GHAZIABAD CONTAINER P.LTD,DELHI vs. DCIT, CIRCLE-10(1), NEW DELHI

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ITA 5249/DEL/2017Status: DisposedITAT Delhi11 October 2021AY 2013-144 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 read with Section 271(1)(c) was defective as it did not specify which limb of Section 271(1)(c) the penalty proceedings were initiated under. This defect renders the notice bad in law.

What were the facts?

The assessee's appeal was against an order of the CIT(A) for AY 2013-14. The assessee did not appear for the hearing, so the tribunal proceeded based on the CIT(A)'s order and prior submissions.

What were the issues?

Whether a penalty notice under Section 271(1)(c) is invalid if it fails to specify the limb of the section under which penalty proceedings are initiated.

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(4)Show list

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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI

Before: MS SUCHITRA KAMBLE & SH. PRASHANT MAHARISHI

Hearing: 05.10.2021Pronounced: 11.10.2021

ORDER

PER SUCHITRA KAMBLE, JM

1.

This appeal is filed by the assessee against the order dated 12.06.2017 passed by CIT (A)-35, New Delhi for assessment year 2013-14.

2.

At the time of hearing none appeared for the assessee despite giving notice. Therefore, we are proceeding on the basis of the order of the CIT(A) and submissions made by the assessee before the CIT(A).

3.

The Ld. DR submitted that the penalty is as per the law and relied upon the order of the CIT(A).

4.

We have heard Ld. DR and perused all the relevant materials available on record. It is pertinent to note that the CIT(A) has categorically mentioned in Para 4.15 that the penalty notice u/274 read with Section 271 dated 8/3/2016 is a format notice and thus it has not strike off the particular limbs of Section 271(1)(c) of the Act. The CIT(A) has not dealt with the decisions of the Hon'ble Supreme Court in case of CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158 as well as CIT Vs. SSA Emerald Meadows (2016) 73 Taxman.com 248 (SC) and CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar). Thus, the notice itself is defective in nature and the decision of the Hon’ble Supreme Court in case of SSA Emerald Meadows (supra) is squarely applicable in the present case. Thus, there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 of the Act. This issue is squarely covered by the decision of the Hon’ble Supreme Court in case of M/s SSA’ Emerald Meadow. The extract of the decision of the Hon’ble Karnataka High Court in M/s SSA’ Emerald Meadows are as under which was confirmed by the Hon’ble Apex Court: "3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed."

Thus, Additional Ground No. (ii) of the assessee's appeal is allowed. Since the inception of the notice issued u/s 271(1)(c) has become null and void, there is no need to comment on merit of the case. The Penalty u/s 271(1)(c) of the Act is quashed.”

Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon’ble Karnataka High Court in the case of SSA’S Emerald Meadows (supra) where the SLP filed by the Revenue has been dismissed is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon’ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. (supra) will be applicable in the present case. The Hon’ble Delhi High Court held as under: “21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA’s Emerald Meadows (2016) 73 Taxman.com 241(Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016.

22.

On this issue again this Court is unable to find any error having been committed by the ITAT. No substantial question of law arises.”

Thus, notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to delete the penalty so levied. The appeal of the assessee is allowed.

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