GAUTAM AUTOMOBILES PRIVATE LIMITED,NEW DELHI vs. ACIT, C R BUILDING

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ITA 426/DEL/2025Status: DisposedITAT Delhi30 June 2025AY 2014-153 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961, are vitiated. The reasoning is based on the established legal position, as supported by the Delhi High Court decisions in PCIT Vs. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del.) and PCIT Vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Del.). These judgments establish that when the Assessing Officer fails to specify the corresponding limb under Section 271(1)(c) in the penalty show-cause notice, such a failure is not a mere procedural defect but is fatal to the penalty proceedings. Consequently, the penalty levied is invalid. The Tribunal ordered accordingly, allowing the assessee's appeal. All other grounds raised on merit by the assessee were rendered academic.

What were the facts?

The assessee, Gautam Automobiles Pvt. Ltd., is in appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, dated 20.12.2024. This order upheld a penalty of Rs. 2,81,022/- levied under Section 271(1)(c) of the Income-tax Act, 1961, by the Assessing Officer (AO) vide order dated 27.03.2019. The penalty was imposed for allegedly furnishing inaccurate particulars of income. The procedural history relevant to the appeal concerns the AO's show-cause notice issued under Section 271(1)(c) read with Section 274 of the Act on 14.09.2016.

What were the issues?

1. Whether the penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961, are vitiated due to the Assessing Officer's failure to specify the limb under Section 271(1)(c) in the penalty show-cause notice issued on 14.09.2016, as required by Section 274 of the Act? Assessee's contention: The assessee argued that the AO's show-cause notice, issued under Section 271(1)(c) read with Section 274 of the Act, was defective as it did not specify any particular limb (concealment of income or furnishing inaccurate particulars of income) under Section 271(1)(c). This failure, the assessee contended, vitiates the entire penalty proceedings. Revenue's contention: The Revenue argued that the defect in the show-cause notice, if any, was merely procedural and not fatal to the impugned penalty proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI S. RIFAUR RAHMAN

Hearing: 30.06.2025Pronounced: 30.06.2025

Date of hearing 30.06.2025 Date of pronouncement 30.06.2025 ORDER

PER SATBEER SINGH GODARA, JM

1.

This assessee’s appeal for assessment year 2014-15, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1071415601(1), dated 20.12.2024 involving proceedings under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2.

It emerges at the outset during the course of hearing that both the learned lower authorities have held the assessee to have furnished it’s inaccurate particulars of income to levy section 271(1)(c) penalty in question amounting to Rs.2,81,022/- vide Assessing Officer’s order dated 27.03.2019 which stands upheld in the CIT(A)’s detailed discussion.

3.

The assessee has first of all raises it’s legal argument that once the learned Assessing Officer had admittedly issued his penalty show-cause notice(s) u/s 271(1)(c) r.w.s. 274 of the Act 14.09.2016, not specifying any specific limb thereunder, his failure to this effect vitiates the entire proceedings. The Revenue on the other hand has vehemently argued that such a defect is only a procedural one only which is not fatal to the impugned penalty.

4.

Faced with this situation, we quote PCIT Vs. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del.) and PCIT Vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Del.) to conclude that once the learned Assessing Officer has not specified the corresponding limb in his section 2 | P a g e 271(1)(c) penalty show-cause notice forming part of the case records, his failure to this clinching effect indeed vitiates the penalty proceedings itself. We order accordingly.

5.

All other pleadings on merit in the assessee’s instant appeal stand rendered academic.

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