INCOME-TAX OFFICER-8(3)(1), MUMBAI, MUMBAI vs. VIBGYOR TEXOTECH LIMITED, MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the Revenue is directed against order dated
22.05.2025 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld.
CIT(A)’] for assessment year 2009-10, in relation to penalty u/s 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Act’). The grounds raised by the Revenue are reproduced as under:
(i) "In the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in directing to DLETE the penalty levied u/s.

271(1)(c) of th non-mentionin limb in the pe proceedings."
(ii) "In the fac
Ld. CIT(A) err solely on the case."
(iii) In the fac
Ld. CIT(A) err to the assesse
2. Briefly stated, f completed under se
Income-tax Act, 196
total income of the and penalty proceed initiated. The quantu pursuant to the ord determined at ₹21,02
notice was issued to considering its subm of ₹7,07,78,990/-.
2.1 In appeal before legal plea that the no 271(1)(c) suffered from specify whether th concealment of incom
ITA he I. T. Act, 1961 of Rs.7,07,78,919/- hold ng of relevant limb OR non-striking off enalty notice is a substantive defect in "
cts and in circumstances of the case and red in directing to DLEETE the penalty u basis of limb, without examining the m cts and in circumstances of the case and red in ignoring the fact that no prejudice ee, and the same is curable u/s 292B of facts of the case are that in th ection 143(3) read with secti
1 (“the Act”) vide order dated 3
assessee was determined at ₹
dings under section 271(1)(c) o um matter travelled up to the der giving effect, the total inco
2,57,100/-. Consequent thereto o the assessee for levy of pen missions, the Assessing Officer i e the Ld. CIT(A), the assessee r otice issued under section 274 re m the vice of vagueness inasmu he penalty proceedings were me or for furnishing of inaccura
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ding that the of irrelevant the initiating d in law, the u/s 271(1)(c) merits of the d in law, the was caused f the Act.?
he reassessment on 147 of the 30.03.2016, the 28,34,12,447/-, of the Act were e Tribunal, and ome was finally o, a show-cause nalty, and after imposed penalty raised a specific ead with section uch as it did not e initiated for te particulars of income. It was conte proceedings void ab i
2.2 The Ld. CIT(A) assessee and examin limb of section 271(1
under section 274. Pl
Hon’ble Supreme Cou taxmann.com 248 (S
Manjunatha Cotton &
Hon’ble juri ictiona
(supra), the Ld. CIT charge is a substant therefore, the penalty accordingly deleted o
“4. Ǔन ण[य/ Decision
The assessee compa
10. Proceedings u/s u/s 143(3) of the income at Rs. 28,31
order giving effect
21,02,57,100/-. Pen and imposed at Rs 7
Hence, this appeal.
Ground No 1 As the view of the fact tha fling inaccurate part
274 and consequent
The appellant has su
ITA ended that such a defect rende initio.
), after considering the subm ning the penalty notice, found th
)(c) had not been struck off in th lacing reliance on the binding p urt in CIT v. SSA’s Emerald Mea
C), the Hon’ble Karnataka High
& Ginning Factory [2013] 359 IT al High Court in Mohd. Far
T(A) held that non-specification ive defect going to the root of ju y order could not be sustained. T observing as under:
n:
any had not filed return of income for th s 147 of the Act were initiated and asses
Act was passed on 30.03.2016 deter
1,12,447/-. The matter travelled upto IT was passed determining total income nal proceedings u/s 271(1)(c) of the Act w
7,07,78,919/-.
e notice u/s. 274 suffers from the vice of v t the notice does not state whether notic ticulars or for concealment of income, the t proceedings are legally invalid.
ubmitted as under:
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ered the penalty missions of the hat the relevant he notice issued precedents of the adows [2016] 73
h Court in CIT v.
TR 565, and the rhan A. Shaikh n of the precise uri iction, and The penalty was he A.Y. 2009- ssment order rmining total
TAT and the e at Rs. Rs.
was initiated vagueness in ce issued for e notice u/s.

The notice of pena inaccurate particula
Hon'ble juri ictiona
Deputy Commission decision attached an In the order of penal
As the reply of the documentary eviden
271(1)(c), has been g
Considering the abo proved that the as particulars of incom during the assessm proceedings under initiated for the A.Y notice u/s 271(1)(c) o
Therefore, after cons satisfied that the a liable for penalty u/
this case comes to Therefore, the minim
7,07,78,919/- @ 10
comes to Rs. 21,23
circumstances of the is about 100% of the The penalty notice d given by AO is repro
*have concealed the attached furnished i
As such, from the ex evident that the A proceedings had b initiation of penalty under section 274 rw
ITA alty is not clear whether for conceal ars. Hence entire proceedings are illega al HC in case of Mr. Mohd. Farhan A Sha er of Income Tax, Central Circle-1, Belga nd copy of notice u/s. 271(1)(c) attached.
lty, the AO has concluded as under:
assessee is not satisfactory, as no ex nces in its support, for non imposition of given by the assessee.
ove facts and reply filed by the assessee, ssessee has deliberately submitted the me in ITR filed in response to notice u ment proceedings, to avoid payment of ta section 271(1)(c) of the Income tax Act,
Y. 2009-10 in the case of the assessee of the Act issued on 30.03.2016. sidering all facts and circumstances of th assessee has concealed its income and s 271(1)(c) of the Act. The tax sought to b
Rs. 7,07,78,919/-(After deduction of p mum of penalty leviable in this case c
00% and maximum of penalty leviable
3,36,757/- @ 300%. After considering a e case, I impose a penalty of Rs. 7,07,78,9
e tax sought to be evaded in this case dated 30/03/2016 under section 274 r duced as under:
e particulars of your Income as per orde inaccu particulars of such income.
xtracts of the notice reproduced as above
AO did not specify charge under wh een initiated by him on the assesse itself is bad in law. Copy of penalty n ws 271(1)(c) dated 30.03.2016 is as und
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lment or for al in view of aikh Vs. The aum. Copy of xplanation or f penalty u/s , it has been e inaccurate u/s 148 and axes. Penalty
, 1961 were vide penalty he case, I am therefore is be evaded in prepaid tax).
comes to Rs.
in this case all facts and 919/-, which rws 271(1)(c) er u/s 143(3) e, it is clearly hich penalty e. As such, notice issued der :

From the notice issu
271(1)(c) of the Act, i limb the penalty wa am of the view that is a substantive def and is not curable squarely covered by vs. SSA's Emerald M decision, the Hon'ble by observing that the the order of Hon'ble division bench of H
ITA ed for initiation of penalty proceedings u/
it is seen that the AO is not certain as to as to be levied. Considering these facts o non-mentioning of relevant limb in the p fect and infirmity which goes to the root o e at the later stage. The case of the y the decision of the Hon'ble Apex Court
Meadows [2016] 73 taxmann.com 248 (SC e Court has dismissed the SLP filed by ere is no merit in the petition of the revenu e High Court wherein the decision of th
Hon'ble Karnataka High Court in the cas
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/s 274 r.w.s.
The Hon'ble Calcutta
Agarwal ITAT 272 of There is no merit in Section 271(1)(c) do assessee is guilty supported in our vi
Foods Versus Comm
SCC 419, a Divisio
Income Tax - 19, Kol
2017 (so far unrepo
Karnataka and Bo judgement and an Principal CIT1, Kolk
February, 2019 on t have only gone into have been issued u
Income Tax Act, 196
The Hon'ble Bombay
Shaikh v.Deputy Co
[2021] 125 taxmann
 As aptly poin
Court there ar
Smt. Kaushal decision earli lead case; th
Manjunatha ( decision has Division Benc
(1) CIT v. Sam
4 (Bom.) (2) P
[2020] 113 ta v. New Era S
2019] and (4
Appeal No. 18
is Kaushalya

 The Tax Appe
Pr. CIT (Centr that one, the issued to th
ITA

& Ginning Factory [2013] 339 ITR 56
a High Court in the case of Pr. CIT vs.
f 2017, GA 245 of 2017 dtd 22/04/2019
n this intended appeal. The impugned es not specify which of the two contrav of. For those reasons, the notice is b iew by the decision of the Supreme Co missioner of Central Excise, U. P. reported n Bench of our Court in Principal Com lkata Versus Dr. Murari Mohan Koley, ITA orted) decided on 18th July, 2018, judge ombay High Courts referred to in th unreported judgement of the Divisio kata Versus M/S. SRMB Srijan Ltd. ma the same point. We make it absolutely c the question of technical defect in the not under Section 271(1)(c) read with Section 61 and the consequences thereof.
y High Court in the in the case of Mohd mmissioner of Income Tax, Central Circle n.com 253 (Bombay) held that:
nted out by the referring Division Bench re two sets of cases. One set of cases is lya [1994] 75 Taxman 549/216 ITR 660
iest in point of time. The other set does hey all have been cryptic but stand pe
(supra). For that reason, the Karnataka been discussed in detail. Nevertheless, ch has found on one precedential plank mson Perinchery [2017] 88 taxmann.com 4
Pr. CIT v. Goa Coastal Resorts and Recrea axmann.com 574/272 Taxman 157 (Bom
Sova Mind [TX Appeal Nos. 70 of 2019
4) Pr. CIT v. Goa Dourado Promotions
8 of 2019, dated 26-11-2019] On the op
(supra). All by co-equal Benches, though.
eal No. 24/2019, decided on 11-11-201
ral) v. Goa Coastal Resorts & Recreation e Division Bench has held that the not e assessee must indicate whether th
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65 has been Bijoy Kumar
9 held that:
notice under ventions, the bad. We are ourt in Amrit in (2005) 13
mmissioner of AT No. 306 of ements of the he preceding on Bench in ade on 26th clear that we tice stated to n 274 of the d. Farhan A.
e 1, Belgaum h, before this led by CIT v.
0 (Bombay) a s not have a ersuaded by High Court's the referring these cases:
413/392 ITR ation (P.) Ltd.
m.) (3) Pr. CIT dated 18-6-
(P.) Ltd. [TX pposite plank
. [Para 162]
19, relates to n (P.) Ltd. In tice which is he Assessing

Officer is sa concealment particulars of the printed f applicable ar clarity the na
Perinchery an struck of the Division Benc satisfaction o penalty proce perused, it is struck off. T impugned ord law laid dow
New Era So interference. [
 Question No.
imposing pen section 271(1
striking off ir
TAX DEPARTM
 It does. The p proceedings, launch pena translates in section 271(1
proceedings f are not comp
Nor can each corollary; ne proceedings c remains disti assessee mu proceedings suffers from t
 More particula must be con resolved in th

 Therefore, the v. Goa Doura dated 26-11- more in conso be held that C
ITA atisfied that the case of the assess of particulars of income or furnishing o f income or both, with clarity. If the notice form, then the necessary portions wh re required to be struck off, so as to in ature of the satisfaction recorded. In b nd New Era Sova Mine, the notices issu e portion which were inapplicable. Fro ch concluded that there was no prop r proper application of mind in a matter of eedings. In the present case, as well if s apparent that the relevant portions ha
This leaves no ground for interferenc der. The impugned order are quite consi n in the case of Samson Perinchery case va Mine case (supra) and, therefore,
[Para 169]
1: If assessment order clearly records sa nalty on one or other, or both grounds m
1)(c), does a mere defect in notice-no rrelevant matter-vitiate penalty proceed
MEN primary burden lies on the revenue. In the it forms an opinion, prima facie or o alty proceedings against the assessee to action only through the statutory n
1)(c), read with section 274. True, the form the basis for the penalty proceedin posite proceedings to draw strength from h cure the other's defect. A penalty pro evertheless, it must stand on its o culminate under a different statutory nct from the assessment proceedings. T ust be informed of the grounds of only through statutory notice. An om the vice of vagueness. [Para 181]
arly, a penal provision, even with civil co nstrued strictly. And ambiguity, if an he affected assessee's favour. [Para 182]
e first question is answered to the effect ado Promotions (P.) Ltd. [Tax Appeal No.
2019] and other cases have adopted a onance with the statutory scheme. That m
CIT v. Smt. Kaushalya [1994] 75 Taxman
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see involves of inaccurate e is issued in hich are not ndicate with both Samson ued had not om this, the er record of of initiation of the notice is ave not been ce with the istent by the e (supra) and warrant no atisfaction for mentioned in ot notice-not ings? COME e assessment otherwise, to e. But that notice under assessment ngs, but they m each other.
ceeding is a own. These scheme that Therefore, the the penalty nibus notice onsequences, ny, must be t that Pr. CIT
18 of 2019, an approach means it must n 549/[1995]

216 ITR 660
law. [Para 18
Question No. 2: Has  Indeed, Smt prejudice. As orders alread initiated. So, detail the exa the statutory nor any prej wording in th the assessee onto observe ground of ab prejudice is followed'. Kau notice issuin assessee abo to explain as  No doubt, the in the notice authority and hearing conte fact, for one a on the groun
185]
 That said, re the assessm avoids prejud reasoning su proceedings s proceedings h
Question No. 3: W
Shroff v. Jt. CIT of non-applicatio are not struck off
 In Dilip N. Sh significance th
Officer in issu that inapprop the same had facts, has fe whether he h
ITA

(Bom.) does not lay down the correct p
3]
Kaushalya failed to discuss the aspect of Kaushalya Case (supra) did discuss th already noted, Kaushalya noted that the dy contained the reasons why penalty the assessee, stresses Kaushalya, 'fu act charge of the revenue against him'. For notice suffered from neither non-applica ejudice. According to it, 'the so-called he notice [has not] impaired or prejudiced to a reasonable opportunity of being he that for sustaining the plea of natural ju bsence of opportunity, 'it has to be esta caused to the concerned person by th ushalya closes the discussion by observ ng 'is an administrative device for in out the proposal to levy penalty in order to to why it should not be done. [Para 184] I ere can exist a case where vagueness an e can demonstrate non-application of m d/or ultimate prejudice to the right of op emplated under section 274. So asserts K assessment year, it set aside the penalty nds of non-application of mind and prej egarding the other assessment year, it r ent order, containing the reasons or dice to the assessee. That is where, it is r uffers. Kaushalya's insistence that t supply justification and cure the defec has not met acceptance. [Para 186]
What is effect of Supreme Court's decisio
[2007] 161 Taxman 218/291 ITR 519 (S n of mind when irrelevant portions of pr f ?
roff, case (supra) for the Supreme Court, hat in the standard Pro-forma used by th uing a notice despite the fact that the sam priate words and paragraphs were to be d not been done'. Then, Dilip N. Shroff, cas lt that the Assessing Officer himself w had proceeded on the basis that the as Vibgyor Texotech Ltd
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proposition of of 'prejudice'?
he aspect of e assessment y should be ully knew in r Kaushalya, ation of mind d ambiguous d the right of eard'. It went ustice on the ablished that he procedure ving that the nforming the o enable him
INC nd ambiguity mind by the pportunity of Kaushalya. In y proceedings judice. [Para reasons that justification, reckoned, the the previous ct in penalty on in Dilip N.
SC), on issue rinted notices it is of 'some he Assessing me postulates deleted, but se (supra) on was not sure ssessee had concealed his
[Para 187]
 It may, in contravention communicatio proof. That s inapplicable p justice that th ambiguity. Th the routine, notices. That And, therefore penal consequ
 In State of U.
the Supreme
One of the pri provisions of infraction per
Here again, p case of a man in individual i
 Here, section albeit comme brooks no trif
Rajesh Kuma which the A judgment in 1269]. Accord statutory auth natural justic express provi principles of contravenes t ultra vires Art
 As a result, omnibus show and disappro in printed for parts of that g

In all the above deci limb or non-striking substantive defect consequent penalty
ITA s income or he had furnished inaccurate this context, be respectfully observ n of a mandatory condition or require on to be valid communication is fatal, wi said, even if the notice contains no cav portion be deleted, it is in the interest of f he notice must be precise. It should give herefore, Dilip N. Shroff case (supra) dis ritualistic practice of issuing omnibus practice certainly betrays non- applicat e, the infraction of a mandatory procedu uences assumes or implies prejudice. [Par
U.P v. Sudhir Kumar Singh 2020 SCC On Court has encapsulated the principles inciples is that 'where procedural and/or f law embody the principles of natural j r se does not lead to invalidity of the ord prejudice must be caused to the litigant, "
ndatory provision of law which is concei interest but also in the public interest'. [Pa n 271(1)(c) is one such provision. With rcial, consequences, the provision is ma fling with or dilution. For a further prece ar v. CIT [2007] 2 SCC 181, may be re
Apex Court has quoted with approva
State of Orissa v. Dr. Binapani Dei [A ding to it, when by reason of action on t hority, civil or evil consequences ensue, ce must be followed. In such an event, ision is laid down on this behalf, comp f natural justice would be implicit.
the principles of natural justice, it may ticle 14 of the Constitution. [Para 190]
it is held that Dilip N. Shroff Case (s w-cause notices as betraying non-applica ves of the practice, to be particular, of iss rm without deleting or striking off the generic notice. [Para 191]
ision, it has been held that non mentionin g off of irrelevant limb in the penalty in the initiation of proceedings itse levied on the basis of such defective noti
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e particulars.
ved that a ement for a th no further veat that the fairness and e no room for sapproves of show-cause tion of mind.
ure leading to ra 188]
nline SC 847
of prejudice.
r substantive justice, their ders passed.
"except in the ived not only ara 189]
calamitous, andatory and dential prop, eferred to in al its earlier
AIR 1967 SC the part of a principles of although no mpliance with If a statue also be held supra) treats ation of mind suing notices inapplicable ng of relevant notice is a elf and the ice cannot be sustained. In view of directed to delete the 3. When the mat appeared on behalf request filed. Accordi qua the assessee
Representative (“DR”)
4. We find that th the short legal grou specify in the notice sought to be levied f inaccurate particular and stands squarel
Bombay High Court has been held that f the statutory notic unsustainable in law
SSA’s Emerald Mea
Respectfully followin juri ictional High C reasoned order of the raised by the Revenu

ITA f these facts and circumstances of the ca e penalty levied u/s 271(1)(c) of the Act tter came up for hearing be of the assessee, nor was an ingly, we proceeded to hear the e, after hearing the Ld.
)..
he Ld. CIT(A) has rightly deleted und that the Assessing Office e under section 274 whether t for concealment of income or fo rs of income. This issue is no lo ly covered by the judgment in Mohd. Farhan A. Shaikh (su failure to strike off the inapplic ce renders the entire penal w. The decision of the Hon’ble Su adows (supra) also supports t ng the binding decision o
Court, and finding no infirmi e Ld. CIT(A), we uphold the sam ue are accordingly dismissed.
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ase, the AO is t.”
efore us, none ny adjournment appeal ex parte
Departmental d the penalty on r had failed to the penalty was for furnishing of onger res integra of the Hon’ble upra), wherein it cable portion in lty proceedings upreme Court in the same view.
f the Hon’ble ity in the well- me. The grounds

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

ITA he appeal of the Revenue is dism ced in the open Court. UNATH KAMBLE)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

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missed.
d/-
KASH KANT)
ANT MEMBER
R, gistrar) umbai