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Facts
The assessee filed an ITR, and an assessment was framed under Section 143(3), making an addition for the difference in property value. Subsequently, penalty proceedings were initiated under Section 271(1)(c) read with Section 274 for concealment of income, leading to a penalty of ₹60,835, which was confirmed by the CIT(A).
Held
The tribunal held that the penalty notice issued under Section 274 was vague as it mechanically included both limbs of Section 271(1)(c) without striking off the irrelevant one or specifying the exact charge. Following jurisdictional High Court precedents, the tribunal concluded that such a vague notice rendered the penalty proceedings null and void, thereby quashing the penalty.
Key Issues
Whether a penalty notice issued under Section 274 read with 271(1)(c) is valid if it is vague and fails to specify the exact charge (concealment of income or furnishing inaccurate particulars) for which penalty proceedings are initiated.
Sections Cited
271(1)(c), 274, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM (Assessment Year:2014-15) ITO, Ward-1(3) Jhuma Chatterjee Aaykar Bhavan, Opposite BF-151 Ground Floor, Sector-1, Ramakrishna School, PO Salt Lake, Kolkata-700064 Vs. Asansol, PIN-713305, West Bengal West Bengal (Appellant) (Respondent) PAN NO. AJEPC3975K Assessee by : Shri Somnath Ghosh, AR Revenue by : Shri Sandip Sarkar, DR Date of hearing: 17.07.2025 Date of pronouncement: 26.08.2025 O R D E R 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.
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.
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
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).
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 Jurisdiction 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
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.08.2025.