INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Notice issued by AO without specifying grounds of penalty - Defective notice -

AO noted that assessee debited provision for bad debts and such provision was not allowable, unless it was ascertained liability. AO accordingly made addition of the amount. AO had imposed penalty under section 271(1)(c) on the 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), the penalty proceedings were initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Therefore, penalty notice was invalid and bad in law and liable to be deleted.

Followed:Pr. CIT & Ors. v. Sahara India Life Insurance Company Ltd. 2019 TaxPub(DT) 6933 (Del-HC), CIT v. SSA'S Emerald Meadows (2018) 73 Taxmann.com 241 (Karn-HC) : 2018 TaxPub(DT) 953 (Karn-HC), CIT & Ors. v. Manjunatha Cotton & Ginning Factory & Ors. (2014) 359ITR 565 (Karn) : 2014 TaxPub(DT) 202 (Karn-HC), Bharat Immunological And Biological Corporation Ltd. v. Dy. CIT ITA.No.5538/Del./2015 for the assessment year 2008-2009 : 2019 TaxPub(DT) 3259 (Del-Trib) and CIT & Anr. v. SSA'S Emerald Meadows (2016) 73 Taxmann.com 248 (SC) : 2016 TaxPub(DT) 4242 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-2009

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