The assessee, HN Reacon is aggrieved by the levy of penalty under section 271(1)(c) of the Income tax Act, 1961 and contended that the penalty show cause notices are fatally defective for not specifying the specific reason for initiating the penalty proceedings under section 271(1)(c) of the Act.
The notice said, “You-are requested to appear before me at 11:30 A.M./PM on 31.03.20l6 and show cause why an order imposing a penalty on you should not be made under section 271(1)(c) of the Income Tax Act, 1961. If you do not wish to avail yours this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271(1 )(c).”
The Tribunal opined that unless the assessee knows under which limb of the penalty notice he has to defend his case, it would not be possible to accept that the notices are valid.
The ITAT while following the decision of the High Court of Delhi in the case of Sahara India Life Insurance Company Ltd held that the penalty notices under section 274 read with section 271(1)(c) of the Act are defective and bad in law.
Therefore, the Tribunal directed the Assessing Officer to delete the penalty so levied under section 271(1)(c) of the Act.Subscribe Taxscan AdFree to view the Judgment