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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. A.D. JainDr. B. R. R. Kumar
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-29, New Delhi dated 08.12.2017.
The Assessing Officer made addition of Rs.1,40,00,000/- to the total income on account of accommodation entry. Consequent to the addition, penalty u/s 271(1)(c) has been levied by the AO.
We find that the page no. 2, the Assessing Officer has mentioned that “I am satisfied that the assessee company has concealed the particulars of its income for the A.Y. 2005-06, therefore penalty provisions u/s 271(1)(c) of the of the Income Tax Act, 1961 are attracted.”
We also find that the last page of the penalty order reads as under:
Neelkanth Town Planners Pvt. Ltd. “Accordingly, in view of the above, I hereby levy a penalty of Rs.43,91,100/- u/s 271(1)(c) of the Income Tax Act, 1961 for concealment of income and furnishing of inaccurate particulars of income.”
We have also gone through the issue of notice u/s 274 r.w.s. 271 of the Income Tax Act, 1961 issued by the Assessing Officer on 20.03.2017 mentioned at page no. 2 of the penalty order. We find that the Assessing Officer has issued the penalty notice stating that, “subsequently penalty notice u/s 271(1)(c) was issued on 20.03.2017, fixing the case for hearing on 24.03.2017. The assessee was asked to why penalty u/s 271(1)(c) should not be imposed upon you for concealment of the particulars of your income/furnishing inaccurate particulars of income.”
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 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.
Neelkanth Town Planners Pvt. Ltd. 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]
Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated.