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 - Non specification of charge

AO completed the assessment under section 143(3) making additions on account of short-term and long-term capital gains. AO initiated the penalty proceedings under section 271(1)(c) for furnishing of inaccurate particulars of income and concealment of income. AO vide separate Order levied the penalty under section 271(1)(c) for concealing the particulars of income. 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 of 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: AO making the additions on account of short term/long term capital gains initiated the penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income and concealing the facts. AO, however, levied the penalty under section 271(1)(c) for concealing the particulars of income. Therefore, notice issued before levy of the penalty was bad in Law and it did not specify under which limb of section 271(1)(c), penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income.

Followed:Pr. CIT, and Others v. Sahara India Life Insurance Company, Ltd. 2019 TaxPub(DT) 6933 (Del-HC), CIT v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) : 2018 TaxPub(DT) 953 (Karn-HC), CIT & Ors. v. Manjunatha Cotton and Ginning Factory & Ors. M/s. V.S. Lad & Sons, (2014) 359 ITR 565 (Karn-HC) : 2014 TaxPub(DT) 202 (Karn-HC) and CIT & Anr. v. SSA's Emerald Meadows SLP No. 11485 of 2016 by Order, dated 5-8-2016 : 2016 TaxPub(DT) 4242 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2006-2007

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