Mumbai bench of Income Tax Appellate Tribunal (ITAT), while deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 the bench held that penalty notice was issued without deleting or striking off inapplicable parts.
Supertech Construction Company, the Appellant filed the appeal against the levy of penalty under Section 271(1)(c) of the Income Tax Act.
The facts reading to the appeal was for the Assessment Year 2009-10, assessment under Section 143(3) read with Section 147 of the Act was framed on the Appellant at Income of INR 30,16,469/- after making addition of INR 10,02,379/- under Section 69 of the Act in relation to the alleged bogus purchases holding the same to be unexplained expenditure.
Therefore In appeal, the CIT(A) restricted the addition to 12.5% of the alleged bogus purchases which was confirmed by the Tribunal. Subsequently the Assessing Officer had also initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act and penalty of INR 38,716/- was levied on the Appellant under Section 271(1)(c) of the Act being tax on 12.5% of alleged bogus purchases.
Aggrieved, the assessee filed an appeal before the CIT(A), who dismissed the appeal. Thereafter the assesse filed another appeal before the tribunal.
Appellant argued that the penalty notice, dated 05/03/2015 issued under Section 271(1)(c) read with Section 274 of the Act was bad in law as the same had been issued without deleting or striking off inapplicable part, and (b) no penalty could be levied in the present case as the addition was based upon estimation on income
Further argued that in terms of the Explanation to section 140A(1) of the Act, where the amount paid by an assessee towards self-assessment tax falls short of the aggregate amount of tax and interest, then, the amount so paid shall first be adjusted towards interest payable and the balance, if any, shall be adjusted towards tax payable, meaning thereby, the exchequer should never be deprived of its legitimate dues payable by the assessee in time.
Ajudiya Manish , the Department representative, supported the decision of lower authorities .
It was observed by the tribunal that the penalty notice was issued under Section 274 read with 271 of the Act without deleting or striking off the inapplicable part
Thus, the statutory notice issued to the Appellant does not inform the Appellant about the charge against the Appellant – whether penalty under Section 271(c) of the Act was sought to be levied for concealment of particulars of income or furnishing inaccurate particulars of income.
After observing the submissions of both parties the two-member bench Of Prashant Maharishi, (Accountant member ) and Rahul Chaudhary, (Judicial Member) directed the Assessing Officer to compute short credited interest under section 244A of the Income Tax Act.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
