Penalty Notice issued in a Stereotyped manner without applying mind is Invalid: ITAT [Read Order]

The ITAT, Delhi bench has held that a penalty notice issued under section 271(1)(c) of the Income Tax Act, 1961 in a stereotyped manner without applying mind is not valid.

The Tribunal bench comprising Shri Anil Chaturvedi, Accountant Member and Shri N. K. Choudhry, Judicial Member was considering an appeal by Vibracoustic India Pvt Ltd wherein the assessee challenged the penalty notice alleging the same is vague, having not mentioned any limb of the penalty and, therefore, the penalty is not leviable.

The Tribunal bench observed that the penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income.

“It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware as to what is the charge made against him so that he can respond accordingly,” the Tribunal said.

Deleting the penalty order, the Tribunal added that “In the background of the aforesaid legal position and, having regard to the manner in which the Assessing Officer has issued notice dated 29.12.2016 under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceedings have been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which is bad in law, hence cannot be considered a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act and therefore we are of the considered view that under these circumstances, the penalty is not leviable as held by the various Court including Apex Court and hence, we have no hesitation to delete the penalty levied by the AO and affirmed by the Ld. Commissioner.”

To Read the full text of the Order CLICK HERE

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