PCIT Vs J & K Power Development Corporation Limited (Jammu & Kashmir High Court)
Jammu Kashmir High Court held that Tribunal rightly set aside penalty under section 271(1)(c) as AO not clear whether it was case of concealment of particulars of income or failure to furnish correct particulars of income. Penalty not leviable as AO not clear about applicability of particular limb.
Facts- The present appeal is filed by PCIT mainly raising the substantial question of law that whether the proceedings for imposition of penalty u/s. 271(1)(c) of the Income Tax Act, 1961, can be vitiated if the satisfaction be derived by the Assessing Authority or the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Principal Commissioner/ Commissioner, as the case may be, during the course of any proceedings under the Income Tax Act, is referable to both the limbs of clause (c) i.e., concealment of the particulars of the income and furnishing of incorrect particulars of such income together and in the alternative.
Conclusion- Held that the Assessing Authority was itself not clear, whether it was a case of concealment of particulars of income by the Assessee or his failure to furnish correct particulars of such income. The Assessee too was deprived of a clear opportunity to give the explanation in view of the confusion created by the Assessing Authority itself. It is in these circumstances, the Tribunal, after relying upon the several precedents, came to the conclusion that it was a case where the Assessee had not given the proper opportunity to offer his explanation and, therefore, the impugned order of imposition of penalty was vitiated being in violation of the principles of natural justice. The Tribunal also found fault with the requisite satisfaction which the Assessing Authority was required to arrive at before initiating the penalty proceedings. We fully concur with the view taken by the Tribunal. We, however, find that the Tribunal while accepting the appeal of the respondent and setting aside the impugned order of penalty did not give liberty to the Income Tax Authorities to issue fresh notice in accordance with law.
