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Facts
The assessee challenged penalty orders under Section 271(1)(c) for furnishing inaccurate particulars of income. The Assessing Officer initiated penalty proceedings after the assessee offered Long Term Capital Gains (LTCG) during scrutiny.
Held
The Tribunal held that the penalty order is unsustainable because the notice issued by the Assessing Officer did not specifically mention the ground for penalty and failed to strike off the inapplicable portion, as per Supreme Court and High Court decisions.
Key Issues
Whether a penalty order under Section 271(1)(c) is vitiated if the notice issued by the AO does not specify the ground and fails to strike off the inapplicable portion.
Sections Cited
271(1)(c)
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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: JUSTICE (RETD.) C.V. BHADANG & SHRI B.R. BASKARAN
PER JUSTICE (RETD.) C.V. BHADANG, PRESIDENT :
By this appeal, the assessee is challenging the concurrent orders passed by the authorities below, confirming levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961 (‘Act’ for short) purportedly on the ground, that the appellant-assessee has furnished ‘inaccurate particulars of income’.
We have heard the learned counsel for parties. Perused record.
It transpired during the course of hearing that the Assessing Officer (AO) had found that the assessee had failed to furnish details of Long Term Capital Gains (LTCG) which the assessee had earned during the year under consideration. The case was taken up for scrutiny in which the appellant offered the said LTCG. The Assessing Officer
The learned counsel for the appellant has placed reliance on the decision of Supreme Court in Commissioner of Income Tax (LTU) vs State Bank of India, [2024] 169 taxmann.com 305 (SC) as well as the decision of Bombay High Court in Principal Commissioner of Income Tax (Central), Bengaluru vs Goa Coastal Resorts and Recreation (P.) Ltd., [2020] 113 taxmann.com 574 (Bombay) in order to submit that the notice which was issued in this case did not specifically mention the ground on which the penalty was proposed to be imposed. It is pointed out that the relevant provision contemplates levying of penalty both on account of assessee having concealed the particulars of income or having furnished inaccurate particulars of such income. The learned counsel has referred to a copy of the notice dated 04.03.2013 in order to point out that the Assessing Officer has not struck off or deleted the inapplicable portion.
The learned DR has submitted that the Assessing Officer was clear in his opinion as to the ground on which he is proceeding, viz. appellant having furnished inaccurate particulars of income and, in that view of the matter, the order imposing penalty deserves to be sustained.
We have considered the submissions made. The issue is no longer res integra as it is covered by the decision of jurisdictional High Court in Mohd. Farhan A. Shaikh vs CIT, [2021] 434 ITR 1 (Bom.) as well as the decision of Supreme Court in State Bank of India (supra). It has been, inter alia, held that non-striking of inapplicable limb would vitiate the order imposing penalty. A co-ordinate Bench of the Tribunal in Lyka Labs Ltd. vs DCIT in to 1417/Mum/2024 decided on 06.06.2024 placing reliance on the aforesaid decision had taken a similar view.
Mr. Kaleem M. Khan 7. In that view of the matter, we find that the impugned order cannot be sustained. The appeal is accordingly allowed. The Assessing Officer is directed to delete the penalty. The appeal is disposed of in the aforesaid terms.
Order pronounced in the open court on 21st January, 2025.