PARAM DAIRY LIMITED,DELHI vs. DCIT, DELHI, DELHI

ITA 6196/DEL/2026Status: DisposedITAT Delhi29 September 2026AY 2014-158 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty proceedings were untenable in the eyes of law. The Assessing Officer issued multiple notices on different dates, mentioning Section 271AAB of the Act but failing to specify the exact limb or the various conditions provided under the section. The Tribunal noted that Section 271AAB(1A) has distinct limbs, clause (a) and clause (b), with different penalty rates and conditions. It is mandatory for the AO to clearly specify in the show-cause notice the precise limb under which the penalty is sought to be levied, as the consequences differ. The failure to do so renders the notice technically incorrect and fatally flawed. The Tribunal respectfully followed the decision of a co-ordinate bench in Assam Hire Purchase Company P. Ltd v DCIT, which held that the omission to mention the specific limb of Section 271AAB vitiates the entire penalty proceedings. Consequently, the impugned penalty order was quashed. The ground raised by the assessee was allowed.

What were the facts?

The assessee, Param Dairy Limited, is appealing an order dated March 25, 2026, passed by the Commissioner of Income Tax (Appeals) [CIT(A)], which upheld a penalty order dated March 26, 2022, for Assessment Year 2014-15. The assessee initially declared a total income of Rs. 2,84,44,386. Following a search and seizure action on February 28, 2014, the Assessing Officer (AO) assessed the total income at Rs. 26,94,56,120. Penalty proceedings were initiated, and the AO levied a penalty of Rs. 79,56,220. The assessee's appeal to the CIT(A) was dismissed, leading to the present appeal before the Income Tax Appellate Tribunal (ITAT). The assessee argued that the penalty proceedings were void ab initio due to defective show cause notices.

What were the issues?

1. Whether the penalty proceedings initiated under Section 271AAB of the Income Tax Act, 1961, are void ab initio due to the show cause notice not specifying the applicable clause, charge, and default, thereby violating the principles of natural justice? Assessee's Contention: The assessee argued that the penalty notices issued by the AO were legally defective because they failed to specify the exact limb of Section 271AAB under which the penalty was proposed. The notices issued on different dates (07-06-2018, 13-02-2021, and 31-01-2022) mentioned Section 271AAB or Section 271AAB(1) but did not specify the precise clause (a) or (b) of Section 271AAB(1A), nor did they detail the specific default or charge. The assessee relied on the principles of natural justice and the judgment in ITA No. 2997/Del/2026 & ITA No.6443/Del/2026 (Assam Hire Purchase Company P. Ltd v DCIT). Revenue's Contention: The Revenue relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 271AAB,Section 274,Section 132

AI-generated summary — verify with the full judgment below

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

Before: SH. M. BALAGANESH & SH. SUDHIR KUMAR

For Appellant: Shri Madhav Kapur, Adv
Hearing: 22/09/2026Pronounced: 29/09/2026

PER SUDHIR KUMAR, JUDICIAL MEMBER:

This is appeal filed by the assessee against the order dated 25- 03-2026 of the Commissioner of Income Tax, Appeal Delhi N [hereinafter referred to as “Ld. CIT(A)”] relevant to penalty order dated 26-03-2022 for the assessment year 2014-15. 2. The assessee has raised as many as 11 grounds of appeal, but he however, argued the ground no. 3 which read as under:-

“That the penalty proceedings are void ab initio as the show cause notice did not specify the applicable clause, charge and default for which penalty was proposed, thereby violating principles of natural justice”

3.

The brief facts of the case are that assessee is a company incorporated under Companies Act,1956. The assessee company filed the return of inco

The order continues below.

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