DCIT221, MUMBAI vs. YES BANK LTD., MUMBAI

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ITA 9278/MUM/2025Status: DisposedITAT Mumbai18 June 2026AY 2010-113 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the penalty orders were vitiated due to a defect in the statutory notice. The Assessing Officer failed to specify whether the penalty was for concealment of income or furnishing inaccurate particulars.

What were the facts?

The Revenue appealed against the deletion of penalty orders for AYs 2009-10 and 2010-11. The Assessing Officer had initiated penalty proceedings under Section 271(1)(c) after making additions to the assessee's income.

What were the issues?

Whether a penalty order under Section 271(1)(c) is vitiated if the statutory notice fails to specify the limb under which the penalty is being levied, such as concealment of income or furnishing inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 14A,Section 35D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI

Before: JUSTICE (RETD.) C.V. BHADANG & SHRI PRABHASH SHANKAR

For Appellant: Shri Yogesh Thar & Ms. Vidhi Salot
For Respondent: Shri Basavaraj Hiremath, CIT DR &, Shri Rajgopal Parthasarathi,Sr. DR
Hearing: 18/06/2026Pronounced: 18/06/2026

PER JUSTICE (RETD.) C.V. BHADANG, PRESIDENT :

Both these appeals by the Revenue involve a challenge to the orders deleting penalty and can be conveniently disposed of by this common order. The appeals relate to assessment years 2009-10 and 2010-11.

2.

The respondent-assessee is a banking company governed by the Companies Act, 1956. The respondent is also governed by the Reserve Bank of India Act, 1934. The respondent had filed its Return of Income (RoI) for the relevant years, which were selected for scrutiny. The Assessing Officer (‘AO’ for short) by separate orders dated 08.12.2011 and 29.01.2013 under Section 143(3) of the Income Tax Act, 1961 (‘Act’ for short) made certain additions/disallowances, more particularly under Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (‘Rules’ for short) and Section

2 ITA NOS. 9277 & 9278/MUM/2025 YES BANK LTD. 35D of the Act wherein the deduction towards preliminary expenses for issuance of fresh capital by a public issue was denied.

3.

Having regard to the grounds as raised challenging the order deleting penalty, we are not concerned with the details about the quantum addition.

4.

The AO initiated penalty proceedings under Section 271(1)(c) of the Act and statutory notices were issued. The AO eventually passed orders dated 30.03.2017 and 18.03.2015 for assessment years 2009-10 and 2010-11 respectively levying penalty, which penalty has been deleted by the learned CIT(A) by the impugned orders dated 13.10.2025 on account of defect in the statutory notice, wherein the relevant portion was not indicated/struck off. Hence, this appeal.

5.

We have heard parties. Perused record.

6.

The learned DR submitted that the respondent-assessee was aware of the reason and the grounds for initiation of penalty proceedings and had contested the same and no prejudice is alleged or demonstrated. It is submitted that thus the mere absence of striking off the relevant limb in the show cause notice cannot result into a situation where the order imposing penalty is vitiated.

7.

The learned AR has placed reliance on the full bench decision of the jurisdictional Bombay High Court in case of Mohd. Farhan A. Shaikh, 434 ITR 1 (Bom.) (FB) and some other decisions in order to submit that non-striking of the relevant limb in the notice results into penalty order being vitiated.

8.

We have considered the submissions made and perused the notices which have been reproduced by the learned CIT(A) in his orders. It is apparent that the AO has not indicated the limb, viz. whether the assessee has concealed the particulars of his

3 ITA NOS. 9277 & 9278/MUM/2025 YES BANK LTD. income or furnished inaccurate particulars of such income, in the statutory notice/s. The issue had come up before the full bench of the Bombay High Court in the case of Mohd. Farhan A. Shaikh (supra). The precise question referred to the full bench was “whether mere failure to tick mark the applicable ground in the notice issued under Section 271 of the Act vitiates the entire penalty proceedings ?” The question has been answered in the affirmative. Needless to mention that we are bound by the said decision. It is not necessary to multiply authorities on the point. The impugned orders do not require any interference. The appeals are accordingly dismissed.

Order pronounced in the open court on 18.06.2026.

Sd/- Sd/- (PRABHASH SHANKAR) (JUSTICE (RETD.) C.V. BHADANG) ACCOUNTANT MEMBER PRESIDENT Mumbai; Dated : SSL Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The PCIT/CIT concerned 4. DR, ITAT, Mumbai 5. Guard File. BY ORDER, //True Copy//

(Assistant Registrar) ITAT, Mumbai

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