gains as accrued in his hands relevant to AY 2012-13.
The AO issued statutory notices u/s. 143(3) and 142(1) of the Act to which the AR of the assessee filed the requisite details. The AO completed the assessment accepting the returned income, Subsequently, the AO initiated penalty proceedings u/s. 271(1)(c) of the Income Tax Act 1961.
K.C.Devdas, on behalf of the assessee submitted that, the penalty would not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or guilty of conduct, contumacious or dishonest or acted in conscious disregard to its obligation. Further, it had also been held that penalty will not also be imposed merely because it was lawful to do so.
K.P.R.R.Murthye on behalf of the revenue submitted that the assessee in the instant case was a non-filer of return of income and only due to issue of notice under Section 148 filed the return of income declaring total income of which had been accepted by the AO. He further submitted that had the department not initiated the reassessment proceedings, the assessee would not have declared its income, since the statutory due date for filing of the return had elapsed.
The Division Bench of RamaKanta Panda, (Accountant Member) and Laliet Kumar, (Judicial Member) dismissed the appeal holding that,
“We are of the considered opinion that merely for non-specifying in the notice as to under which limb the penalty is levied i.e for concealment of income or furnishing inaccurate particulars of income thereof, the penalty cannot be cancelled especially when the assessee who is a non-filer was put to notice which he has understood and has replied to such notice issued by the AO.”
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