ACIT CIRCLE-7(1), NEW DELHI vs. DLF HOMES KOKAPET PVT LTD, NEW DELHI

PER SHAMIM YAHYA, ACCOUNTANT MEMBER :

This appeal by the Revenue is directed against the order of the ld.

CIT (Appeals)-3, New Delhi for the assessment year 2011-12.

It was stated that even in the penalty order, the charge on which penalty has been levied is not specified. That in para 6 of the penalty order, AO has mentioned that assessee has furnished inaccurate particulars of concealed particulars of income. Assessee made reference to several case laws in this regard. Ld. CIT (A) found cogency in the submissions and noted the reference made to Hon’ble Karnataka High Court decision in the case of CIT vs. SSA’s Emerald Meadows against which Hon’ble Supreme Court has dismissed the SLP filed by the Department. Hon’ble Karnataka High Court decision quoted read as under :-

"The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c)of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion; no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.”

“4.3 In view of the above facts, it is clear that the AO has issued the penalty notice in a routine manner and as such the appellant was not made aware of the specific charge against him. Even the penalty order does not specify the charge on which penalty has been levied. It is observed from Para 6 of the penalty order that the AO has mentioned that the appellant ./2019 company has furnished inaccurate particulars of income and in Para 7, it is stated that the assessee company has concealed the particulars of income. Even on merits, it has been submitted that the appellant was awarded a housing project by the government of Andhra Pradesh and the work was suspended due to some litigation and as per the Accounting Standard (AS 16), the appellant suspended the capitalization of the interest and therefore, no addition was required to be made. The AR has quoted various judgments in its favour on this issue and has also relied upon the judgment of Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproduct Pvt. Ltd. 322 ITR 158. On the basis of the various arguments and contentions raised by the AR, facts of the case and keeping in view the various judgments of Apex Court and different High Courts/ITAT, I am of the opinion that it is not a fit case for levy of penalty as it cannot be said that the appellant has furnished inaccurate particulars of income or has concealed the particulars of income. Accordingly, the penalty levied by the AO is deleted and the grounds of appeal are allowed.”

7. Against the above order, assessee is in appeal before us. We have heard both the parties and perused the records.

8. Ld. Counsel of the assessee referred to the defect in the notice and pleaded that the penalty is not sustainable on account of defective notice.

He further submitted that on merits also, assessee has made correct claim as per AS-16 and mere rejection of the claim cannot lead to levy of penalty. In this regard, he referred to the decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproduct Pvt. Ltd. 322 ITR 158, referred by ld. CIT (A).

“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.”

Accordingly, we confirm the order of ld. CIT (A) and penalty is not sustainable as the omnibus notice suffers from the vice of vagueness.

Since we have already quashed the penalty on the jurisdictional issue, the merits of the penalty levied is not being adjudicated being academic in nature.