INCOME TAX ACT, 1961

Section 271(1)(c) Section 274

Penalty under section 271(1)(c) - Defective notice issued under section 274 - Objection not raised before lower authorities -

Assessee-company was engaged in business of construction and is undertaking the contract with the State Government and Central Government to construct Bridges and Roads.Addition on account of difference between the declared interest income and income as reflected in Form 26AS was made by the AO. AO also initiated penalty proceedings under section 271(1)(c). Subsequently, penalty under section 271(1)(c) was imposed. Assessee drew attention to the assessment order and copy of penalty notice, to buttress the contention that the notice issued was not in accordance with law and does not disclose the charge for which the assessee was being preceded. He further submitted that even on merit, the penalty under section 271(1)(c) deserves to be quashed as it was not sustainable either in law or in facts. DR contended that in pursuance of notice under section 271(1)(c), the assessee filed reply and no objection was raised regarding notice being defective before the AO or before the CIT(A). He contended that at such a belated stage, such objection regarding legality of notice should not be entertained as no prejudice was caused to the assessee.Held: It was the contention of the assessee that the initiation of penalty proceedings under section 271(1)(c) was bad in law. As the AO had not recorded the requisite satisfaction and also issued notice under section 271(1)(c) was defective as no specific charge was mentioned. No such objection was raised before the authorities below by the assessee. The plea of the assessee regarding notice being defective cannot be entertained at this stage. As in the present case as well the assessee did not object against the notice being defective rather it filed reply making averments on merit. Assessee ought to have objected against the notice being defective at the first instance.

Followed:Sunderm Finance Limited v. Asstt. CIT (2018) 403 ITR 407 (Mad) : 2018 TaxPub(DT) 2565 (Mad-HC).

REFERRED : Pr. CIT v. Kulwant Singh Bhatia (2018) 304 CTR 103 (MP) : 2018 TaxPub(DT) 2716 (MP-HC); CIT v. SSA's Emerald Meadows (2016) 73 taxman.com 248 (SC)) : 2016 TaxPub(DT) 4242 (SC); CIT v. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Karn) : 2014 TaxPub(DT) 202 (Karn-HC)

FAVOUR : Against the assessee.

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 271(1)(c)

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