RACHIT PRINTS PVT. LTD.,DELHI vs. ACIT, CIRCLE- 2, MEERUT

The present appeal has been filed by the assessee against the order of the ld. CIT(A), Meerut dated 29.01.2018.

The Assessing Officer made addition of Rs.21,71,854/- to the total income on account of the sundry creditor. Consequent to the addition made, penalty u/s 271(1)(c) has been levied by the AO.

At the outset, the ld. AR argued that the notice issued was defective as it did not specify as to which limb of Section 271(1)(c) has been invoked for levy of penalty. The said notice is as under:

We have also gone through the notice u/s 274 r.w.s. 271 of the Income Tax Act, 1961 issued by the Assessing Officer on 13.03.2014. We find that the Assessing Officer has issued the 3 Rachit Prints Pvt. Ltd. penalty order stating that, you *have concealed the particulars of your income or……… furnished inaccurate particulars of such income.”

On this issue, we are guided by the following judgments: 1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180]