Home Income tax Corporate Income tax Penalty Notice that Fails to Specify Charge Against An Assessee Is Invalid U/S 274

Penalty Notice that Fails to Specify Charge Against An Assessee Is Invalid U/S 274

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Penalty Notice that Fails to Specify Charge Against An Assessee Is Invalid U/S 274
Mumbai ITAT's Order For Sai Sugam Enterprises

The assessing officer who has issued a present trigger discover beneath Part 274 learn with Part 271(1)(c) of the Revenue Tax Act,1961 is faulty/invalid for the reason that identical doesn’t explicitly convey to the taxpayer in regards to the sure fault/cost the taxpayer would have proceeded for impose of penalty, held by the Mumbai Bench of Revenue Tax Appellate Tribunal (ITAT).

Sai Sugam Enterprises, on the time of the evaluation continuing the AO charged an quantity of Rs.71,78,070/- beneath Part 271(1)(c) of the IT Act by penalty order for Evaluation 12 months (AY) 2011-12. The taxpayer upset by the order filed an attraction earlier than the Commissioner of Revenue Tax (Appeals).

It cited the Excessive Courtroom’s full-bench ruling within the matter of Mohd. Farhan A. Shaikh v. DCIT, the place it was determined that the penalty itself could be void if a present trigger discover was given previous to the imposition of a nice with out figuring out the offence or cost for which the assessee is being prosecuted.

Consequently, the punishment imposed by AO is invalid, and the penalty should be eliminated. The Division has objected to this CIT (A) motion, and an attraction has been made to the Tribunal.

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The Bench made up of ABY T. Varkey, Judicial Justice of the Peace, and Amarjit Singh, Accountant Member, famous that CIT(A) decided the penalty discover issued by AO was ready in the usual format, and that its contents present that each faults/prices, “have hid the particulars of earnings and/or furnished inaccurate particulars of such earnings,” have been spelt out. Nevertheless, CIT (A) decided that AO had not made clear no matter cost or fault the assessee was accused of with a view to levy the penalty.

The Tribunal cited the Karnataka Excessive Courtroom’s ruling within the case of CIT vs. Manjunatha Cotton and Ginning Manufacturing facility, which held that the discover issued by the Assessing Officer beneath Part 274 learn with Part 271(1)(c) of the Revenue Tax Act, 1961 (for brief, “the Act”) was invalid in legislation as a result of it did not specify which provision of that part, i.e., whether or not for concealing earnings particulars or furnishing false info, was the premise for the.

The Bench concluded that the assessee’s exact offence or cost giving rise to the imposition of the penalty was not made clear within the penalty discover, and consequently, the imposition of the penalty by the AO is deemed to be “null” in authorized phrases.

Consequently, the CIT (Appeals) resolution to delete the penalty was stored, and the income’s attraction was denied.

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