| The Tax Publishers2019 TaxPub(DT) 5487 (Pune-Trib) INCOME TAX ACT, 1961
Section 271(1)(c)
Where AO issued notice of penalty under section 274 without specifying the grounds on which the penalty under section 271(1)(c) was imposed, imposition of penalty was unjustified, because specifying grounds of penalty in the notice being a mandatory requirement could not be construed as a mere technical error.
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Penalty under section 271(1)(c) - Disallowance of expenses which was not capitalized to plant and machinery - Non-recording of satisfaction - Imposition of
Assessee-company was engaged in the manufacturing of Front Grill, Instrument Panel, Spair, Wheel Cover, Seat Foam, etc. AO made disallowance of Rs. 17,79,699 which was not capitalized to plant and machinery by assessee. AO had imposed penalty under section 271(1)(c) on assessee, who assailed the same contending that notice issued under section 274 did not specify the grounds on which penalty was imposed, i.e., whether for concealment of income or for furnishing inaccurate particulars. Revenue rejected contention of assessee holding that penalty could not be deleted merely because of a technical error in the show cause notice. Held: From the perusal of the notice, it was very much obvious that AO did not specify the grounds on which penalty was imposed. AO was required to specify that on which limb of section 271(1)(c), penalty proceedings were initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The notice, in fact, was in standard proforma without the irrelevant clauses therein being struck off. Thus, penalty was deleted
Followed:CIT v. Reliance Petro Product (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC) and CIT v. Samson Perinchery (2017) 392 ITR 4 (Bom) : 2017 TaxPub(DT) 0672 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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