SURENDRA COMMERCIAL SYNDICATE PRIVATE LIMITED,KOLKATA vs. ITO, WARD 1(2),, KOLKATA

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ITA 1126/KOL/2026Status: DisposedITAT Kolkata16 July 2026AY 2010-20117 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued under Section 274 read with Section 271(1)(c) was vague and defective as it did not specify the limb under which the penalty was proposed. Consequently, the penalty order was set aside.

What were the facts?

The assessee filed a return declaring a loss, but the Assessing Officer determined a positive total income after making additions for disallowed expenses and concealed income. Penalty proceedings were initiated under Section 271(1)(c).

What were the issues?

Whether a penalty notice under Section 271(1)(c) is valid if it does not specify the limb (concealment or inaccurate particulars) for which penalty is proposed.

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, “D” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.1126/KOL/2026 Assessment Year: 2010-11 Surendra Commercial Syndicate Private Limited..................................................Appellant 152/B, M.G. Road, Burrabazar, Kolkata- 700007. [PAN No. AAGCS9355P] Vs. ITO Ward- 1(2), ..…………..…………………....…….................................….Respondent Aayakar Bhawan P-7 Chowringhee Square, Kolata- 700069 Appearances by: Vikash Surana, AR, appeared on behalf of the Appellant. Praveen Das Chowdhury, (Sr. D.R.).,appeared on behalf of the Respondent. Date of concluding the hearing : July 02 , 2026 Date of pronouncing the order : July 16 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 07.01.2026 of the National Faceless Appeal Centre (NFAC), passed under Section 271(1)(c) of the Assessment Year 2010-11 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. The brief facts of the case of the assessee is that the assessee filed its return of income for AY 2010-11 declaring a loss of Rs.7,79,71,277. The case was assessed u/s 143(3) of the Act and the Assessing Officer determined the total income at Rs.21,90,880/-. During the assessment, the AO noticed that the assessee had set off income from other sources of Rs.1,12,278/-against speculation loss and had also claimed preliminary expenses written off and filing fees,

which were not allowable deductions. The AO further observed that the assessee had disclosed Rs.20,00,000/- as concealed income from miscellaneous receipts during FY 2009-10 at the time of survey u/s 133A of the Act. However, during the assessment proceedings, the assessee claimed that the same income was speculation income from commodity transactions. The AO rejected this explanation on the ground that the claim was an afterthought and not supported by evidence. Accordingly, additions were made and income was recomputed. Accordingly, penalty proceedings u/s 271(1)(c) of the Act were initiated. Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed at barred by limitation. Being aggrieved by and dissatisfied the assessee preferred appeal before us. 3. The Ld. AR challenges the very impugned order of the penalty levied u/s 271(1)(c) of the Act by submitting that the notice issued u/s 274 read with section 271(1)(c) is vague and defective as there was no mention of the specific limb in which the penalty was propose to be levied whether for concealment of particulars of income or for furnishing of inaccurate particulars of income nor assessment year has been mentioned. He has also brought following decision:- (i) CIT v. M/s SSA’s Emerald Meadows [(2016) (SC)]: (ii) Dilip N. Shroff v. CIT [(2007) (SC)] (iii) KPC Medical College and Hospital v. PCIT dated 19.03.2025 (Calcutta High Court)

Contrary to that Ld. DR submits that appeal of the assessee has been dismissed on account of limitation and there was no discussion on the merit.

4.

Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order we find that an order of penalty u/s 271(1)(c) of the Act was passed in pursuant to the notice issued u/s 274 read with section 271(1)(c) of the act. The learned AR challenges the validity of notice. We have gone through the notice issued to the assessee and find that there was no mention of any limb in which the penalty proposed to be levied. The notice sent to the assessee are herein below: - It is a fact that the aforesaid notice does not specify limb in which limb penalty was proposed to be levied. In this context we have gone through a decision passed in the case of Commissioner of Income-tax v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Karnataka) held as under:

“…the imposition of penalty under section 271(1)(c) of the Act is bad in law and invalid for the reasons where the show cause notice under section 274 of the Act did not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The said decision of the High Court of Karnataka was affirmed by the Hon'ble Supreme Court in the decision reported in Commissioner of Income-tax v. SSA'S Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180 (SC). On the same lines it is the decision of this court in Pr. CIT v. Brijendra Kumar Poddar in [ITAT No. 215 of 2018, dated 23-11-2021]. As pointed out earlier, the show cause notice issued under Section 274 read with Section 271 of the Act did not furnish any particulars and all the relevant columns have been left blank. Thus, by applying the legal position in the aforementioned decision, this court has no hesitation to hold that the show cause notice was bad in law consequently the initiation of penalty proceedings is vitiated."

14.

Thus, for the above reasons, the appeals filed by the assessee are allowed and the substantial questions of law are answered in favour of the assessee.”

5.

Keeping in view the notice is discussed above and considering the judgment passed by the Karnataka High Court confirmed by the Supreme Court by dismissing the SLP, we are in this view that notice issued u/s 274 read with Section 271 of the Act is ab initio void, consequently, the penalty order passed on the invalid notice is hereby set aside.

In the result the appeal of the assessee is hereby allowed.

Kolkata, the 16th July , 2026.

Sd/- Sd/-

[Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated: 16 .07.2026.

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches

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