ACIT, CENTRAL CIRCLE- 26, NEW DELHI vs. TRILOK CHAND CHAUDHARY, NEW DELHI

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ITA 4282/DEL/2018Status: DisposedITAT Delhi12 January 2023AY 2012-136 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice was bad in law as it failed to specify whether the penalty was for concealment of particulars of income or for furnishing inaccurate particulars. Following jurisdictional High Court decisions, the penalty was deleted.

What were the facts?

The Revenue appealed against the deletion of penalty by the CIT(A), while the assessee's cross-objection argued the penalty notice was invalid. The penalty notice under Section 274 r.w.s 271(1)(c) did not specify the limb under which the penalty was being levied.

What were the issues?

Whether a penalty notice under Section 271(1)(c) is invalid if it does not specify the limb of the section under which penalty is proposed.

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, DELHI ‘G’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI ANUBHAV SHARMA

For Appellant: Shri C.S. Anand, Adv
For Respondent: Shri H.K. Choudhary, CIT-DR
Hearing: 12.01.2023

Heard together (2 matters)

ITA No. 4282/DEL/2018
CO No. 138/DEL/2018

Read from the judgment's own cause title. This page is filed under one of them.

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

1.

This appeal by the Revenue and Cross Objection by the assessee are preferred against the order of the ld. CIT(A) – 26, New Delhi dated 12.03.2018 pertaining to Assessment Year 2012-13.

2.

The solitary grievance of the Revenue is that the ld. CIT(A) erred in deleting the penalty of Rs. 2,25,75,000- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] and the Cross Objection of the assessee is that the penalty order has been passed based upon the show cause notice issued u/s 274 of the Act r.w.s 271 of the Act wherein the Assessing Officer failed to specify under which limb the impugned penalty has been levied.

3.

Since the Cross Objection goes to the root of the matter, we deem it fit to address it first.

4.

We have given thoughtful consideration to the orders of the authorities below. The undisputed fact is that notice served upon the assessee u/s 274 of the Act r.w.s 271(1)(c) of the Act did not specify under which limb of the section he is proposing to levy penalty under section 271(1)(c) of the Act.

5.

This issue has been decided by the Hon’ble Delhi High Court in favour of the assessee and against the Revenue in the case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. ITA 475 of 2019 held as under:

“21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”

6.

Similar view was taken by the Hon’ble High Court of Karnataka in the case of SSA Emerald Meadows of 2015. The relevant findings of the judgement read as under:

“Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The issue was decided in favour of the assessee.”

7.

A SLP of the revenue against this judgement of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in 73 taxmann.com 248.

8.

Respectfully following the binding decision of the Hon’ble Jurisdictional High Court of Delhi, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act.

Accordingly, the Cross Objection of the assessee is allowed.

9.

Since we have quashed the penalty order itself, we do not find it necessary to dwell into the merits of the case. Appeal of the Revenue becomes otiose.

10.

In the result, Cross objection of the assessee in CO No. 138/DEL/2018 is allowed whereas the appeal of the Revenue in is dismissed.

The order is pronounced in the open court on 12.01.2023.

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