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Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
Date of Hearing : 17.01.2023 Date of Order : 19.01.2023 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : These are appeals by the assessee against the respective orders of ld. CIT (Appeals)-4, New Delhi dated 20.05.2019 pertaining to the Assessment Years 2011-12 & 2012-13.
Since the appeals were heard together and have some common issues, they are being consolidated and disposed off by this common order. under:-
“1) THAT in the facts and circumstances of the case, the CIT(A) erred in holding that though the A.O. failed to specify the nature of default for which penalty u/s,271(1)(c) is levied, the levy of penalty was not bad in law. 2) THAT in the facts and circumstances of the case, the CIT(A) erred in partly confirming the order of A.O. in the levy of penalty u/s 271(1)(c). 3) THAT in the facts and circumstances of the case, the CIT(A) erred in partly confirming the order of A.O. that assessee had furnished inaccurate particulars of his income and then proceeded to levy penalty.”
At the outset, in this case, ld. Counsel for the assessee stated that the penalty is not sustainable inasmuch as in the notice of penalty u/s 271(1)(c) of the Income-tax Act, 1961 (for short 'the Act'), AO has not specified nature of default BY ticking appropriate limb and that this makes the penalty levied devoid of valid jurisdiction. In this regard, he referred to various case laws.
Upon careful consideration, we find that tin this case, penalty u/s 271(1)(c) of the Act was levied on the assessee for an amount of Rs.4,63,500/- and Rs.6,18,000/- for AYs 2011-12 & 2012-13 respectively. Assessee has raised this plea of non-specification of default in penalty notice before the ld. CIT (A). Ld. CIT (A) has noted the ground but has dismissed the same by observing as under :-
“6.3 Though, no specific ground of appeal challenging the imposition of penalty has been made on the ground that notice under section 274 of the Act is defective as no specific limb for initiation of penalty i.e. whether for concealment or for furnishing inaccurate particulars of income has been mentioned, however, since the appellant has contested this technical issue
3 & 6738/Del./2019 in its written submission, I am of the view that such contention is not acceptable for the reason that even assuming that there was vagueness in the penalty notice, the same has caused no prejudice to the appellant as the appellant clearly understood the purport and import of notice issued u/s 274 r.w.s. 271 of the Act. From the penalty order as well as assessment order, it is clear that penalty has been imposed on account of furnishing of inaccurate particulars. Entire facts and background of the case should be kept in mind and mere mistake in the language should not vitiate the proceeding.”
We find that the above adjudication by the ld. CIT (A) is not sustainable in the light of various case laws on this subject. It has been now settled that AO has to specify the default for which the penalty notice is issued so that the assessee is aware of the charge against him.
For this purpose, it is mandatory that the relevant limb of the notice be specified whether the notice for penalty is for concealment of income or furnishing of inaccurate particulars of income. It has been held that omnibus notice without specifying the relevant charge renders the penalty levied without jurisdiction. In this regard, reference is made to the decision of Full Bench of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT in & 57 of 2012 dated11.03.2021 wherein it has been held that no specification of charge in the penalty notice leads to same becoming void and penalty on that count is to be deleted. Hon’ble Court held as under :-
“Head Note only : S.271(1)(c) : Penalty – Concealment –Non-striking off of the irrelevant part while issuing notice under section 271(1)(c) of the Income-tax Act, - Order is bad in law – Assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.”
However, in this regard, ld. DR for the Revenue has submitted that the fact whether penalty notice was properly ticked or not needs to be checked from the assessment records. For this purpose, he suggested that the matter be referred to the AO to examine the factual veracity of this claim. Ld. Counsel for the assessee fairly agreed to this proposition.
Accordingly, we remit the issue to the file of AO. AO shall ascertain whether the penalty notice issued to the assessee had the relevant limb ticked off i.e. whether the charge was specified or not. If the relevant charge was not ticked and the notice was omnibus notice, the penalty levied in this regard is liable to be deleted. With these directions, we remit the issue to the file of AO. Needless to add, assessee should be granted adequate opportunity of being heard. Our above finding is applied mutatis mutandis to both the appeals 9. filed by the assessee. 10. In the result, these appeals of the assessee stand allowed for statistical purposes. Order pronounced in the open court on this 19th day of January, 2023.