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 under section 274 -

AO made addition of an income by making addition on the basis of estimation of net profit @ 8% of the contract receipt, penalty proceedings were initiated under section 271(1)(c). Declining the contentions raised by assessee, AO proceeded to levy the penalty @ 100% of tax sought to be evaded. Assessee 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 of income. Held: Even AO failed to apply his mind at the time of recording satisfaction at the time of framing assessment to initiate the penalty proceedings under section 271(1)(c) as to under which limb of section 271(1)(c), i.e., for concealing particulars of income or furnishing inaccurate particulars of such income, penalty proceedings have been initiated rather written vague and ambiguous satisfaction recorded that, 'penalty proceedings under section 271(1)(c) are initiated'. AO had failed to make out a case for furnishing of inaccurate particulars of income or concealment of particulars of income by the assessee so as to attract the provisions contained under section 271(1)(c). Thus, penalty could not be imposed.

Followed:Pr. CIT & Ors. v. M/s. Sahara India Life Insurance Company Ltd. [ITA 475/2019 Order, dated 2-8-2019] : 2019 TaxPub(DT) 6933 (Del-HC) CIT v. M/s. SSA's Emerald Meadows (2016) 73 taxman.com 241 (Kar) : 2018 TaxPub(DT) 0953 (Karn-HC) CIT & Anr. v. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Karn) : (2013) 218 Taxman 423 (Karn) : (2013) 35 taxmann.com 250 (Karn) : 2014 TaxPub(DT) 0202 (Karn-HC) Alok Garg v. DCIT [ITA No. 7023/Del/201, dt. 21-4-2017] ITO v. Smt. Purnima Devi Gupta 2004 TaxPub(DT) 1343 (Jod-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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