ANIKA INTERNATIONAL PVT. LTD.,NEW DELHI vs. DCIT, CIRCLE- 2(2), NEW DELHI

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ITA 3348/DEL/2018Status: DisposedITAT Delhi14 February 2023AY 2014-153 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 notice issued under Section 274 for penalty was vague as it did not specifically state whether the penalty was for concealment of income or for furnishing inaccurate particulars. Following jurisdictional High Court decisions, the penalty was deemed invalid.

What were the facts?

The assessee appealed against a penalty levied under Section 271(1)(c) of the Income Tax Act. The Assessing Officer initiated penalty proceedings for concealment of income and furnishing inaccurate particulars, but the penalty was ultimately levied only for furnishing inaccurate particulars.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid if the notice under Section 274 does not specifically state the grounds for imposing the penalty.

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 ‘A’, NEW DELHI

Before: Sh. C. M. GargDr. B. R. R. Kumar

For Appellant: CA &
Hearing: 08.02.2023Pronounced: 14.02.2023

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

1.

The present appeal has been filed by the assessee against the order of the ld CIT(A)-I, New Delhi dated 05.03.2018.

2.

The assessee has raised the following grounds of appeal: “1. The learned Assessing Officer has erred in raising a penalty u/s 271(1)(c) of the Income Tax Act, 1961 amounting to Rs. 2,28,000/-.”

3. Based on the facts on record, the facts of the case are examined from record on jurisdictional issue of initiation of penalty and subsequent levy of penalty. The Assessing Officer initiated penalty proceedings for concealment of income and furnishing of inaccurate particulars of income whereas the Anika International Pvt. Ltd penalty has been levied on furnishing of inaccurate particulars of income.

4.

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]

5.

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.

6.

In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 14/02/2023.

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