PARESH VALJI CHOPDA ,JAMKHAMBHALIA vs. INCOME-TAX OFFICER, WARD 3(5) JAMNAGAR (CURRENTLY ITO WD 1 DWARKA), DWARKA

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ITA 1181/RJT/2026Status: DisposedITAT Rajkot09 October 2026AY 2010-114 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 notice issued by the Assessing Officer under section 271(1)(c) read with section 274 of the Income-tax Act, 1961, was defective. The Tribunal noted that section 271(1)(c) contains two distinct charges: concealment of particulars of income and furnishing of inaccurate particulars of income. The assessee is entitled to know the precise charge. In this case, the notice did not strike off the inapplicable portion or specify the applicable limb, making it vague and defective. The Tribunal relied on the decisions of the Hon'ble Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory, the Hon'ble Supreme Court's dismissal of SLP in CIT v. SSA's Emerald Meadows, and the Hon'ble Bombay High Court's Full Bench decision in Mohd. Farhan A. Shaikh v. DCIT, which held that failure to strike off the irrelevant limb can vitiate penalty proceedings. Consequently, the Tribunal found that the penalty imposed by the AO and confirmed by the Ld. CIT(A) was unsustainable. The penalty was deleted. The issue regarding the dismissal of the appeal by the Ld. CIT(A) solely on grounds of delay was rendered infructuous by the deletion of the penalty.

What were the facts?

The assessee, Paresh Chopda, filed an appeal against an order passed by the National Faceless Appeal Centre (NFAC), Delhi, concerning assessment year (AY) 2010-11. The appeal challenged a penalty order under section 271(1)(c) of the Income-tax Act, 1961, dated 28.06.2018, which was confirmed by the NFAC's order dated 15.07.2026. The case originated from re-opening proceedings under section 147 of the Act due to cash deposits of Rs. 11,45,000/- made by the assessee in his savings bank account during the financial year 2009-10. The Assessing Officer (AO) completed the assessment on 19.12.2017, making additions of Rs. 11,45,000/- for unexplained cash deposits. Subsequently, penalty proceedings under section 271(1)(c) were initiated, leading to a penalty of Rs. 2,56,007/-. The assessee's appeal to the NFAC was dismissed, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the penalty proceedings and the penalty levied under section 271(1)(c) of the Income-tax Act, 1961, are void ab initio, bad in law, and against the principles of natural justice, considering the alleged defects in the assessment and penalty orders? (Question of law and fact, concerning Section 271(1)(c) and principles of natural justice). 2. Whether the NFAC/Ld. CIT(A) erred in dismissing the assessee's appeal solely on the ground of delay without condoning it, despite sufficient cause being shown, and failing to adjudicate the matter on merits? (Question of law and fact, concerning procedural fairness and principles of natural justice). Assessee's contentions: - The notice issued by the AO under section 271(1)(c) of the Act is defective, rendering the penalty imposition invalid. - The assessment proceedings, assessment order, penalty proceedings, and consequent penalty order are void ab initio, bad in law, and against the principles of natural justice. - The Ld. CIT(A) erred in dismissing the appeal due to delay without condoning it, despite sufficient cause, and failed to adjudicate the matter on merits. Revenue's contentions: - The Ld. DR primarily reiterated the stand taken by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 147,Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Mahesh Paun, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 05/10/2026

आयकरअपीलीयअिधकरण,राजकोट �ायपीठ,राजकोट। In The Income Tax Appellate Tribunal, “SMC” Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member आयकरअपीलसं./ITA No. 1181/RJT/2026 (�नधा�रणवष�/Assessment Year: (2010-11) Paresh Chopda, Income-Tax Officer, Advocate chember Mahesh N Paun, Ward 3(5) Jamnagar, Vs. Shreeji Chambers, 17- Nava Para, Near Additional / Joint / Deputy S.B.I. (ADB)-Jam-Khambhaliya - /Assistant Commissioner of Income Gujarat- 361305 Tax/ Income-tax Officer, National Faceless Assessment Centre, Delhi �ायीलेखासं./जीआइआरसं./PAN/GIR No.: AMEPC2943G (अपीलाथ�/Assessee) (��यथ�/Respondent)

Assessee by : Shri Mahesh Paun, Ld. AR Respondent by : Shri Ganesh Iyer, Ld. Sr. DR Date of Hearing : 05/10/2026 : 09/10/2026 Date of Pronouncement

ORDER Per, Dr. Arjun Lal Saini, AM:

Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2010-11, is directed against the order under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated 15.07.2026, which in turn arises out of a penalty order u/s 271(1)(c) of the Act, dated 28.06.2018. 2. Grounds of appeal raised by the assessee, are as follows:

ITA No.1181/Rjt/2026 Paresh Chopda

“1) The Learned Assessing Officer ["Ld. AO"] erred in law and on facts in initiating penalty proceedings and levying penalty of Rs. 2,56,007/- under section 271(1)(c) of the Income Tax Act, 1961. The assessment proceedings, the assessment order, the penalty proceedings, and the consequent penalty order are void ab initio, bad in law, and against the principles of natural justice, and therefore deserve to be quashed. 2) The Learned Commissioner of Income Tax (Appeals), NFAC ["Ld. CIT(A)"] erred in law and on facts in dismissing the appeal of your assessee solely on the ground of delay in filing the appeal, without condoning the said delay, despite sufficient cause having been shown by your assessee for the delay. The Ld. CIT(A) failed to appreciate the facts, submissions, and material available on record while doing so, and the order dismissing the appeal without adjudicating the matter on merits is bad in law, against the principles of natural justice and deserves to be quashed. 3) Assessee craves leave to add, amend, alter, modify or withdraw any ground of appeals.” 3. Brief facts of the case are that the assessee made cash deposits of Rs. 11,45,000/- in his savings bank account maintained with State bank of India during the financial year 2009-10 relevant to AY 2010-11. The case of the assessee was re-opened under section 147 of the Income tax Act, 1961, after obtaining approval from Principal CIT, Jamnagar and a notice under section 148 of the Act was issued on 28/03/2017, which was served upon to the assessee. The assessment was completed u/s. 147 on 19-12-2017 making additions Rs. 11,45,00/- on account of unexplained cash deposits in the savings bank account maintained with State bank of India during the financial year 2009-10 relevant to A Y 2010- 11. A show cause notice u/s 271(1)(c) r.w.s. 274 dated 19-12-2017 for levy of penalty was issued to the assessee. Thereafter, due to change of incumbent, another notice u/s 271(1)(c) r.w.s. 274 dated 30-05-2018 was issued to the assessee. Again there has been no compliance from the assessee. The reasonable opportunities have been given to the assessee but the assessee has not given any explanation that why penalty should not be levied. In this case, it is the fact that the assessee made cash deposits of Rs.11,45,000/- in the savings bank account maintained with State bank of India during the financial year 2009-10 relevant to A Y 2010- 11 but the assessee has not furnished such particulars of his income by way of filing a return of income nor furnished any details of sources Page 2 of 4

ITA No.1181/Rjt/2026 Paresh Chopda of such cash deposits nor even furnished any explanation/details in lieu of notice u/s 271(1)(c) r.w.s. 274 of the Income-tax Act, 1961. Therefore, considering the facts of the case and under the circumstances of the case, the assessing officer imposed penalty u/s 271(1)(c) r.w.s. 274 of the Income-tax Act, 1961. Therefore it is directed that the assessee shall pay a sum of Rs.2,56,007/- which is 100% of the tax sought to be evaded by way of penalty u/s 271(1)(c) r.w.s. 274 of the Income-tax Act, 1961.

4.

Being aggrieved by the said order of the Assessing Officer, the assessee filed an appeal before the Ld.CIT(A), but remained unsuccessful. Therefore, assessee is left with no other alternative but to knock on the doors of the Tribunal with this appeal praying for justice.

5.

I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel for the assessee, argued that notice issued by the assessing officer under section 271 (1)( C )of the Act is defective, therefore, penalty should not be imposed on the assessee. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which I have already noted in my earlier para and is not being repeated for the sake of brevity.

6.

I have considered submissions of both the parties. The learned CIT(A) erred in sustaining the penalty without examining whether the statutory notice under section 274 read with section 271(1)(c) of the Act, specifically did not inform the assessee about the exact charge against the assessee. The section 271(1)(c) of the Act contains two distinct charges, viz: (i)concealment of particulars of income; and (ii) furnishing of inaccurate particulars of income. The assessee is entitled to know the precise charge which he is required to meet. If the notice contains both expressions: Page 3 of 4

ITA No.1181/Rjt/2026 Paresh Chopda "concealed the particulars of your income" and "furnished inaccurate particulars of such income", without striking off the inapplicable portion or otherwise specifying the applicable limb, the notice is vague and defective. The Hon'ble Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar.), held that the notice under section 274 should specify the particular ground/limb on which penalty proceedings are initiated. The decision in CIT v. SSA's Emerald Meadows followed the same principle and the Revenue's SLP was dismissed by the Hon'ble Supreme Court. The Full Bench decision of the Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh v. DCIT, 434 ITR 1 (Bom.), has also held that failure to strike off the irrelevant limb can vitiate penalty proceedings. Therefore, I am of the view that notice issued by the AO under section 271(1) (c ) of the Act is defective. The notice under section 271 (1) (c ) of the Act, should specifically state as to whether penalty is being imposed for concealment of income or for furnishing inaccurate particulars of income. There is no any specific charge on the assessee in the case under consideration, therefore the penalty imposed by the AO and confirmed by the ld CIT(A) needs to be deleted. Accordingly, I delete the penalty.

7.

In the result, the appeal filed by the assessee, is allowed.

Order is pronounced in the open Court Today on 09/10/2026.

Sd/- [ Dr. Arjun Lal Saini ] Accountant Member राजकोट/Rajkot िदनांक/ Date: 09/10/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, RAJKOT 6. Guard File By order Private Secretary ITAT, Rajkot Page 4 of 4

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