HARISH CHANDRA BATRA,DEHRADUN vs. ITO, WARD- 1(3), DEHRADUN

The Assessing Officer made addition on account of long term capital gain. Consequent to the addition, penalty of Rs.7,00,000 u/s 271(1)(c) has been levied by the AO.

We find that the page no. 11, the Assessing Officer has mentioned that “issue penalty notice u/s 271(1)(c).”

We also find that the para no. 5 of the penalty order dated10.02.2015 reads as under:

We have also gone through the notice u/s 274 r.w.s. 271 of the Income Tax Act, 1961 issued by the Assessing Officer. We find that the Assessing Officer has issued the penalty order stating that, you *have concealed the particulars of your income by furnishing inaccurate particulars of such income.”

On this issue, we are guided by the following judgments: 1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in ITA No. 475 of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically.

Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated.

In the result, the appeal of the assessee is allowed. Order pronounced in open court on 25th day of November, 2021.