Specification of Charge of penalty is an important factor while deciding the matters in litigation

Ganga Iron & Steel Trading Co. Vs CIT (Bombay High Court)

Specification of Charge of penalty under section 271(1)(c) is an important factor while deciding the matters in litigation- Ganga Iron and Steel Trading Co. v Commissioner of Income Tax dated 22.12.2021 , 447 ITR 743 (Bom.)

It is the experience of the author that penalty proceedings are initiated as a ritual and in a routine manner. Whenever any type of addition is made upto the AY 2016­17 penalty proceedings were mainly governed by section 271(1)(c). After that section 270A replacing section 271(1)(c). Under section 271(1)(c), penalty is leviable for concealment of income or for furnishing inaccurate particulars or both. Over a good period of time when law was or more or less settled on section 271(1)(c) this section was replaced by section 270A. Section 270A says about levy of penalty in the case of under reporting of income or misreporting of income or both. The Jurisprudence on this point is very clear that assessment proceedings and penalty proceedings are separate. The Law is also clear that before imposing penalty the assessee should be made clear that under which offence the penalty is going be levied on him, meaning thereby that the notice should specify the charge whether it is case of concealment of income or furnishing inaccurate particulars or both under the old regime. In the new regime also the notice should specify whether it is for under reporting or misreporting and further subdivision of under reporting or misreporting.

The Charge levied should be specific

The assessing officer should be clear in his findings that whether the penalty is levied for concealment or for furnishing inaccurate particulars of income. The assessing officer should be satisfied about the nature of default for which he has initiated penalty. It should not be the case that the penalty has been initiated for a default and levied for another one. Initiation of penalty proceedings in the assessment order is a sine qua non for initiation of penalty proceedings.

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