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Facts
The assessee's twin appeals arose against penalties levied under Section 271(1)(c) of the Income Tax Act for Assessment Years 2007-08 and 2008-09, based on the alleged furnishing of inaccurate particulars of income and concealment thereof, related to wrong claims of exemptions. The penalties were substantial, amounting to over Rs. 14 crores and Rs. 26 crores respectively.
Held
The Tribunal held that the penalty proceedings were vitiated because the Assessing Officer failed to specify the specific limb(s) of Section 271(1)(c) under which the penalty was being levied in the show-cause notices. The Tribunal relied on judicial precedents to support this conclusion.
Key Issues
Whether penalty proceedings under Section 271(1)(c) are valid if the show-cause notice fails to specify the specific limb(s) under which the penalty is being imposed?
Sections Cited
271(1)(c), 274, 11(1), 11(2)
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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman
Asstt. Year: 2007-08 : Asstt. Year: 2008-09 The Delhi Building & Others Vs DDIT(E), Construction Workers Welfare Trust Circle-IV, Board, 5, Shamnath Marg, New Delhi-110002 New Delhi-110054 (APPELLANT) (RESPONDENT) PAN No. AAAJT1846R Assessee by : Sh. Sankalp Malik, Adv. & Sh. Sanjay Malik, Adv. Revenue by : Ms. Pooja Swaroop, CIT-DR Date of Hearing: 24.06.2025 Date of Pronouncement: 27.06.2025 ORDER Per Satbeer Singh Godara, Judicial Member: These assessee’s twin appeals & 963/Del/2018 for Assessment Years 2007-08 and 2008-09, arise against the CIT(A)-36, New Delhi’s in case No. 163 & 164/2015- 16 dated 29.07.2016, in proceedings u/s 271(1)(c) of the Income Tax Act, 1961 (in short “the Act”), respectively.
Heard both the parties at length. Case files perused.
It emerges at the outset during the course of hearing that both the learned lower authorities have held the assessee to “have furnished inaccurate particulars of income thereby & 963/Del/2018 Delhi Building & Others Construction Workers Welfare Board concealed its income” regarding wrong claim of benefits of exemptions u/s 11(1) and 11(2), to levy section 271(1)(c) penalty in question amounting to Rs.14,84,51,810 and Rs.26,10,75,652/-; appeal wise, respectively, representing in Assessing Officer’s order dated 29.06.2017 which stands upheld in the CIT(A)’s detailed discussion.
The assessee has first of all raised it’s legal argument that once the learned Assessing Officer had admittedly issued his penalty show-cause notices u/s 271(1)(c) r.w.s. 274 of the Act dated 21.12.2009 and 24.12.2010, assessment year wise not specifying any specific limb(s) thereunder, his failure to this effect vitiates the entire proceedings. The Revenue on the other hand has vehemently supported both the lower authorities’ action levying the impugned penalty.
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(s) in his twin penalty show- cause notices forming part of the case records, his failure to this clinching effect indeed vitiates the penalty proceedings itself. We order accordingly.
These assessee’s twin appeals & 963/Del/2018 are allowed. A copy of this common order be placed in the respective case files. Order Pronounced in the Open Court on 27/06/2025.