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Facts
The Revenue filed appeals against the CIT(A)'s order, and the assessee filed cross-objections. The assessee faced a delay in filing cross-objections due to financial constraints and staff departures. The main issue revolves around the validity of penalty notices issued under Section 271(1)(c) for alleged concealment of income or furnishing inaccurate particulars.
Held
The Tribunal condoned the delay in filing the cross-objections. It held that the penalty notices were omnibus and suffered from vagueness as they did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. Therefore, the penalty was quashed.
Key Issues
Whether the penalty notices issued under Section 271(1)(c) were valid when they did not specify the exact charge (concealment vs. inaccurate particulars)? Whether the reassessment proceedings under Section 147 were validly initiated and conducted?
Sections Cited
147, 148, 143(3), 153A, 271(1)(c), 274
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRIS.RIFAUR RAHMAN
M/s. Sahara India Commercial vs. ACIT, Central Circle 1, Corporation Limited, New Delhi. Sahara India Sadan, 2A, Shakespeare Sarani, Kolkata – 700 071. (PAN : AADCS6118F) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ajay Vohra, Sr. Advocate Shri Saksham Singhal, Advocate Shri Shivam Gupta, CA REVENUE BY : Shri Javed Akhtar, CIT DR Date of Hearing : 02.06.2025 Date of Order : 14.08.2025 ORDER
PER S.RIFAUR RAHMAN,ACCOUNTANT MEMBER :
The Revenue has filed appeals against the order of ld. Commissioner of Income Tax (Appeals)-23, New Delhi [“ld. CIT(A)”, for short] dated 27.09.2016 for AY 2006-07 and dated 27.01.2022 for the Assessment Years 2010-11, 2013-14 & 2014-15. The assessee has also filed cross objections in all the aforesaid assessment years.
Since the issues are common and the appeals are connected, therefore, the same are heard together and being disposed off by this common order. to 886/DEL/2022 CO No.18/Del/2017 CO Nos.186 to 188/Del/2022 3. First we take up cross objections filed by the assessee being CO No.186/Del/2022 for AY 2010-11 as lead case wherein the assessee has taken the following ground of appeal :-
The Ld. CIT (Appeal) erred on facts as well as in law in not adjudicating/rejecting Ground no.2 by holding that the issue raised by Appellant remained academic in nature, appeal having been allowed on merits.
4. At the time of hearing, ld. AR of the assessee submitted that there is a delay of 195 days in filing the cross objections. He submitted that since the entire Sahara Group was undergoing bad weather, most of the employees have left the organization and the Group was surviving with less staff due to acute financial constraint. He further submitted that proper and timely statuary compliances have become a challenge over a period of time due to lack of staff and due to this, the person who was handling the Income tax matters at Kolkata office left the organization and kept this notice in the file which remained unattended till recently when the notice of hearing was received on 17.11.2022 by the assessee fixing the hearing for 24.11.2022. He submitted that this lapse on the part of person incharge who has since left the organization has resulted in delay of 195 days in filing the cross objections. Accordingly, he prayed to 886/DEL/2022 CO No.18/Del/2017 CO Nos.186 to 188/Del/2022 that the delay of 195 days may please be condoned as this delay was due to sufficient cause which was beyond the control of the assessee.
We have heard both the counsels on the issue of condonation of delay. In our considered opinion, there was a reasonable cause for the delay in filing the cross objections. Therefore, we condone the delay in filing the cross objections before the Tribunal.
At the outset, ld. AR for the assessee submitted that assessee has taken the ground in the cross objections that the ld. CIT(A) erred in not adjudicating/rejecting Ground No.2 raised before him which is reproduced below for the sake of clarity :- “2. That the penalty order passed under section 271(1)(c) of the I.T. Act, 1961 by the learned Assessing Officer is void, in as much as, from the notice issued under section 274 read with section 271(1)(c) of the I.T. Act, 1961 it is not discernible, as to whether the penalty levied is for furnishing of any inaccurate particulars of income or for concealment of income, which renders the entire proceedings bad in law.”
Ld. AR of the assessee brought to our notice brief facts of the case that on the basis of assessment completed under section 143(3)/153A of the Income-tax Act, 1961 (for short ‘the Act’) on 21.11.2016 at an income of Rs.6,22,54,92,610/-, Assessing Officer initiated the penalty proceedings by way of issuance of the notice u/s 271(1)(c) of the Act read with section 274. Disagreeing with the contentions raised by the assessee, AO to 886/DEL/2022 CO No.18/Del/2017 CO Nos.186 to 188/Del/2022 reached at the conclusion that the assessee has concealed its income and thereby levied a penalty of Rs.14,81,29,583/- @ 100% of minimum penalty. He submitted that aggrieved with the above order, assessee preferred appeal before the ld. CIT (A) and before ld. CIT (A), assessee has made elaborate submissions and after considering the above submissions, ld. CIT (A) allowed the appeal filed by the assessee on merits but not decided the ground no.2.Aggrieved with the above order, assessee is in appeal before us by filing cross objections.
At the time of hearing, ld. Counsel for the assessee contended that the notice issued under section 274 read with section 271(1)(c)of the Act is a defective one. He submitted that the charge has not been specified in the notice, hence referring to various decisions including that of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT 434 ITR 1 (Bom)(FB) and Hon’ble Delhi High Court in PCIT vs. Sahara India Life Insurance Co. Ltd. 432 ITR 84 (Del.) & Pr. CIT vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Delhi), ld. Counsel for the assessee pleaded that the penalty order is liable to be quashed.
On the other hand, ld. DR for the Revenue objected to the above submissions. to 886/DEL/2022 CO No.18/Del/2017 CO Nos.186 to 188/Del/2022 10. Considered the rival submissions and perused the material placed on record. The Assessing Officer has not specified the relevant limb for initiation of penalty proceedings in the notice issued u/s 274 of the Act. For the sake of clarity, the same is reproduced below :-
We note that assessee has duly raised issue against the assumption of jurisdiction for the levy of section 271(1)(c) that in the penalty notice, relevant limb was not specified whether the penalty proceedings were initiated for concealment of income or furnishing of inaccurate particulars of income. When the same was not so specified in the penalty notice it has been held in the case laws cited before us that mention of the same in the assessment order or penalty order cannot cure fatal short-coming. When the charge has not been specified in the notice, it is an omnibus notice. In such circumstances, Hon’ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. 432 ITR 84 (Del.) has held that the penalty order passed is liable to be quashed on account of this defect which is fatal. We further note that Full Bench of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT (supra) has held that no specification of charge in the penalty notice leads to same become 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 to 886/DEL/2022 CO No.18/Del/2017 CO Nos.186 to 188/Del/2022 of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.”
Accordingly, following the precedent and on the undisputed proposition that relevant limb of the penalty notice was not specified as to whether penalty was for concealment or furnishing of inaccurate particulars of income, we direct that the penalty in this case is liable to be deleted. Hence, we quash the penalty and decide the issue in favour of the assessee and accordingly direct to delete the penalty.
We also observe that ld. CIT (A) also deleted the penalty on merits only against which Revenue is in appeal before us, but since we have already quashed the penalty on the jurisdictional issue, the merits of the penalty levied are not being adjudicated at this stage being academic in nature.
In the result, the cross objections filed by the assessee in AY 2010-11 is allowed. 15. With regard to cross objections filed by the assessee in AYs 2013-14 & 2014-15, since the facts are exactly similar to AY 2010-11 our above findings in AY 2010-11are applicable mutatis mutandis in Assessment Years 2013-14 & 2014-15. Accordingly, the cross objections filed by the assessee for AYs 2013-14 & 2014-15 are allowed. to 886/DEL/2022 CO No.18/Del/2017 CO Nos.186 to 188/Del/2022 16. Since we have allowed the cross objections filed by the assessee in AYs 2010-11, 2013-14 & 2014-15 and deleted the penalty, the appeals filed by the Revenue in AYs 2010-11, 2013-14 & 2014-15 are dismissed.
In the result, the cross objections filed by the assessee in AYs 2010-11, 2013-14 & 2014-15 are allowed and the appeals filed by the Revenue in AYs 2010-11, 2013-14 & 2014-15 are dismissed.
Now we take up Revenue’s appeal for AY 2006-07 and the cross objections filed by the assessee for AY 2006-07.
At the time of hearing, ld. AR of the assessee submitted that assessee has taken the ground in the cross objection that, “Ground Nos.1 to 4 of the appeal of the Revenue do not arise out of the order of the CIT (Appeal) and therefore are not substantiate in law and are infructuous and deserve to be dismissed.” He submitted that the ld. CIT (A) has decided the issue relying on various case laws holding that the reopening of assessment under section 147 of the Act and the issuance of notice u/s 148 of the Act cannot be sustained and accordingly held that the reassessment order u/s 147 of the Act is quashed and allowed the appeal filed by the assessee. Hence, he prayed that the cross objections filed by the assessee may be allowed and the appeal filed by the Revenue be dismissed.
On the other hand, ld. DR of the Revenue relied on the order of the Assessing Officer.
Considered the rival submissions and material placed on record. We have gone through the detailed findings of the ld. CIT (A) in para 4.2 of his order and observe to 886/DEL/2022 CO No.18/Del/2017 CO Nos.186 to 188/Del/2022 that no proper opportunity was granted to the assessee and further reassessment proceedings were taken up only on 19.03.2014 and completed on 28.03.2014 within 9 days. It clearly shows that assessee was not extended proper time and proper opportunity to produce various records as called for by the Assessing Officer. It is also fact on record that reassessment proceedings were initiated beyond four years and Assessing Officer has not brought on record any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for the impugned assessment year 2006-07 and proceeded to reopen the same merely on the basis of report of DDIT (Inv.). Therefore, we are inclined to accept the findings given by the ld. CIT (A) that reopening of assessment u/s 147 of the Act and the issuance of notice u/s 148 of the Act cannot be sustained. Accordingly, we uphold the order of the ld. CIT (A).
In the result, the cross objection filed by the assessee in AY 2006-07 is allowed and the appeal filed by the Revenue in AY 2006-07 is dismissed.
To sum up : all the cross objections filed by the assessee are allowed and the appeals filed by the Revenue are dismissed. Order pronounced in the open court on this 14th day of August, 2025.