MAA SHARDA EDUCATIONAL SOCIETY,GHAZIABGAD vs. ITO, EXEMPTION WARD, GHAZIABAD

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ITA 8181/DEL/2019Status: DisposedITAT Delhi14 November 2022AY 2008-094 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that it is settled law that a penalty order is liable for quashing if the penalty notice does not specify the default. The CIT(A) erred in not adjudicating this ground. Therefore, the issue was remitted back to the CIT(A) for decision.

What were the facts?

The Assessing Officer made additions to the assessee's income for corpus donation and repairs. Subsequently, a penalty was imposed under Section 271(1)(c) of the Income-tax Act. The assessee appealed to the CIT(A), raising a ground that the penalty notice did not specify the limb of default.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid if the penalty notice does not specify the limb of default (concealment of income or furnishing inaccurate particulars)? Whether the CIT(A) erred in not adjudicating this ground?

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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

For Respondent: Shri Rajiv Kumar, Sr. DR
Hearing: 09.11.2022

This appeal by the assessee is directed against the order of the ld. CIT (Appeals), Ghaziabad for the assessment year 2008-09. 2. The issue raised pertains to sustenance of penalty of Rs.3,00,000/- under section 271(1)(c) of the Income-tax Act, 1961 (for short 'the Act'). The necessary grounds of appeal read as under :- “1. Because order of ld. Lower ld. CIT (A) is bad in law and against the facts and circumstances of the case.

2. Because the learned lower authority erred in sustaining penalty without appreciating that penalty is initiated without specifying the specific limb in which assessee is presumed to be defaulted which is against the law laid down in case of Manjunath Cotton and Ginning Factory (2013) 359 ITR 565 (Karnataka) and

3. Because ld. CIT (A) further misdirected himself on the facts as well as on law as addition is merely on a/c of denial of bonafide claims of corpus donation/repairs supported with ratio of various decisions hence imposition of penalty is against the settled law pronounced by Hon’ble Apex Court in case of M/s. Reliance Petro and by other Hon’ble authorities.

4. Because assessee has disclosed all the facts relating to income which are not found incorrect, hence ld. CIT (A) failed to appreciate that mechanical imposition of penalty is against the provision itself.

Therefore it is prayed that the order imposing penalty of Rs.3 lakhs may kindly be quashed.”

3.

In this case, in the merits of the case, Assessing Officer made following additions :-

(i) Donation towards corpus fund disallowed Rs.8,46,100/- (ii) Disallowance of repair & maintenance Rs.2,00,000/-

4.

Penalty under section 271(1)(c) of the Act was also imposed on the said additions.

5.

Against the above order, assessee filed an appeal before the ld. CIT(A).

6.

In the submissions before the ld. CIT (A), assessee took an additional ground that in the penalty notice, the charge has not been specified whether the notice was for concealment of income or furnishing of inaccurate particulars of income. Assessee quoted the decision of CIT vs. SSA’s Emerald Meadows 386 ITR 13. Several other decisions were also quoted in this regard that not specifying the default in the penalty notice makes the issue void. Ld. CIT (A) did not address the case laws mentioned. He only mentioned that such ground cannot be raised before him and that moreover the requirement of service is ./2019 only of notice and since assessee has got opportunity to file the reply, hence the requirement is fulfilled.

7.

Against the above order, assessee is in appeal before us. We have heard the ld. DR for the Revenue and perused the records. Adjournment has been sought on behalf of the assessee but the same has been rejected as the appeal is coming for long time and the matter is being remitted to the file of ld. CIT (A). 8. We find that now it is settled law that not specifying the claim of default in the penalty notices leaves the penalty order liable for quashing. Ld. CIT (A) has greatly erred in holding that assessee could not have raised the ground before him. In our considered opinion, interest of justice demands that this ground should be adjudicated by the ld. CIT (A) by referring to the factual record in this regard as to whether penalty notice contains specification of the necessary limb under which the penalty is initiated. Hence, in the interest of justice, we remit the issue to the file of ld. CIT (A) to decide this issue as per law. Needless to add, assessee shall be provided an opportunity of being heard. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 14th day of November, 2022.

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