Crux : Where the notice issued u/s 271(1)(c) read with section 274 of the act does not specify whether the penalty is for concealment of income or for furnishing of inaccurate particulars of income, the same is bad in law and no penalty can be levied.
Case Details : Minu Bakshi vs ACIT ITA 3118/Del/2017 (Order dated 11.12.2019)
In Favour of –ASSESSEE
Facts of the Case – AY 2007-08
The assessee is an individual and filed the return of income on 31.08.2007 for A.Y. 2007-08 showing a total income of Rs.11,76,296/-.
Thereafter, a search and seizure action u/s 132 of the Act was conducted on 10.12.2012 in the Bakshi Group of cases wherein the premises of the assessee was also searched.
A notice u/s 153A of the Act was issued requiring the assessee to furnish the true and correct return of income.
In response thereto, the return of income was filed u/s 153A showing a total income of Rs.9,61,76,296/-.
The case was selected for scrutiny and notices u/s 143(2) and 142(1) along with the questionnaire were issued by the Assessing Officer.
The assessment was completed u/s 143(3) vide order dated 27.03.2015 by the Assessing Officer at an income of Rs.9,61,76,296/-, making an addition of Rs.9,50,000/- on account of unaccounted cash receipt.
Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 were initiated in respect of the said addition.
The penalty order levying a concealment penalty of Rs.3,19,77,000/- was passed on 29.09.2015 which was rectified under Section 154 vide order dated 14.06.2016, thereby levying penalty at Rs. 2,13,18,000/-.
It was submitted that whether the penalty is for concealment of income or furnishing of inaccurate particulars of income was not evident from the notice nor from the penalty order as well.
The Ld AR further submitted that the Hon’ble Delhi High Court in case of Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd. (ITA No.475/2019 vide order dated 02.08.2019) held that notice issued by the Assessing Officer would be bad in law if it did not specify which limb of Section 271(1)(c) of the penalty proceedings had been initiated.
Further it has come to notice of Bench that there is a specific section of penalty in search cases i.e. section 271AAB of the Income Tax Act which has not been considered by either the AO or the CIT(A). Thus the penalty in itself is based on incorrect section.
Thus it was held that the notice u/s 271(1)(c) read with section 274 of the Act itself is bad in law on the issue that no specific limb for levy of penalty is mentioned in the notice or in the order.