ASIAN GLOBAL LTD,NEW DELHI vs. ITO WARD 3(3), NEW DELHI

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ITA 4154/DEL/2026Status: DisposedITAT Delhi20 August 2026AY 2015-168 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued under Section 271(1)(c) read with Section 274 of the Act was bad in law because it failed to specify which limb of Section 271(1)(c) the penalty proceedings were initiated under. This lack of specificity rendered the foundation for imposing the penalty legally missing.

What were the facts?

The Assessing Officer (AO) added a sum to the appellant's total income based on an estimated gross profit rate. The appellant argued that the penalty notice under Section 271(1)(c) was invalid as it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars.

What were the issues?

Whether a penalty notice under Section 271(1)(c) is invalid if it does not specify the limb of the section under which penalty proceedings are initiated.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

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

Before: SHRI SUDHIR PAREEK

For Appellant: Adv. & Ms. Kanishka
Hearing: 04.08.2026Pronounced: 20.08.2026

PER SUDHIR PAREEK, JM:

The captioned appeal has been preferred by the appellant against the order of the learned Commissioner of Income Tax (Appeals) Delhi [“Learned CIT(A)”, for short] dated 18.02.2026 passed u/s 250of the Income Tax Act, 1961 (for short ‘the Act’) by which the appeal of the appellant was dismissed.

2 ITA No. 4154/Del/2026 Asian Global Ltd. 2. Facts of the case may be summarized as that the appellant company filed its declaring total income of Rs.67,740/- thereafter the case was selected for complete scrutiny assessment and accordingly notice u/s 143(2) of the Act was issued and in the course of assessment proceedings, the Learned AO has taken gross profit rate of Rs. 34,27,020/- @ 3.76% of total turnover of Rs. 9,11,44,152/- and added it to the total income of the appellant company for the year under consideration. The appellant further assails the order by way of appeal before the Learned CIT(A) in which appellant could not succeeded and so present appeal.

3.

Heard rival submissions and carefully scanned the materials available on record.

4.

Reiterating the grounds of appeal, the Learned AR expressed grievance that the impugned order against the fact of case and intent of legislature and quite perverse in law and facts and also has been passed in a biased manner by confirming imposition of penalty at the higher side and ignored the true position of fact that the appellant has not violated any of the provisions of the law u/s 271(1)(c) of the Act and has not made any concealment or furnished inaccurate particulars of its income and addition which has finally been made it by estimation of profit @ 4.5% instead of 3.66% declaring as per the financial accounts. It is also submitted that while initiating the penalty proceedings under above provisions, the

3 ITA No. 4154/Del/2026 Asian Global Ltd. Learned Authority has not arrived at any conclusion under which limb of the above section 271(1)(c) of the penalty was to be initiated whether concealed the particulars of income or furnishing inaccurate particulars of such income. 5. The Learned AR further submitted that factual aspect of this case may be narrated as that the appellant company filed its return of income and same was processed within the ambit of section 143(1)(a) of the Act and assessment was completed at a total income of Rs. 34,74,770/- by addition of Rs. 34,27,020/- and despite of the submissions and materials available on record, The Learned AO resorted to the addition by enhancing the gross profit by 3.76% on estimate basis instead of gross profit added declared by the appellant company at 3.66% as per the financial accounts. Also submitted that against the addition, appellant previously filed an appeal before the Learned CIT(A) which was dismissed and aggrieved thereupon, the appellant preferred an appeal before Tribunal in ITA No. 1669/Del/2024 in which co-ordinate bench of Tribunal order as under:

“Be that as it may, it is deemed appropriate in these peculiar facts that a lump sum profit @ 4.5% only in the given facts would be just and proper with a rider that the instant estimation shall not be treated as a precedent. Learned assessing authority shall ensure that it's consequential computation shall compute the assessee's gross profit @ 4.5% as against 3.66% declared in the book results in very terms. Ordered accordingly.”

Further submitted that despite the fact above, gross profit is taken by estimation, ignoring and not considered the submissions in correct perspective and

4 ITA No. 4154/Del/2026 Asian Global Ltd. imposition thereby penalty of Rs. 3,53,844/- (i.e., @ 150% of minimum leviable penalty), aggrieved thereupon, appeal presented by appellant was also dismissed by the Learned CIT(A).

6.

In the course of hearing, the Learned AR relied upon the order of the Tribunal in ITA No. 1974/Del/2021 dated 31st Jan., 2025, of which relevent extract is as under:

“10. In support of submissions advanced on behalf of the assessee, referred the [2016] 73 taxmann.com 241 (Karnataka) CIT, Banglore v/s SSA's Emerald Meadows and CIT vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565, in which the Hon'ble Karnataka High Court held in relevant para 3 as under: "3. 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(1)(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 orfurnishing 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 CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITE 565/218 Taxman 423/35 taxmann.com 250 (Kar.)." 11. It is pertinent to mention that the revenue challenged the abovecited judgments of Karnataka High Court by way of SLP before Hon'ble Supreme Court and SLP dismissed by the Hon'ble Apex Court. 12. Where the notice is not specifying or mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon'ble Delhi High Court in the case of M/s Sahara India Life Insurance Company Ltd. (2021) 432 ITR 84 (Delhi), squarely applicable in the case in hand before us, in which the Hon'ble Delhi High court held as under: "21. The Respondent had challenged the upholding of the penalty imposed under section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 and observed that the notice issued by the AO would be bad in law if it did not specify which limb of section 271(1)(c) the penalty 4 proceedings had been initiated under i.e. whether for concealment of

5 ITA No. 4154/Del/2026 Asian Global Ltd. particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in CIT v. SSA's Emerald Meadows [2016] 73 taxmann.com 241, the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016." 22. On this issue again this court is unable to fund any error having been committed by the ITAT No substantial question of law arises."

7.

Per Contra, the Learned DR relied upon the order passed by lower authority.

8.

As per provision of section 271(1)(c) of the Act, in the course of any proceedings under the Act, the Learned AO, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, may direct that such person shall pay by way of penalty as provided therein.

9.

The Learned AR further vehemently submitted that the notice dated 27-12- 2017 issued by the Learned AO u/S 271(1)(c) of the Act, not specify that in which of the reasons penalty was proposed to impose i.e. whether for concealment the particulars of the income or furnishing inaccurate particulars of such income as it is mandatory to specify that which limbs of section 271(1)(c) of the Act, the penalty proceedings been initiated. Notice in question reproduced as under;

6 ITA No. 4154/Del/2026 Asian Global Ltd.

10.

In this regard, the Learned AR submitted that the notice dated 27.12.2017 issued by the Learned AO u/s 271(1)(c) of the Act not specified with the knowledge of the reasons, penalty was proposed to impose that is whether the concealment of particulars of income or furnishing inaccurate particulars of such income whereas it was incumbent upon the Learned AO, should specify the reason clearly that which limbs of section 271(1)(c) of the Act, the penalty proceedings has been initiated.

7 ITA No. 4154/Del/2026 Asian Global Ltd. 11. On the basis of foregoing fact situation and in consonance with the view expressed as above cited order and respectfully following the binding legal position, we are considered opinion that notice u/s 271(1)(c) r/w 274 of the Act itself bad in law as it was unable to specify that in which limb of section 271(1)(c) penalty processed to be imposed and in that case foundation of imposing of penalty in question legally missing, which is mandatory requirement of law. In the instant case, a simple glance of notice placed on record, evident the Learned AO had not struck off or ticked the relevant portion thereon mentioning the specific offence committed by the appellant and such a legal infirmity is can be ignored only at the cost of law.

12.

Resultantly, there is material substance in the submission advanced on behalf of the appellant that notice in question issued u/s 274 r/w 271(1)(c) is illegal and bad in law as same lacks specific charge and accordingly, issues raised by the appellant is deserves to be allowed by deleting the penalty in question. 13. Consequently, the appeal is hereby allowed as stated above.

Order is pronounced in the Open Court on 20.08.2026

Sd/- Sd/- (AMITABH SHUKLA) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 20.08.2026

8 ITA No. 4154/Del/2026 Asian Global Ltd. *GP/Sr.PS* Copy forwarded to: 1. Appellant 1. Respondent 2. CIT(E) 3. CIT 4. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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