The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the penalty imposed under section 271(1)(c) of the Income Tax Act,1961 by the assessing officer without the application of mind.
I.G. International Pvt. Ltd, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the penalty imposed by the assessing officer under section 271(1)(c ) of the Income Tax Act.
Ashok Mehta and Dipesh Vora, the counsels for the assessee contended that the notice issued by the assessing officer under section 274 read with section 271(1)(c) of the Income Tax Act was defective, as both the limbs of section 271(1)(c) of the Income Tax Act are mentioned therein and also the assessing officer had not struck off the irrelevant clause in the said notice.
It was also submitted that the assessing officer had recorded satisfaction for levy of penalty under section 271(1)(c) of the Income Tax Act on the ground of “furnishing inaccurate particulars of income” and also issued notice wherein both the limbs of section 271(1)(c) of the Act are invoked i.e. “concealed particulars of income or furnished inaccurate particulars of income”. Both limbs are mentioned with the conjunction ‘or’. This clearly indicates that there was an ambiguity in the mind of the Assessing Officer while issuing notice as to under which limb notice had to be issued.
V.S.Mahajan, the counsel for the respondent contended that the assessee had wrongly claimed deduction under section 35D of the Income Tax Act and thus the penalty under section 271(1)(c) of the Income Tax Act was levied by the assessing officer.
The bench observed that the vagueness regarding the charge for which penalty was to be levied continued to be there in the mind of the assessing officer right through from recording of satisfaction to levy of penalty.
It was also observed that the assessee against whom penalty proceedings are initiated had to be made aware in absolute terms of the charges for which the penalty proceedings are initiated and the notice vide which charges for levy of penalty are communicated to the assessee should be unambiguous.
The two-member bench comprising Vikas Awasthy (Judicial) and Amarjith Singh (Accountant) held that the notice issued by the assessing officer under section 274 of the Income Tax Act was defective and the penalty imposed under section 271(1)(c) of the Income Tax Act was not as per the law and are liable to be quashed while allowing the appeal filed by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
