ORIENTAL RELAYS LLP (SUCCESSOR TO ORIENTAL RELAYS PVT. LTD.),KOLKATA vs. A.C.I.T., CIRCLE - 8(2), KOLKATA, KOLKATA

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ITA 1574/KOL/2024Status: DisposedITAT Kolkata29 July 2025AY 2016-2017Bench: SHRI RAJESH KUMAR (Accountant Member), SHRI PRADIP KUMAR CHOUBEY (Judicial Member)4 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the penalty notice issued under Section 274 read with Section 271(1)(c) was issued in a mechanical manner, without application of mind, as the Ld. AO did not strike off the irrelevant limb or specify the charge. Citing precedent, the Tribunal held such a notice to be invalid, rendering the subsequent penalty order unsustainable.

What were the facts?

The assessee was subjected to an assessment under Section 143(3) of the Income-tax Act, 1961, which included an addition of Long-Term Capital Gain. Subsequently, the Ld. AO imposed a penalty under Section 271(1)(c) of the Act, affirmed by the Ld. CIT(A). The assessee appealed, arguing that the penalty notice issued under Section 274 read with Section 271(1)(c) was invalid as the Ld. AO failed to strike off irrelevant limbs or indicate the relevant charge.

What were the issues?

Whether the penalty imposed under Section 271(1)(c) is valid if the notice issued under Section 274 read with Section 271(1)(c) does not specify the charge or strike off irrelevant limbs, indicating a mechanical application of mind.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 271(1)(c),Section 274

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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Shreya Loyalka, AR
For Respondent: Shri Manoj Kumar Pati, DR
Hearing: 17.07.2025Pronounced: 29.07.2025

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 27.05.2024 for the AY 2016-17.

2.

The only issue pressed by the assessee is against the confirmation of penalty by the ld. CIT (A) as imposed by the ld. AO u/s 271(1)(c) of the Act, on the basis of invalid notice issued u/s 274 read with section 271(1)(c) of the Act.

3.

The facts in brief are that the assessment u/s 143(3) of the Income- tax Act, 1961 (the Act) dated 27.12.2018, was passed by making an

4.

Now, the assessee has challenged the order of ld. CIT (A) on the ground that since the penalty order was passed in consequence to invalid notice u/s 271(1)(c) of the Act, therefore, all the consequential proceedings/ orders are invalid and may be quashed. The ld. AR referred to the notice issued u/s 274 read with section 271(1)(c) of the Act and submitted that the ld. AO has not struck off the irrelevant limb nor indicated the relevant limb in the penalty notice and therefore, notice itself is issued without application of mind and in standard format which rendered the said notice to be invalid in the eyes of the law. Consequently, the penalty order passed u/s 271(1)(c) of the Act is also invalid and deserved to be quashed. In defense of his argument, the ld. Counsel for the assessee following the decisions: -

“1. KPC Medical College and Hospital v. PCIT [2025] 173 taxmann.com 581 (Cal HC) 2. CIT vs. State Bank of India [2024] 169 taxmann.com 305 (SC) 3. PCIT vs. Unitech Reliable Projects (P.) Ltd. [2024] 166 taxmann.com 135 (SC) 4. CIT Vs. SSA's Emerald Meadows [2016] 73 taxmann.com 248 (SC) 5. Balaji Metal and Sponge Pvt Ltd. v. ITO dated 29.11.2024 6. Ganesh Prasad Khetan v. DCIT (2025) 171 taxmann.com 647 (Raipur)” 05. The ld. DR heavily relied on the orders of the ld. lower authorities.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 29.07.2025.

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