INCOME TAX ACT, 1961

Section 271(1)(c)

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

During the course of assessment proceedings, AO observed that assessee debited a sum towards exchange variance. On verification of details furnished by assessee, it was noticed by AO that there was a forex loss on account of purchase of machinery. Assessee in its books recorded the entry as capital. However, after accounting for certain forex income, the net loss was claimed as deduction the Profit and Loss account. Thus there was violation of section 43A, therefore, AO issued notice under section 274 read with section 271(1)(c) for furnishing inaccurate particulars of income. Held: Notices issued by AO under section 274 read with section 271(1)(c) showed that AO did not mention whether the notice was issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, as per the ratio laid down by Supreme Court in CIT & Anr. v. M/s SSA'S Emerald Meadows (2016) 73 Taxmann.com 248 (SC) : 2016 TaxPub(DT) 4242 (SC), notice issued by AO was not valid and consequently, the order passed under section 271(1)(c) was also not sustainable.

Followed:National Thermal Power Company Ltd. v. CIT (1998) 229 ITR 383 (SC) : 1998 TaxPub(DT) 0342 (SC) Mr. Mohd. Farhan A. Shaikh v. The Dy. CIT,., The Asstt. CIT [Tax Appeal Nos. 51 & 57 of 2012, dated 11-3-2012] : 2021 TaxPub(DT) 1503 (Bom-HC) The CIT v. M/s Manjunatha Cotton And Ginning Factory & Oths. (2013) 359 ITR 565 (Karn) : 2014 TaxPub(DT) 0202 (Karn-HC) CIT & Anr. v. M/s SSA'S Emerald Meadows (2016) 73 Taxmann.com 248 (SC) : 2016 TaxPub(DT) 4242 (SC).

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14

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