RAM GOPAL BANSAL,KOLKATA vs. D.C.I.T., CC - 4(4), , KOLKATA

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ITA 595/KOL/2026Status: DisposedITAT Kolkata23 June 2026AY 2013-20146 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice was invalid because it did not specify the exact charge against the assessee, thus denying them a proper opportunity to respond. Consequently, the penalty imposed based on this defective notice was also quashed.

What were the facts?

The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, after assessing income higher than the returned income. The penalty notice issued by the AO mentioned both concealment of income and furnishing inaccurate particulars of income, without specifying which charge was applicable.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid if the notice issued under Section 274 does not clearly specify the charge of concealment or furnishing inaccurate particulars of income.

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, KOLKATA ‘A’ BENCH, KOLKATA

Before: SHRI DUVVURU R.L. REDDY, VICE- & SHRI RAJESH KUMAR

For Appellant: Shri S. K. Tulsiyan, Advocate &, Ms Lata Goyal, CA
For Respondent: Shri V. Vidhyadhar, CIT-DR
Hearing: 21.05.2026Pronounced: 23.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA BEFORE SHRI DUVVURU R.L. REDDY, VICE-PRESIDENT AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER I.T.A. No.595/KOL/2026 (Assessment Year:2013-14) Ram Gopal Bansal, DCIT, 39A, Ballygunge Circular Road, Vs. Central Circle – 4(4), Kolkata – 700019, West Bengal Kolkata [PAN: AECPB5157M] (Appellant) .. (Respondent) Appellant by: Shri S. K. Tulsiyan, Advocate & Ms Lata Goyal, CA Respondent by: Shri V. Vidhyadhar, CIT-DR Date of Hearing 21.05.2026 Date of Pronouncement 23.06.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

This appeal is preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), Kolkata - 27(hereinafter referred to as the “Ld. CIT(A)”], dated 03.02.2026 for the Assessment Year (A.Y.) 2013-14.

2.

The facts of the case in brief are that the assessment was framed u/s 143(3) of the Income-tax Act, 1961 (In short, ‘the AO’) vide order dated 29.03.2016, assessing income of Rs.1,79,71,090/- as against the returned income of Rs.88,06,130/- as declared by the assessee in the return of income filed u/s 139(4) of the Act on 18.08.2014. The AO issued penalty

ITA No.595/Kol/2026/AY 2013-14 Ram Gopal Bansal notice u/s 271(1)(c) of the Act on 19.08.2016, giving a show cause notice as to why the penalty should not be imposed, for the concealment of particulars of income or furnishing inaccurate particulars of income. Thereafter, the assessee replied the same. The penalty was imposed u/s 271(1)(c) of the Act, amounting to Rs.28,31,976/- in the order passed u/s 271(1)(c) of the Act on 19.08.2026.

3.

In the appeal, the Ld. CIT(A) confirmed the order of AO.

4.

The Learned Authorized Representative (Ld. AR) vehemently argued before us that the penalty notice issued by AO on 29.03.2016 u/s 271(1)(c) of the Act contains a fatal flaw and deficiency which is incurable. The Ld. AR vehemently submitted that for the said notice issued by AO mentioned that assessee has concealed the particulars of income or furnished inaccurate particulars of such income, thereby mentioning both the charges for levying penalty. Thus, the Ld. AR submitted that the notice was issued in a mechanical manner without application of mind as the notice did not specify one of the two limbs on which penalty was proposed to be levied, thereby denying the assessee the opportunity to respond correctly to the charge on which the penalty was to be imposed. The Ld. AR submitted that the said penalty notice is an invalid in the eyes of law and so is the consequent penalty order passed by the AO. The Ld. AR in defense of his arguments relied on the judgements of Hon'ble Supreme Courts and High Courts in cases of (i) CIT vs. SSA’s Emerald Meadows (SC), (2016) 73 taxmann.com 248 (SC), (ii) CIT vs. Shri Samson Perinchery, (2017) 392 ITR 4 (Bombay) and (iii) PCIT (Central) vs. Golden Peace Hotels and Resorts (P.) Ltd., (2021) 124 taxmann.com 249 (SC), wherein the similar issue has been decided in favour of the assessee. The Ld. AR also relied on the latest decision of

ITA No.595/Kol/2026/AY 2013-14 Ram Gopal Bansal Hon'ble Apex Court in the case of CIT(LTU) vs. SBI, (2024) 169 taxmann.com 305 (SC). The Ld. AR finally prayed that penalty notice as well as penalty order may be quashed as the same are invalid, nullity and bad in the eyes of law. 6. Per Contra , the Ld. CIT-DR submitted that the mere non-mentioning of one of the two charges in the notice should not result in quashing the notice or the order passed u/s 271(1)(c) of the Act. The Ld. CIT-DR prayed that if at all any defect is there, the same may directed to be cured by referred to the matter to AO for issuing correct notice and passing the penalty order accordingly. 7. After hearing the rival contentions of the parties and perusing the materials available on record including the penalty notice, we find that undisputedly the notice has been issued by the AO u/s 274/271(1)(c) of the Act dated 29.03.2016, which is placed at page 2 of the paper book. On perusal of the same, we find that the AO initiated penalty proceedings for both the charges i.e., the concealment of income and/or furnishing inaccurate particulars of income. Thus, both the charges were mentioned in the said notice. In our opinion the notice has been issued without application of mind and in a mechanical manner as the same was issued in a standard format. In our opinion, the penalty imposed based on the said invalid notice is also invalid as correct charge on which the penalty was proposed to be levied was not mentioned. The Hon'ble jurisdictional High Court in the case of KPC Medical College and Hospital vs. PCIT(Central) (2025) 173 taxmann.com 581 (Calcutta)has been held that penalty imposed based on the defective notice is bad in law and has to be quashed. The relevant findings of the Hon'ble High Court are extracted below:

ITA No.595/Kol/2026/AY 2013-14 Ram Gopal Bansal “13. We have perused the notice and we find that none of the relevant columns have been indicated nor have the irrelevant columns been struck off. Identical issue came up for consideration wherein one of the questions which was considered was with regard to the validity of the notice issued under Section 274 read with 271 wherein the Court also took into consideration the effect of Section 271AAB read with 162 and answered the questions in favour of the assessee and against the revenue in the following terms : "In CIT v. SSA'S Emerald Meadows [2016] 73 taxmann.com 241 (Kar.) the High Court of Karnataka following the decision in CIT v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Kar.) held that 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 CIT v. SSA's Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180. 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.” 8. Similarly, the Hon'ble Apex Court in the case of CIT(LTU) vs. SBI, (2024)169 taxmann.com 305 (SC) has decided the issue in favour of the assessee by deleting penalty levied u/s 274 r.w.s. 271(1)(c) of the Act, observing as under:

“1. We have heard learned counsel for the respective parties.

ITA No.595/Kol/2026/AY 2013-14 Ram Gopal Bansal 2. Having regard to the peculiar facts of this case inasmuch as the High Court has followed CIT v. Manjunatha Cotton and Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423 359 ITR 565 (Karn), we are not inclined to interfere in the matter. The reason being that the aforesaid judgment in Manjunatha Cotton and Ginning Factory case (supra) has been relied upon by the High Court in CIT v. SSA's Emerald Meadows [2016] 73 taxmann.com 241 (Karnataka) and the said judgment has been sustained by this Court in CIT v. SSA'S Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180 (SC)/[SLP (Civil)....CC No.11485/2016 vide order dated 05.08.2016] inasmuch as the said special leave petition was dismissed. 3. Therefore, we are not inclined to go into the question of law, if any, as such raised in these Special Leave Petitions, the same is kept open.” 9. Since the facts of the assessee’s case are materially similar as decided by the Hon'ble Apex Court in the case of CIT(LTU) vs. SBI (supra)and Hon'ble High Court in KPC Medical College and Hospital vs. PCIT (supra), consequently, respectfully following the ratio laid down by the Hon'ble Courts, we quash the penalty notice as well as the consequent penalty order passed by the AO u/s 271(1)(c) of the Act.

10.

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

The order is pronounced in the open Court on 23/06/2026.

Sd/- Sd/- (Duvvuru R. L. Reddy) (Rajesh Kumar) VICE PRESIDENT ACCOUNTANT MEMBER Kolkata, Dated: 23/06/2026 SAMANTA ] �ȯ��ȧĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to : 1. \ �Ȣ�ȡ�ȸ/ The Appellant 2. Ĥ×��ȸ/ The Respondent 3. Ȳ�Ȳͬ��] ���] �ǕÈ�/ Concerned CIT

ITA No.595/Kol/2026/AY 2013-14 Ram Gopal Bansal 4. ] ���] �ǕÈ�(अपील) / The CIT(A) 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, ] ���\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[�ȡ_�/ Guard file.

BY ORDER, // TRUE COPY // Asstt.Registrar, ITAT, Kolkata

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