S. 271(1)(c) Penalty cannot be invoked without Specifying Exact Charge

Jumbo Electronics Corp. Pvt. Ltd. Vs. DCIT (ITAT Mumbai)

The impugned penalty order certainly gives an impression that the Assessing Officer himself was not sure which limb of section 271(1)(c) is applicable to the assessee. In any case of the matter, non mentioning of particular limb for which the Assessing Officer has imposed penalty under section 271(1)(c) in the impugned penalty order coupled with the fact that in the show cause notice issued under section 274 in the standard printed form the Assessing Officer has not struck off the irrelevant clauses, thereby, not specifying exact charge made against the assessee vis^–a^–vis section 271(1)(c), makes the penalty order invalid as it contravenes the principles of natural justice.

Full Text of the ITAT Order is as follows:-

Aforesaid appeal filed by the assessee is against the order dated 17^th July 2012, passed by the learned Commissioner (Appeals)^–5, Mumbai, confirming penalty imposed under section 271(1)(c) Income-tax Act, 1961 (for short “the Act”) for an amount of ` 15,67,406, for the assessment year 2006-07.

2. Brief facts are, the assessee a company filed its return of income for the impugned assessment year on 23^rd September 2006, declaring loss of Rs. 48,94,672. During the scrutiny assessment proceedings, the Assessing Officer after verifying the books of account and information called for, disallowed certain expenditures claimed by the assessee. Further, the interest earned on fixed deposit amounting to Rs. 3,30,015, which was shown as income from business was treated as income from other sources. As a result, the Assessing Officer while assessing the business income as nil, determined the total income at Rs. 3,30,020 by assessing the interest earned on fixed deposit as income from other sources. On the basis of such dis allowance / addition made, the Assessing Officer while completing assessment also initiated proceedings for imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income. In the course of penalty proceedings, in response to the show cause notice issued under section 274 r/w 271(1)(c) of the Act, though, the assessee furnished its explanation denying the allegation made by the Assessing Officer, however, the Assessing Officer rejecting the explanation of the assessee proceeded to imposing penalty of ` 15,67,406 under section 271(1)(c) of the Act.

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