SARASWATI DYNAMICS P.LTD,ROORKEE vs. ACIT, HARIDWAR

Per Dr. B. R. R. Kumar, Accountant Member:

“1. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in dismissing the appeal of the assessee.

2. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in upholding the levy of penalty u/s & 179/DDN/2019 2 Saraswati Dynamics Pvt. Ltd. 271(1)(c) even when the penalty notice itself was bad in law in as much as the penalty notice does not specify the specific default for which penalty notice has been issued.

3. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in upholding the levy of penalty u/s 271(1)(c) on the basis of penalty notice where inappropriate words out of concealment of income or filing of inaccurate particulars of income has not been struck off.

4. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in upholding the penalty ignoring the Hon'ble Supreme Court judgment in the case of SSA's Emerald and also the judgment of Hon'ble Karnataka High Court in the case of Manjunath.

5. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in upholding the penalty only on the ground that the addition made by the AO in the assessment order has been confirmed by the CIT(A).

6. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in upholding the levy of penalty u/s 271(1)(c) without proving either the concealment of income or filing of inaccurate particulars of income.

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 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. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180]