The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has quashed the penalty proceedings as the notice under Section 271(1)(c) of the Income Tax Act 1961 was issued without specifying the charge and striking off the irrelevant limp.
This appeal was filed by the assessee, Manisha Jain against the order of the Commissioner of Income Tax dated 30.03.2018 for assessment year 2014-15 in sustaining the penalty levied under Section 271(1)(c) of the Income Tax Act.
It was noted that the penalty order was bad in law as the penalty proceedings were initiated and penalty was levied without specifying the exact limb of Section 271(1)(c) of the Income Tax Act. It was observed while referring to the penalty notice dated 26.12.2016 issued under Section 274 read with Section 271(1)(c) of the Income Tax Act which was placed on record and noted that the notice was issued mechanically stating that assessee had concealed particulars of income or furnished inaccurate particulars of such income.
In other words, the notice was issued for both the limbs without strike off irrelevant limb and specifying the charge for which the notice was issued. Therefore, it was observed that since the notice was issued without specifying the charge for which notice was issued the penalty proceedings initiated were bad in law and consequently levy of penalty under Section 271(1)(c) of the Income Tax Act could not be sustained.
Om Parkash, appeared on behalf of the revenue.
A Single Bench of Challa Nagendra Prasad, (Judicial Member) referred the judgement of High Court in PCIT Vs. Sahara India Life Insurance Co. Ltd. which held that the notice issued by the Assessing Officer was bad in law if it did not specify under which limb of Section 271(1)(c) of the income Tax Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate
particulars of income.
The Bench further noted that the ratio of the full bench decision of the Bombay High Court (Goa) squarely applied to the facts of the assessee’s case as the notice under Section 274 read with Section 271(l)(c) of the Income Tax Act dated 26.12.2016 was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued.
Thus, respectfully following the said decision the Bench allowed the appeal filed by the assessee holding that the penalty order passed under Section 271(l)(c) of the Income Tax Act by the Assessing Officer was bad in law and accordingly the penalty order passed under Section 271(l)(c) of the Income tax Act for Assessment Year 2014-15 was quashed.
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