Penalty Notice without specifying the Charge proves Non-application of Mind, Invalid: ITAT [Read Order]

The New Delhi bench of the ITAT has held that a penalty notice, issued in a stereotyped manner without specifying the specific limb as mentioned in section 271(1)(c) of the Income Tax Act, 1961 shall be treated as passed without applying mind which is bad in law.

The assessee received penalty orders from the income tax department. Assailing the orders, the assessee contended before the Tribunal that the notice dated 25.03.2013 issued u/s 271(1)(c) read with section 274 of the Act is vague, as the same did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of incomeand therefore the penalty is not leviable.

The department contended that as per the decision of the High Court in various cases, the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked.

The Tribunal bench comprising T.S. Kapoor, Accountant Member And Shri N. K. Choudhry, Judicial Member 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.

Quashing the penalty orders, the Tribunal held that “having regard to the manner in which the Assessing Officer has issued the notice dated 25.03.2013under section 274 read with 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 can not 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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