ENDOW POWER BATTERY,NEW DELHI vs. ACIT/DCIT, CENTRAL CIRCLE 18, NEW DELHI

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ITA 1159/DEL/2026Status: DisposedITAT Delhi29 July 2026AY 2016-176 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 order was vitiated because the Assessing Officer failed to specify the exact limb (concealment or inaccurate particulars) in the show cause notice for levying penalty under Section 271(1)(c) read with Section 274 of the Act.

What were the facts?

A search operation led to the discovery of the assessee's bank statement, resulting in an addition of Rs. 65,23,239/- by the AO. Subsequently, penalty proceedings were initiated under Section 271(1)(c) of the Income Tax Act.

What were the issues?

Whether the penalty levied under Section 271(1)(c) is valid when the show cause notice is vague and fails to specify the exact limb of concealment or inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 132,Section 153C,Section 142(1),Section 143(2),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F”, NEW DELHI

Before: SHRI VIMAL KUMAR & SHRI MANISH AGARWAL

For Appellant: Shri R P Mall, Advocate
For Respondent: Ms. Harpreet Kaur Hansra, Sr. DR
Hearing: 23.07.2026Pronounced: 29.07.2026

PER VIMAL KUMAR, JM:

The appeal filed by the Appellant/assessee is against order dated 17.11.2025 of Ld. Commissioner of Income Tax (Appeal)-27, Delhi (hereinafter referred to as ‘the CIT(A)’) u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of penalty order dated

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04.03.2024 u/s 271(1)(c) of the Act in pursuance to assessment order dated 27.02.2021 of the Ld. Assessing Officer (hereinafter referred to as ‘the AO’) for Assessment Year 2016-17.

2.

Brief facts of the case are that a search and seizure operation u/s 132 of the Act was conducted upon the assessee along with different business and residential premises of M/s. Laxmi Remote Group of cases based at Delhi. During search in case of Shri Vijay Kumar Sachdeva, Smt Anju Sachdeva & Sh. Prakash Chand Sachdeva, a copy of bank statement of the assessee with Indusind Bank was found and seized. Notice u/s 153C of the Act dated 05.07.2019 was issued. The assessee filed return of income on 16.09.2019. Notice u/s 142(1) of the Act along with questionnaire dated 24.09.2019 was issued. Notice u/s 143(2) of the Act dated 19.09.2019. Notice u/s 142(1) of the Act dated 16.11.2019 were issued. The assessee submitted replies. On completion of proceedings, ld. AO vide order dated 27.02.2021 made addition of Rs. 65,23,239/-.

2.1 Separate penalty proceedings were initiated u/s 271(1)(c) of the Act. The penalty proceedings culuminated in penalty order dated 04.03.2024.

2.2 Against penalty order dated 04.03.2024, the assessee preferred appeal before Ld. CIT(A) which was dismissed vide order dated 17.11.2025.

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3.

Being aggrieved, the appellant/ assessee preferred present appeal on following grounds:

“1. That the learned Commissioner of Income Tax (Appeals)- 27 has grossly erred both in law as well as on facts in upholding the order dated 04.03.2024 passed by the learned DCIT/ACIT, Central Circle-18, New Delhi, levying a penalty of Rs. 1,00,121/- u/s 271(1)(c) of the Act, which penalty is not leviable on the facts and circumstances of the case. 2. That the learned Commissioner of Income Tax (Appeals)- 27 has grossly erred both in law as well as on facts in failing to appreciate that the levying of penalty u/s 271(1)(c) of the Act is without issuing a notice in accordance with law since the show cause notice issued to the assessee is vague and does not meet the requirements of law. 3. That the learned Commissioner of Income Tax (Appeals)- 27 has grossly erred both in law as well as on facts in failing to appreciate that merely because the addition has been made, it cannot be held that the assessee has concealed particulars of income warranting levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961, and hence the penalty levied is unsustainable in law. 4. That the learned Commissioner of Income Tax (Appeals)- 27 has grossly erred both in law as well as on facts in upholding the order of penalty dated 04.03.2024 without giving any fair and proper opportunity of being heard, which is in violation of the principles of natural justice, and hence the impugned order is vitiated in law.” 4. Ld. Authorized Representative for the appellant/assessee submitted that notice dated 27.02.2021 on page No. 1 of paper book mentions “You have concealed the particulars of income or furnished inaccurate particulars of such income”. Show cause notice dated 09.09.2021 page No. 2 of paper book states that “under-reported your income”. Notice dated 19.01.2024 at page No. 3 of paper

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book provides that “You have concealed the particulars of income or furnished inaccurate particulars of such income”. First notice on page No. 1 dated 27.02.2021 and third notice dated 19.01.2024 on page No. 3 of paper book are vague as they do not specify inaccurate particulars. Reliance was placed on order of ITA No. 7690/Del/2025 titled as DCIT vs. Akc Retailers(P.) Ltd. dated 20.05.2026 [2026] 186 taxmann.com 1166(Delhi- Trib.).

5.

Ld. Departmental Representative relied on impugned order.

6.

From examination of record in light of aforesaid rival contention, it is crystal clear that first show cause notice dated 27.02.2021 page No. 1 and third notice dated 19.01.2024 on page No. 3 u/s 271(1)(c) of the Act mentioned that “You have concealed the particulars of income or furnished inaccurate particulars of such income”. So, Ld. AO failed to specify the specific limb regarding inaccurate particulars of income of levy penalty u/s 271(1)(c) r.w.s. 274 of the Act. 6.1 A co-ordinate Bench in ITA No. 7690/Del./2025 titled as DCIT vs. Akc Retailers Pvt. Ltd. order dated 20.05. 2026 in para No. 3 and 4 observed as under: “3. At the time of hearing, ld. AR has raised its legal argument that once the Assessing Officer had admittedly issued his penalty show-cause notice(s) u/s 271(1)(c) r.w.s. 274 of the Act dated 15th December, 2017, not specifying any

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specific limb thereunder; and, his failure to this effect vitiates the entire proceedings itself. The Revenue on the other hand has vehemently argued that such a defect is only a procedural one which is not fatal to the impugned penalty. 4. In view of the aforesaid facts and circumstances, we quote the decision in the case of PCIT Vs. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del.) and PCIT Vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Del.) wherein, the Hon’ble Court has concluded that once the Assessing Officer had nowhere specified the corresponding limb in his section 271(1)(c) penalty show-cause notice forming part of the case records, his failure to this effect indeed vitiates the penalty proceedings itself. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and thus upheld the same.” 6.2 In view of above material facts by following the judicial precedent, it is held that the failure to specify the specific limb regarding in accurate particulars of income for levy of penalty u/s 271(1)(c) r.w.s. 274 of the act vitiated the penalty order. Therefore, the impugned order dated 04.03.2024 being illegal, is set aside. Grounds of appeal are accepted.

7.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 29.07.2026

Sd/- Sd/- (MANISH AGARWAL) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:29.07.2026 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals)

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5.

DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI

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