Clarity on grounds while issuing notice u/s 271 (1) (c) by AO is must?

Orbit Enterprises vs. ITO (ITAT Mumbai) - 28 Oct 2017

Question discussed: Since  "concealment of particulars of income" and "furnishing of inaccurate particulars of income" referred to in s. 271(1)(c) has different meaning so whether specification of the same to be done in notice clearly?

Some important pointers of the case (for easy reference):

1- It was discussed further that " the learned representative for the assessee pointed out that non-striking off of irrelevant portion of the standard form of notice u/s 274 r.w.s. 271(1)(c) of the Act is a legal infirmity, which is fatal to the imposition of penalty because in the absence of specifying the ground on which penalty is initiated, there is a violation of principles of natural justice. In this context, the learned representative has specifically pointed out the judgments of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory & Ors., 359 ITR 565 (Karn.) and M/s. SSA’s Emerald Meadows (supra) wherein even the SLP filed before the Hon'ble Supreme Court has also been dismissed.

2-Sec. 271(1)(c) of the Act postulates that penalty prescribed therein can be levied on existence of any of the two situations, namely for concealment of particulars of income or for furnishing inaccurate particulars of such income. It has been judicially well understood by now that ‘concealment of particulars of income’ and ‘furnishing of inaccurate particulars of income’ referred to in Sec. 271(1)(c) of the Act denote two different connotations.

3- Hence it was concluded "In view of the aforesaid discussion, in our view, having regard to the fact that in the instant case the notice issued u/s 274 r.w.s. 271(1)(c) of the Act dated 29.03.2012 does not specify the grounds of initiation of penalty proceedings, the same is invalid and untenable in the eyes of law. Accordingly, the penalty imposed u/s 271(1)(c) of the Act is directed to be deleted on this count itself."

For reading full text of the case law please refer -http://itatonline.org/archives/orbit-enterprises-vs-ito-itat-mumbai-s-2711c-292bb-concealment-of-particulars-of-income-and-furnishing-of-inaccurate-particulars-of-income-referred-to-in-s-2711c-denote-two-differe/orbit-enterprises-271-1-c-penalty-ambiguity-notice/