ANJU SHARMA,DELHI vs. DDIT/ADIT (IN TAX,) NOIDA, NOIDA

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ITITA 9/DEL/2026Status: DisposedITAT Delhi14 May 2026AY 2016-175 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 dated 09.06.2025 is void and therefore quashed. The reasoning was based on the discrepancy between the notice issued and the penalty order passed. The notice under Section 274 r.w.s. 271(1)(c) dated 20.05.2025 was issued solely for the charge of 'furnishing inaccurate particulars of income'. However, the AO, in the penalty order, invoked both the charges of 'concealment of income' and 'furnishing inaccurate particulars of income'. The Tribunal relied on the Supreme Court's decision in T. Ashok Pai vs. CIT, which states that 'furnishing of inaccurate particulars of income' and 'concealment of income' are distinct charges. Furthermore, the Tribunal followed the Bombay High Court's ruling in CIT vs. Samson Perinchery, which mandates that a penalty order must be based only on the grounds for which penalty proceedings were initiated, and penalty cannot be imposed on fresh grounds without prior notice to the assessee. Since the assessee was not put on notice for the charge of concealment of income, the penalty order invoking both charges was deemed invalid. The operative direction is to quash the penalty order.

What were the facts?

The assessee, Anju Sharma, filed an appeal against the order of the Commissioner of Income Tax (Appeals), Noida-2, dated 31.12.2025. This order confirmed the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Year 2016-17. The penalty was initially levied by the Assessing Officer (AO) via an order dated 09.06.2025. The assessee's primary contention is that the penalty proceedings were initiated without coherence between the reasons recorded, the notice issued under Section 274 read with Section 271(1)(c), and the final penalty order. The assessment order for AY 2016-17 was dated 14.12.2018.

What were the issues?

1. Whether the penalty order dated 09.06.2025, levying penalty under Section 271(1)(c) of the Act, is valid when the notice issued under Section 274 read with Section 271(1)(c) only cited furnishing inaccurate particulars of income, but the penalty order invoked both furnishing inaccurate particulars and concealment of income? Assessee's contentions: The assessee argued that there is a lack of coherence between the reasons recorded for initiating penalty proceedings, the notice issued, and the final penalty order. Specifically, the assessment order initiated penalty for 'furnishing inaccurate particulars of income or concealment of income'. The notice dated 20.05.2025 under Section 274 r.w.s. 271(1)(c) was issued only for 'furnishing inaccurate particulars of income'. However, the AO's penalty order dated 09.06.2025 levied penalty for both 'concealment of income' and 'furnishing inaccurate particulars of income'. The assessee cited the Supreme Court's decision in T. Ashok Pai vs. CIT and the Bombay High Court's decision in CIT vs. Samson Perinchery, highlighting that these are separate charges and penalty cannot be levied on grounds for which the assessee had no notice. Revenue's contentions: The revenue prayed for the dismissal of the assessee's appeal, vehemently defending the impugned order.

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, DELHI BENCHES, NEW DELHI

Before: VIKAS AWASTHY & SANJAY AWASTHI

PER VIKAS AWASTHY, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Noida-2 (hereinafter referred to as ‘the CIT(A)’) dated 31.12.2025 confirming levy of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for AY 2016-17.

2.

Smt. Ragini Handa, appearing on behalf of the assessee submits that the penalty levied by the Assessing Officer (AO) u/s 271(1)(c) of the Act is liable to be deleted on the ground that there is no coherence between the reasons recorded for initiating penalty proceedings, the notice issued u/s 274 r.w.s. 271(1)(c) of the Act and the order dated 09.06.2025 vide which penalty u/s 271(1)(c) of the Act has been levied.

3.

The ld. Counsel submits that a perusal of the assessment order dated 14.12.2018 for A.Y. 2016-17 would show that the AO has initiated penalty proceedings for “furnishing inaccurate particulars of income or concealment of income”. Referring to the notice u/s 274 r.w.s. 271(1)(c) of the Act dated 20.05.2025 at page 72 of the paper book, she pointed out that the AO has issued notice for levy of penalty only for furnishing inaccurate particulars of income. Finally, penalty has been levied by the AO for concealment of income by furnishing inaccurate particulars of income. She pointed that concealment of income and furnishing inaccurate particulars of income are two separate charges for levy of penalty u/s 271(1)(c) of the Act. The AO, has issued notice u/s. 274 r.w.s 271(1)(c) of the Act for only one charge of section 271(1)(c) of the Act and has levied penalty on both the charges while passing the order levying penalty.

4.

Per contra, Shri Vikram Singh Sharma, representing the department vehemently defending the impugned order, prayed for dismissing appeal of the assessee.

5.

Both sides heard, orders of the authorities below and the documents on which the Counsel for the assessee has placed reliance during the course of submissions examined.

6.

The assessee has challenged validity of the order dated 09.06.2025 vide which penalty u/s.271(1)(c) of the Act has been levied on the assessee and the order of CIT(A) confirming the same. A perusal of the notice u/s.274 r.w.s 271(1)(c) of the Act dated 20.05.2025 show that the AO has issued notice for levy of penalty for furnishing inaccurate particulars of income. The said notice is reproduced herein below:

7.

Thereafter, the AO while passing the penalty order has levied the penalty observing as under:

“6. The facts and circumstances discussed above, it is clear that the assessee has concealed an income to the extent of Rs. 85,62,378/- by furnishing inaccurate particulars of income. Keeping in mind all the aforementioned facts and circumstances, penalty u/s 271(1)(c) of Income-tax Act, 1961 is being imposed.” 8. A perusal of the penalty order reveals that the AO has invoked both the charges under section 271(1)(c) of the Act. Whereas, while issuing notice u/s 274 r.w.s. 271(1)(c) of the Act, the AO had invoked only the charge of furnishing inaccurate particulars of income. The Hon’ble Apex Court in the case of T. Ashok Pai vs. CIT, reported as 292 ITR 11, has held that expressions ‘furnishing of inaccurate particulars of income’ and ‘concealment of income’ carry different connotations. Thus, these are separate charges for two different offences. Since, the provisions of section 271(1)(c) of the Act are penal in nature, the rule of strict construction shall apply.

9.

The Hon’ble Bombay High Court in the case of CIT vs. Samson Perinchery 392 ITR 4 (Bom), has held that order imposing penalty has to be made only on ground for which penalty proceedings have been initiated. It cannot be on fresh ground for which the assessee has no notice.

10.

Thus, in light of the facts of case and decisions discussed above, we hold that the penalty order dated 09.06.2025 is void, hence, quashed.

11.

In the result, appeal of the assessee is allowed

Order pronounced in the open court on Thursday the 07th day of May, 2026. Sd/- Sd/- SANJAY AWASTHI VIKAS AWASTHY ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi Dated: 14-05-2026 NV

Copy to: ANJU SHARMA, C/O MAHESH KUMAR & CO. 211 & 304, ARUNCHAL BUILDING, 1 CANNAUGHT PLACE, NEW DELHI-110001, DELHI DDIT/ADIT (IN TAX,) NOIDA, A-2D, SECTOR 24, GAUTAM BUDH NAGAR, 2 GAUTAM BUDH NAGAR-201307, UTTAR PRADESH 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE

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