SHRI CHETAN GUPTA,NEW DELHI vs. DCIT, NEW DELHI

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ITA 894/DEL/2015Status: DisposedITAT Delhi28 June 2022AY 2002-033 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 levied was invalid because the notice issued under Section 274 did not specifically state the grounds for penalty, i.e., concealment of income or furnishing of incorrect particulars. Following jurisdictional High Court judgments, the penalty was quashed.

What were the facts?

The Assessing Officer made an addition to the assessee's total income on account of unsecured loans. Subsequently, penalty proceedings under Section 271(1)(c) were initiated.

What were the issues?

Whether the penalty under Section 271(1)(c) is valid when the notice under Section 274 is vague and does not specify the grounds for penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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

Before: Dr. B. R. R. KumarSh. Yogesh Kumar US

For Appellant: CA &
Hearing: 26.05.2022Pronounced: 28.06.2022

Heard together (3 matters)

ITA No. 894/Del/2015
ITA No. 895/Del/2015
ITA No. 896/Del/2015

Read from the judgment's own cause title. This page is filed under one of them.

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeals have been filed by the assessee against the orders of the ld. CIT(A)-24, New Delhi, dated 22.12.2014.

2.

Since, the issues involved in all these appeals are identical, they were heard together and being adjudicated by a common order.

3.

The Assessing Officer made addition of Rs.xxxx/- to the total income on account of the unsecured loans received during the F.Y. 2003-04. Consequent to the addition, penalty u/s 271(1)(c) has been levied by the AO. , 895 & 896/Del/2015 2 Chetan Gupta 4. We find that the page no. 10 below para 8.1, the Assessing Officer has also mentioned “that penalty proceedings u/s 271(1)(c) are being initiated separately.”

5.

We find that the para no. 1 of the penalty order reads as under:

Penalty proceedings u/s 271(1)(c) of I.T. Act was initiated separately for concealment and failing to furnish true particulars of its income. Show cause notice initiating penalty u/s 271(1)(c) of the Act was issued and send alongwith assessment order on 23.12.2011.

6.

We also find that the para no. 11 of the penalty order reads as under:

“I hold the assessee in default in concealing the income of Rs.xxxxx.”

7.

On this issue, we are guided by the following judgments:

1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the ITA Nos. 894, 895 & 896/Del/2015 3 Chetan Gupta Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180]

8.

Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, the penalty levied is hereby obliterated.

9.

In the result, the appeals of the assessee are allowed. Order Pronounced in the Open Court on 28/06/2022.

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