DY. COMMISSIONER OF INCOME TAX, CIRCLE-17(2), HYDERABAD vs. ZENOTECH LABORATORIES LIMITED, HYDERABAD

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ITA 843/HYD/2019Status: DisposedITAT Hyderabad03 September 2021AY 2006-074 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s deletion of penalties. This was because the Assessing Officer's show cause notices failed to specify whether the assessee had concealed income or furnished inaccurate particulars.

What were the facts?

The Revenue appealed against the CIT(A)'s deletion of penalties imposed under Section 271(1)(c) for AYs 2006-07 and 2013-14. The Assessing Officer had imposed significant penalties.

What were the issues?

Whether the penalty proceedings under Section 271(1)(c) are invalid if the show cause notice does not clearly state the specific limb of the section (concealment or inaccurate particulars) under which the penalty is proposed.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

These two Revenue’s appeals for AYs.2006-07 & 2013-14 arise from the CIT(A)-7, Hyderabad’s order(s) dated 26-02- 2019 passed in case Nos.0091 & 0093 / CIT(A)-7 / 2018-19, involving proceedings u/s. 271(1)(c) of the Income Tax Act, 1961 [in short, ‘the Act’]; respectively.

2.

At the outset, we notice that these Revenue’s appeals suffer from identical delay of 08 days as attributable to the reasons mentioned in the petition(s)/affidavit(s) and on :- 2 -: & 844/Hyd/2019 account of no objection from assessee’s side. This delay stands condoned therefore.

3.

We now advert to the Revenue’s identical sole substantive ground challenging correctness of the CIT(A)’s action deleting Section u/s.271(1)(c) penalty(ies) of Rs.2,51,40,989/- & Rs.2,40,11,400/- imposed in the Assessing Officer’s order(s) both dt.29-09-2016; respectively.

4.

It transpires during the course of hearing at the outset that the Assessing Officer’s corresponding penalty show cause notice(s) dt.31-12-2008 and 31-03-2016; respectively nowhere specified as to whether the assessee had concealed the particulars of income or furnished inaccurate particulars of income. We quote, Hon'ble jurisdictional high court’s decision Pr.CIT Vs. Baisetty Revathi [398 ITR 88] (Telangana & AP) and Mohd.Farhan A.Shaikh Vs. DCIT (2021) [125 taxmann.com 253] (Bom) (FB) that such a failure renders the entire penal mechanism as invalid. We therefore uphold the CIT(A)’s action deleting the impugned penalty(ies) on this precise legal issue alone.

5.

We lastly acknowledge that although the instant lis is being decided after a period of 90 days from the date of hearing as per Rule 34(5) of the IT(AT) Rules 1963, the same however, does not apply in the covid lockdown situation as per hon'ble apex court’s recent directions dated 27-04-2021 in M.A.No.665/2021 in SM(W)C No.3/2020 ‘In Re Cognizance for extension of limitation’ making it clear that in such cases where the limitation period (including that prescribed for institution

:- 3 -: & 844/Hyd/2019 as well as termination) shall stand excluded from 14th of March, 2021 till further orders in above terms.

6.

These two Revenue’s appeals are dismissed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 3rd September, 2021

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