JHUMA CHATTERJEE,KOLKATA vs. I.T.O., WARD - 1(3), ASANSOL

Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 12.08.2024 for the AY 2014-15. 02. At the time of hearing the learned counsel of the assessee pressed the second ground of appeal only, which is qua notice issued u/s271(1)(c) of the Act being vague without mentioning any specific charge and therefore, null and void ab initio and consequently, the entire proceedings need to be quashed and penalty imposed needs to be deleted in full. 03. The facts in brief are that the assessee filed the return of income on 10.01.2015, electronically by declaring income of ₹3,68,310/-. The assessment was framed u/s 143(3) of the Act vide order dated 25.10.2016 passed u/s 143(3) of the Act, wherein addition of ₹ 21,62,303/- was made in respect of difference between market value Jhuma Chatterjee; A.Y. 2014-15

and value of the property. Accordingly, the penalty proceedings under Section 271(1)(c) read with section 274 of the Act, were initiated for concealment of income by issuing notice dated 25.10.2016. 04. In the appellate proceeding, the learned CIT (A) reduced the addition to the extent of ₹3,58,710/-. The ld. AO thereafter recorded a finding that obviously the assessee has concealed the income and had not offered the tax, the correct income in ITR. Finally, the penalty of ₹60,835 was imposed equal to 100% of tax sought to be evaded by passing an order u/s271(1)(c) of the Act dated 17-02-2022, which was also confirmed by Landed CIT (A).
05. After hearing the rival contentions and perusing the materials available on record, we find that the notice u/s 274(1) of the Act has been initiated on 25.10.2016, wherein the learned AO has not either struck off the irrelevant limb or specified the limb under which the penalty was proposed to be levied. In other words, the learned AO has stated both the limbs in the said notices. Therefore, we find merit in the contention of the assessee that the notice has been issued in standard format and in a mechanical manner without application of mind, with the result that assessee could not reply the correct charge under which the penalty was proposed to be levied. The case of the assessee is squarely covered by the decision of the Hon'ble
Juri iction High Court in the case of KPC Medical College and Hospital vs. PCIT [2025] 173 taxmann.com 581 (Calcutta) dated 19-03-2025, wherein the similar issue has been decided in favour of the assessee by observing and holding as under: -
“13. We have perused the notice and we find that none of the relevant columns have been indicated nor have the irrelevant columns been struck off. Identical issue came up for consideration wherein one of the questions which was considered was with regard to the validity of the notice issued under Section 274 read with 271 wherein the Court also took into consideration the effect of Section 271AAB read with 162 and Jhuma Chatterjee; A.Y. 2014-15

answered the questions in favour of the assessee and against the revenue in the following terms :
"In CIT v. SSA'S
Emerald
Meadows [2016]
73 taxmann.com 241
(Karnataka) the High Court of Karnataka following the decision in Commissioner of Income-tax v. Manjunatha
Cotton
&
Ginning
Factory [2013]
35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Karnataka) held that the imposition of penalty under section 271(1)(c) of the Act is bad in law and invalid for the reasons where the show cause notice under section 274 of the Act did not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The said decision of the High Court of Karnataka was affirmed by the Hon'ble Supreme Court in the decision reported in Commissioner of Income- tax v. SSA'S Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180
(SC). On the same lines it is the decision of this court in Pr. CIT v. Brijendra
Kumar Poddar in [ITAT No. 215 of 2018, dated 23-11-2021]. As pointed out earlier, the show cause notice issued under Section 274 read with Section 271
of the Act did not furnish any particulars and all the relevant columns have been left blank. Thus, by applying the legal position in the aforementioned decision, this court has no hesitation to hold that the show cause notice was bad in law consequently the initiation of penalty proceedings is vitiated."
14. Thus, for the above reasons, the appeals filed by the assessee are allowed and the substantial questions of law are answered in favour of the assessee.”
06. Therefore, respectively following the decisions of the Hon'ble
Juri ictional High Court we quash the penalty proceedings and also penalty order-imposed u/s 271(1)(c) of the Act.
07. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.08.2025. (PRADIP KUMAR CHOUBEY)
(RAJESH KUMAR)
(JUDICIAL MEMBER)
(ACCOUNTANT MEMBER)

Kolkata, Dated:26.08.2025
Sudip Sarkar, Sr.PS
Jhuma Chatterjee; A.Y. 2014-15

Copy of the Order forwarded to:

BY ORDER,//

Sr. Private Secretary/ Asst.