INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Concealment or Furnishing of inaccurate particulars of income - Notice not specifying the limb - Defective notice

Assessee sold a house property and claimed exemption under section 54, which was denied by AO alleging that the property purchased was a free hold commercial plot and not a residential house. Consequently, addition was made and penalty under section 271(1)(c) was levied. Assessee submitted that AO issued Show cause notice under section 274 read with section 271(1)(c) before levy of the penalty, which was illegal and bad in law. He further submitted that as Show cause notice contained both the limbs of section 271(1)(c), it was void and no penalty could be imposed. Held: Notice issued by AO under section 274 read with section 271(1)(c) was bad in law as it did not specify under which limb of section 271(1)(c), the penalty proceedings were initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. And as the notice issued before levy of penalty itself was void, illegal and bad in law, entire penalty proceedings were illegal, vitiated and liable to be quashed.

Relied:CIT & Anr. v. M/s. SSA'S Emerald Meadows in (Special Leave to Appeal (C)..... /2016 (CC No. 11485/2016), dt. 5-8-2016) : 2016 TaxPub(DT) 4242 (SC)

REFERRED : M/s. Sundaram Finance Ltd. v. Dy. CIT in (Special Leave Petition (Civil) Diary No(s). 34548/2018, DIARY No. 34544/2018, dt. 26-10-2018) : 2018 TaxPub(DT) 6831 (SC), M/s. Sundaram Finance Limited (Formerly M/s. Sundaram Finance Services Ltd.) v. The Asstt. CIT (2018) 403 ITR 407 (Mad) : 2018 TaxPub(DT) 2565 (Mad-HC),CIT, Bangalore and The ITO, Ward-6 (3), Bangalore v. M/s. SSA'S Emerald Meadows in (I.T.A. No. 380 of 2015, dt. 23-11-2015) : 2018 TaxPub(DT) 953 (Karn-HC)

FAVOUR : In assessee's favour

A.Y. :

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