Penalty can’t be levied on the basis of Vague Charges: ITAT [Read Order]

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the penalty under section 271(1)(c) of the Income Tax Act cannot be levied on vague charges.

The assessee, a salaried individual, who derives a salary from (i) Eaton Technologies Pvt. Ltd (ii) Hutchison 3 Global Services Pvt. Ltd (iii) Axa Technologies Shares Services Pvt. Ltd. After the completion of the assessment of the proceedings, the Assessing Officer imposed penalty on the assessee for furnishing inaccurate particulars and concealment of income for the failure of the Assessee to offer Rs.4,54,653/- and Rs.1,71,721/- salary received from two concerns, failure to disclose interest amount of Rs.8,121/- and to explain the source of cash deposits amounting to Rs.32,50,000/-.

The assessee claimed that since revised return was filed before assessment was completed i.e. on 29.03.2014 and in that revised return, the assessee has reflected the salary and the interest component which was not included in the original return and thereby in compliance to section 139(5) of the Act, there is neither ‘concealment of income’ nor ‘furnishing of inaccurate particulars of income’ so far as the assessee is concerned.

The Tribunal observed that in the notice issued u/s.274 read with section 271(1)(c) of the Act as well as penalty order, the charge for which penalty under section 271(1) (c) of the Act has been levied, is not specific and both the limbs of charge are mentioned there i.e. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’.

“The sanctity in terms of natural justice with regard to this proposition is that the assessee under the scheme of welfare legislation which is embedded in the Income Tax Act, 1961 should get an opportunity to prepare himself for the defense as regards to the exact charge on which penalty is imposed upon him u/s. 271(1)(c) of the Act. In the instant case, the charge is vague and therefore, the levy of penalty is not warranted. Furthermore, the revised return filed by the assessee is in conformity with section 139(5) of the Act wherein all the particulars of income have been disclosed,” the Tribunal said.