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Facts
The Assessing Officer completed the assessment and initiated penalty proceedings under Section 271(1)(c) r.w.s. 144 of the Income-tax Act, 1961, levying a penalty of Rs. 4,45,800/-. The assessee appealed to the CIT(A), who dismissed the appeal. The assessee then filed an appeal before the Tribunal.
Held
The Tribunal held that the penalty notice issued under Section 271(1)(c) r.w.s. 274 of the Act was vague as it did not specify whether the penalty was for concealment of income or furnishing of inaccurate particulars. Following precedents, the Tribunal found the notice to be defective.
Key Issues
Whether the penalty notice issued under Section 271(1)(c) r.w.s. 274 is valid when it fails to specify the relevant limb for levying the penalty.
Sections Cited
153A, 144, 271(1)(c), 274
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Income Tax Appellate Tribunal, DELHI BENCHES ‘G’, NEW DELHI.
(Assessment Year: 2013-14) Parveen Tayal, vs. DCIT, Central Circle 2, H.No.246/G/Ist Floor, Faridabad. Sector 10, DLF, Faridabad – 121 006 (Haryana). (PAN : AGRPT5617P) (APPELLANT) (RESPONDENT) ASSESSEE BY : Dr. Rakesh Gupta, Advocate Shri Somil Aggarwal, Advocate REVENUE BY : Shri Mahesh Kumar, CIT DR Date of Hearing : 17.07.2024 Date of Order : 17.07.2024 ORDER PER S.RIFAUR RAHMAN,AM:
The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)-3, Gurgaon [“Ld. CIT(A)”, for short] dated 30.01.2025 for the Assessment Year 2013-14.
Brief facts of the case are, the Assessing Officer completed the assessment under section 153A r.w.s. 144 of the Income-tax Act, 1961 (for short ‘the Act’) on 24.04.2021 at an income of Rs.14,42,698/-.
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 reached at the conclusion that the assessee has concealed particulars of his income in order to decrease its tax liability and thereby levied a penalty of Rs.4,45,800/- @ 100% u/s 271(1)(c) of the Act.
Aggrieved with the above order, assessee preferred appeal before the ld. CIT (A) and before ld. CIT (A), assessee has made elaborate submissions. After considering the above submissions, ld. CIT (A) dismissed the appeal filed by the assessee.
Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :-
1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in upholding the action of the Ld. A.O. in imposing penalty of Rs.4,45,800/- u/s 271(1)(c) and framing the impugned penalty order and that too without assuming jurisdiction as per law and without complying with the mandatory conditions laid down under the said section and by recording incorrect facts and findings and is bad in law and against the facts & circumstances of the case.
2. That having regard to the facts and circumstances of the case, Ld. CTT(A) has erred in law and on facts in upholding the action of the Ld. A.O. in imposing penalty and passing the impugned penalty order being illegal, barred by limitation and void ab-initio and without obtaining the valid approval from the competent authority in accordance with law.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in upholding the Ld. A.O. in imposing the impugned penalty of Rs.4,45,800/- and passing the impugned penalty order and that too without recording the mandatory 'satisfaction' as per law.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) bas erred in law and on facts in upholding the action of Ld. A.O. in precise penalty notice u/s 271 (l)(c) while assuming jurisdiction was vague and inapplicable clause has not struck off.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in passing the impugned penalty order without giving adequate opportunity of being heard and in gross violation of principles of natural justice.”
5. At the outset, 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 and relied upon the orders of the authorities below.
Considered the rival submissions and perused the material placed on record. The Assessing Officer has not specified the relevant limb for
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 of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.”
9. 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 set aside the orders of the authorities below and decide the issue in favour of the assessee and accordingly directed to delete the penalty.
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 appeal filed by the assessee is allowed. Order pronounced in the open court on this 17th day of July, 2025 after the conclusion of the hearing.