Notice U/S 271(1)(c) Of IT Act Must Specify Whether Penalty Is Against 'Concealment' Of Income Or Furnishing 'Incorrect' Income: J&K High Court
Kapil Dhyani
23 Oct 2024 6:00 PM IST
The Jammu and Kashmir and Ladakh High Court has made it clear that notice to an assessee proposing imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 has to clearly specify whether assessee is accused of 'concealing' his income or furnishing 'incorrect' income particulars. Section 271(1)(c) stipulates that penalty proceedings can be initiated provided...
The Jammu and Kashmir and Ladakh High Court has made it clear that notice to an assessee proposing imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 has to clearly specify whether assessee is accused of 'concealing' his income or furnishing 'incorrect' income particulars.
Section 271(1)(c) stipulates that penalty proceedings can be initiated provided the Assessing Officer is satisfied that any person has concealed the particulars of the income or furnished the incorrect particulars of such income.
A division bench of Justices Sanjeev Kumar and Rajesh Sekhri held that such a notice cannot be a “composite” one.
The notice has to specify one of the two grounds to enable the assessee to file a proper explanation.
In the case at hand, the notice issued to the respondent-assessee was a composite notice intimating that he was liable to be proceeded for imposition of penalty for having concealed the particulars of his income/ for having furnished incorrect particulars for such income.
On assesse's appeal, the Income Tax Appellate Tribunal held that it was a case where the Assessee was not given proper opportunity to offer his explanation and principles of natural justice were violated, thus vitiating the penalty order.
'Fully concurring' with this view, the High Court held,
“The Assessing Authority concerned had not recorded its satisfaction with regard to one of the two limbs or on both the limbs indicated in clause (c) of sub-section 1 of Section 271…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.”
Accordingly, Revenue's appeal against ITAT order was dismissed but with liberty to proceed against the respondent afresh, as per law.
Appearance: Advocate Umar Rashid Wani for Revenue; Sr. AAG Ab. Rashid Malik with Advocate Mohd Younis Hafiz for Respondent
Case title: Pr. Commissioner of Income Tax v. J & K Power Development Corporation Limited
Case no.: ITA 7/2019
