By TIOL News Service

MUMBAI, MAY 10, 2017: THE ISSUE BEFORE THE TRIBUNAL IS - Whether minor defects in the penalty notice makes it invalid, when no prejudice is caused to assessee and penalty proceedings were actively contested by him before AO. NO is the answer.

Facts of the case:

The assessee, being resident corporate assessee, was assessed u/s 143(3) wherein the assessee suffered certain depreciation & interest disallowances u/s 32 & 43B vide AO's order which led to initiation of penalty for furnishing of inaccurate particulars of income by issuance of notice u/s 274 r/w/s 271(1)(c). Finally, the assessee was saddled with a penalty of Rs.12,50,056/- against wrong claim of Rs.37,88,046/- vide penalty order which was contested without any success before the CIT(A).

On appeal, the ITAT held that,

++ so far as the legal grounds are concerned, a perusal of quantum order reveals that the penalty was initiated for furnishing of inaccurate particulars and finally the same was levied on the same ground. Undoubtedly, notice u/s 274 was duly served on the assessee and the relevant clause of the standard printed form was duly ticked by the AO which shows due application of mind qua penalty proceedings. Mere non-deletion of few words, in our opinion, on the facts of the case, has not caused any prejudiced to the assessee particularly when the penalty proceedings were actively contested by him before the AO. The assessee, at all times, was aware of the grounds for which he was being penalized. Our conclusion draw support from the provisions of Section 292B also which cures minor defect in the notice provided such notice in substance and effect was in conformity with the intent and purpose of the act. On overall facts and circumstances, we find that such condition was fulfilled in the instant case. Therefore, the penalty could not be deleted merely on the basis of defect pointed by the AR in the notice.

(See 2017-TIOL-620-ITAT-MUM)