PAWAN HANS HELICOPTERS LTD,NOIDA vs. ACIT CIRCLE-19(2), NEW DELHI

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ITA 1536/DEL/2020Status: DisposedITAT Delhi03 March 2023AY 2002-034 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty order was bad in law because the notice issued under Section 274 read with Section 271(1)(c) did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. Following jurisdictional High Court judgments, the penalty was quashed.

What were the facts?

The assessee, Pawan Hans Helicopters Ltd., appealed against the CIT(A)'s order confirming a penalty levied by the AO. The penalty was imposed on additions made for prior period expenses claimed by the assessee.

What were the issues?

The primary issue was the validity of the penalty notice under Section 274, which failed to specify the exact charge (concealment or inaccurate particulars) against the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, DELHIBENCH ‘F’, NEW DELHI

Before: Dr. B. R. R. KumarSh. Yogesh Kumar US

For Appellant: Adv. &
Hearing: 08.12.2022Pronounced: 03.03.2023

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the assessee against the order of ld. CIT(A)-7, New Delhi dated 28.01.2020.

2.

The assessee has raised the following ground of appeal: “1. On the facts and circumstances of the case, the order passed by the Learned CIT(A) is bad both in the eyes of law and on fact

2. On the facts and circumstances of the case the order passed by the learned CIT(A) is bad in law having been passed exparte without giving the assessee reasonable opportunity of being heard and in clear violation of the principles of natural justice.

3. On the facts and circumstance of the case, the Learned CIT(A) has erred both on facts and in laws in confirming the action of the AO levying penalty of Rs.39,18,354/- by invoking the provision of section 271(1)(c) of the Act.

2 Pawan Hans Helicopters Ltd 4. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the penalty levied on the addition of Rs 1,11,95,296/- on account of prior period expenses claimed by the assessee 5. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming penalty levied by the AO despite the fact that the above said additions itself are not tenable in law.

6.

On the facts and circumstances of the case the learned CIT (A) has erred both on facts and in law in confirming the penalty levied by the AO ignoring the fact that assessee being a government of India Enterprise, no malafide intention can be alleged on the part of the assessee 7. On the facts and circumstances of the case the learned CIT (A) has erred both on facts and in law in confirming the penalty levied by the AO ignoring the contention of the assessee that the penalty proceedings are independent proceedings, as such mere addition does not lead to levy of penalty.

8.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty levied by the AO despite the fact that the notice issued by AO u/s 274 read with section 271(1)(c) of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income.

9.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty levied by the AO despite the fact that issue on which penalty was levied was a debatable issue thus penalty under section 271(1)(c) cannot be levied.

10.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty levied by the AO despite the fact that there is neither concealment nor furnishing the inaccurate particulars by the assessee.”

3.

Heard the arguments of both the parties and perused the material available on record.

4.

We have also gone through the notice u/s 274 r.w.s. 271 of the Income Tax Act, 1961 issued by the Assessing Officer on 3 Pawan Hans Helicopters Ltd 30.06.2009. We find that the Assessing Officer has issued the penalty order stating that, you *have concealed the particulars of your income by furnishing inaccurate particulars of such income.”

5.

On this issue, we are guided by the following judgments:

1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180]

4 Pawan Hans Helicopters Ltd 6. Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated.

7.

In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 03/03/2023.

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