15 Section 271(1)(c) – Penalty – Concealment of income – A. Y. 2006-07 – Notice for levy of penalty – Notice should state specific grounds for levy of penalty – Printed form not sufficient

Muninga Reddy vs. ACIT; 396 ITR 398
(Karn)

 For the A. Y. 2006-07, after completing the
assessment, the Assessing Officer imposed penalty of Rs. 1,78,35,511/- for
concealment of income u/s. 271(1)(c) of the Income-tax Act, 1961. The Tribunal
confirmed the penalty.

On appeal by the assessee, the Karnataka
High Court reversed the decision of the Tribunal and held as under:

“i)   In
order to levy penalty, the notice would have to specifically state the ground
mentioned in section 271(1)(c) of the Income-tax Act, 1961, namely whether it
is for concealment of income or furnishing incorrect particulars of income that
the penalty proceedings are being initiated. Sending a printed form with the
grounds mentioned in section 271(1)(c) of the Act would not satisfy the
requirement of law. The assessee should know the ground which he has to meet
specifically, otherwise the principles of natural justice would be violated and
consequently, no penalty could be imposed on the assessee if there is no
specific ground mentioned in the notice.

ii)   There
was a printed notice and no specific ground was mentioned, which may show that
the penalty could be imposed on the particular ground for which the notice was
issued. Hence, the notice and the consequent levy of penalty were not valid.”