INCOME TAX OFFICER, WARD-15(2), HYDERABAD vs. B.SHANKAR, HYDERABAD

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ITA 1763/HYD/2019Status: DisposedITAT Hyderabad19 May 2021AY 2007-083 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 order of the CIT(A) in deleting the penalty. The CIT(A) had followed the jurisdictional High Court's decision that a penalty notice under Section 271(1)(c) must specify the exact ground for initiation.

What were the facts?

The Assessing Officer reopened the assessment of the assessee for AY 2007-08 and brought Rs. 2,73,75,000 to tax for undisclosed income from land transactions. Subsequently, a penalty was levied under Section 271(1)(c) of the Income Tax Act.

What were the issues?

Whether the penalty levied under Section 271(1)(c) is valid when the notice issued did not specify the exact ground for penalty initiation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 292BB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Smt. P. Madhavi Devi & Shri Laxmi Prasad Sahu

For Respondent: DR Assessee by: Sri G. Sudhakar Rao
Hearing: 06/05/2021Pronounced: 19/05/2021

This is Revenue’s appeal for the A.Y 207-08 against the order of the CIT (A)-7, Hyderabad, dated 26.9.2019 deleting the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act.

2.

Brief facts of the case are that it had come to the knowledge of the Assessing Officer that the assessee individual along with three others had entered into transaction of purchase and sale of land and in the process has received a sum of Rs.87,50,000/- over and above purchase cost and also that he had invested a sum of Rs.1,86,25,000/- for purchase of land. But the assessee has not filed any return of income and has not offered any income to tax. Therefore, the Assessing Officer reopened the assessment of the assessee and brought the sum of Rs.2,73,75,000/- to tax. Thereafter, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act by issuing the notice u/s 274 of the Act. Since the assessee did not file any reply, he levied minimum penalty i.e., 100% of the tax sought to be evaded, i.e., Rs.91,58,325/-. Aggrieved, the assessee preferred an appeal to the CIT (A), who deleted the penalty. Against the relief granted by the CIT (A), the Revenue is in appeal before us by raising the following grounds of appeal:

“1) The order of the Hon'ble CIT (A) is erroneous both on facts and as well as on law. 2) The Hon'ble CIT (A) erred in deleting the penalty despite the fact that the quantum addition leading to the levy of penalty was sustained at 1st appeal stage and is alive. 3) The decision of the CIT (A) is not acceptable in view of section 292BB wherein the assessee has not raised any objection during the course of penalty proceedings and claim later that the notice was improper and defective. 4) The appellant craves to add, amend, alter any of the grounds of appeal during the proceedings with prior permission of the Hon'ble ITAT”.

3. After hearing both the parties, we find that the CIT (A) has granted relief to the assessee on the grounds that the notice for levy of penalty u/s 271(1)(c) did not mention the specific ground for which the penalty has been initiated. We find that the CIT (A) has followed the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (359 ITR 565) as well as the decision of the Hon'ble jurisdictional High Court in the case of Pr.CIT vs. Smt. Baisetty Revathi in ITTA No.684/2016 dated 13.7.2017 for granting relief to the assessee. As the decision of the CIT (A) is in accordance with the precedents on the issue, particularly the decision of the Hon'ble jurisdictional High Court, we do not see any reason to interfere with the order of the CIT (A). The Revenue’s appeal is accordingly dismissed.

4.

In the result, Revenue’s appeal is dismissed.

Order pronounced in the Open Court on 19th May, 2021.

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