M/S. ORIENTAL INSURANCE CO. LTD.,NEW DELHI vs. DCIT, NEW DELHI

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ITA 6590/DEL/2015Status: DisposedITAT Delhi03 November 2021AY 2005-064 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 notice issued under Section 274 r.w.s. 271 was invalid. It failed to specify whether the penalty was for concealment of income or for furnishing inaccurate particulars of income, making it vague.

What were the facts?

The Assessing Officer (AO) issued a penalty notice under Section 274 read with Section 271 of the Income Tax Act, 1961. The notice stated that the assessee had concealed particulars of income by furnishing inaccurate particulars of such income.

What were the issues?

Whether a penalty notice under Section 274 r.w.s. 271 is valid if it does not specifically state the grounds for imposing penalty, i.e., concealment of income or furnishing inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI

Before: Sh. Kul BharatDr. B. R. R. Kumar

For Respondent: Ms. Deep Shikha Sharma, CIT DR
Hearing: 25.08.2021Pronounced: 03.11.2021

Heard together (2 matters)

ITA No. 6590/Del/2015
ITA No. 24/Del/2016

Read from the judgment's own cause title. This page is filed under one of them.

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeals have been filed by the assessee and the Revenue against the orders of ld. CIT(A)-22, New Delhi dated 20.10.2015.

2.

The notice u/s 274 r.w.s. 271 of the Income Tax Act, 1961 issued by the Revenue is as under:

3.

We have gone through the notice u/s 274 r.w.s. 271 of the Income Tax Act, 1961 issued by the Assessing Officer on 31.03.2013. We find that the Assessing Officer has issued the penalty order stating that, you *have concealed the particulars of your income by furnishing inaccurate particulars of such income.”

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]

4 Oriental Insurance Co. ltd. 5. Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated.

6.

In the result, the appeal of the assessee is allowed and that of the Revenue is dismissed. Order Pronounced in the Open Court on 03/11/2021.

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