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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
The appeal by the assessee is directed against the order of the ld.
CIT (Appeals)-22, New Delhi for the assessment year 2005-06.
The issue raised pertains to sustenance of penalty under section 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’). The grounds of appeal raised are as under :-
“1. The order of CIT (A) is bad in law and on facts. 2. The ld. CIT (A) has erred in confirming the penalty imposed by the ld. Assessing Officer despite the fact that the Ld. Assessing Officer has not initiated penalty for concealment of income in assessment order.
3. The ld. CIT (A) has erred in confirming the penalty imposed by the ld. Assessing Officer despite the fact that the Ld. Assessing Officer was not specific as to under which limb he was going to penalize the appellant company.
4. The ld. CIT (A) has erred in confirming the penalty imposed by the ld. Assessing Officer merely on the basis of findings recorded in the assessment order without making any further enquiry on the addition of cash deposit of Rs.2.00 crores deposited out of cash sales in its bank account. 5. The ld. CIT (A) has erred in confirming the penalty imposed by the ld. Assessing Officer on the disallowance of expenditure of Rs.20,000/- relating to the fees paid to the ROC.
We note that pursuant to the penalty order passed in this case, upon assessee’s appeal, ld. CIT (A) has also considered the assessee’s challenge that in the notice of penalty, the charge has not been specified.
The order of ld. CIT(A) in this regard may be referred to as under :-
Pages 10 and 11
“6.2. The Ld.AR, without prejudice, further submitted that the AO was not specific as to under which limb, the AO was going to penalize the assessee or seek explanation of the assessee. In other way the appellant has challenged the validity of penalty proceedings on the ground that no specific charge i.e. whether the penalty was being proposed to be imposed for furnishing of inaccurate particulars or concealment of income was mentioned.
6.3 I have considered the technical issues raised by the Ld. AR. I have perused the assessment order .and in the assessment order, AO after making an addition of Rs.2 crores of cash deposit, has recorded satisfaction that the assessee has concealed its true income and penalty proceedings u/s 271 (l)(c) have been initiated separately. Otherwise also, the detailed order makes it amply clear that penalty has been imposed for concealment of income. I find AO was very clear in his mind that under which limb of the section 271(1)(c), penalty is leviable. Therefore the argument of the appellant that the AO has not specified the charge, is not correct and not on the sound footing.
./2019 6.4 Even if assuming that there was vagueness in the initiation of penalty proceeding, the same has caused no prejudice to the appellant as the appellant clearly understood the purport and import of initiation of penalty proceeding. Entire facts and background of the case should be kept in mind and mere mistake in the language should not vitiate the proceeding. 6.5 Reliance in this regard is placed on the decisions of the Hon'ble Madras High Court in the case of M/s Sundaram Finance Ltd. vs. ACIT, Chennai, TC (Appeal) No.876 & 877 of 2008 dated 23.04.2018, Trimurti Engineering Works vs. ITO [2012] 25 taxamann.com 363 (Delhi) and Hon'ble ITAT Mumbai's decision dated 02.05.2017 in the case of M/s Earth Moving Equipments Corporation vs. DCIT(166 ITD 133 Mumbai and 854 taxmann.com 51) [Mumbai-Trib.]. 6.6 Thus, in view of above discussion, I am of considered view that even assuming that there was some error in initiation of penalty proceeding, the penalty order is not vitiated in the facts and circumstances of the case in which penalty was initiated as well as imposed. These arguments are rejected.”
We note that assessee’s challenge to the issue of initiation of penalty proceedings under penalty notice goes to the core of the jurisdictional aspect. This aspect has been analyzed by various Hon’ble High Courts and also by Hon’ble Supreme Court. The Full Bench of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A.
Shaikh v. DCIT (2021) 125 taxmann.com 253 (Bom.) has adjudicated the issue and has come to the conclusion that non-ticking of the limb of notice specifying charge under notice 271(1)(c) as to whether it is for concealment of income or for furnishing of inaccurate particulars of income, is fatal. In this case, we note that ld. CIT (A) has brushed aside this issue. Ld. DR for the Revenue has submitted that this aspect needs to
In this view of the matter, we are of the considered opinion that the matter should be remitted to the file of ld. CIT (A) who will consider this issue in detail after considering the decision of Hon’ble Bombay High Court referred above. We are not commenting on other aspects of merit in this case since we are remitting the grounds on the issue of jurisdiction, as otherwise it will lead to multiplication of proceedings. After the ld. CIT (A) has completed the order upon remand, both the parties are at liberty to file necessary appeals, if deemed necessary.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 7th day of June, 2022.