INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Non specification of charge -

Assessee was working as a Manager in a firm and the said firm was dissolved and a fresh partnership was drawn. Assessee became the Managing Partner of the said Firm along with four Partners. Survey was conducted under section 133A in the business premises of the firm, during which, books of accounts and documents were seized and sworn statement was recorded from the assessee, the Managing Partner. Assessment was reopened for the reason that assessee was not able to explain the partners Current Account balance, no explanation for the unexplained credit. Further, penalty proceedings were initiated against the assessee by issuance of notice under section 271(1)(c). Held: AO did not specifically state under which limb of the penalty provision, the assessee would fall and therefore, assessee was put to prejudice as regards the allegation which he has to meet. Apart from that, assessee would submit that re-assessment proceedings in name of assessee was erroneous as if at all there was any material, it was only firm which is to be assessed and not assessee. It would be too late for assessee to raise such a contention as re-assessment proceedings stood concluded as of the year 2008. This was not a case, where assessee had no explanation to offer and the explanation offered was not tested for its correctness in the proper manner to pave way for levy of penalty.

Followed:N. Venkatachalam v. Asstt. CIT [ITA. No.566/Mds/2015, dt. 16-8-2016].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2004-05

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