SUNDEK INDIA LIMITED,AHMEDABAD vs. THE DY.CIT, CIRCLE-4(1)(1), AHMEDABAD
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA KAMBLE
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National
Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 30.08.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2013-14. 2. The grounds of appeal raised by the Assessee are as follows:-
The learned CIT(A) has erred in law and on facts of the case in upholding initiation of penalty proceedings u/s 271(1)(c) of the Act. Asst. Year : 2013-14 - 2–
The learned CIT(A) has erred in law and on facts of the case in upholding levy of penalty of Rs.1,63,19,220/- u/s 271(1)(c) of the Act.
The Ld. CIT(A) has erred in law and on facts of the case in upholding the order u/s 271(1)(c) of the Act which is ex-facie non-est and bad in law on account of not containing the DIN (Document Identification Number) in the body of the order as mandated by departmental instructions issued from time to time.
Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.”
We have heard the rival contentions and perused the material available on record. The pertinent facts relevant for adjudication of this case are that the Assessing Officer, vide para 5.11 of the order, initiated penalty proceedings u/s 271(1)(c)/r.w.s. 274 of the Act for furnishing ‘inaccurate particulars’ of income. For the sake of ready reference, the relevant paragraph is reproduced hereunder:-
“…..
……
11 Hence in view of the above provision of the Act i.e. section 2(24) r.w.s 28(iv) of the Act. The amount of Rs. 5,02,98,118/- is Sundek India Ltd Vs. DCIT Asst. Year : 2013-14 - 3– also income of the assessee and chargeable to tax. The amount as transferred by the assessee to 'General Reserves' is not only a benefit or perquisite but it is also arising from the business of the assessee, hence a business income and liable to be taxed. The penalty proceedings U/s. 271(1)(c)/r.w.s 274 is also initiated separately for inaccurate particulars of income.”
We also find that a show-cause notice has been issued to the assessee on 12.02.2016 proposing levy of penalty for furnishing ‘inaccurate particulars’ of income. For the sake of ready reference, the relevant paragraph No.2 of the penalty order is reproduced hereunder:-
“2. A show-cause notice to the assessee was issued on 12.02.0216
to explain why penalty u/s 271(1)(c) of the Act should not be levied for furnishing inaccurate particulars of income. In response to the notice, the assessee has failed to furnish the reply.
Therefore, it is clear that the assessee has nothing to say in this regard.”
Further, we find that the Assessing Officer levied penalty u/s 271(1)c) of the Act for ‘concealment’ of particulars of income. For the sake of ready reference, the relevant part of the penalty order is reproduced hereunder:-
“11. In view of the above. I am satisfied that the assessee has furnished inaccurate particulars of income and thereby concealed its income. The assessee has concealed the particulars of income to the extent of Rs. 5,02,98,118/-. Therefore, minimum penalty leviable @ 100% of tax sought to be evaded comes to Rs.
1,63,19,220/- and maximum penalty @ 300% of tax sought to be evaded comes to Rs. 4,89,57,660/-. Therefore, looking to the facts
Asst. Year : 2013-14
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of the case, I hereby levy minimum penalty of Rs. 1,63,19,220/-u/s.
271(1)(c) of the Act.”
On this issue, we are guided by the following judgments:
1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning
Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law .
2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.
Hence, respectfully following the orders of the Hon’ble High Courts, since the Assessing Officer has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open Court on 22.04.2025 (SUCHITRA KAMBLE)
VICE-PRESIDENT
Ahmedabad; Dated 22/04/2025
Asst. Year : 2013-14
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आदेश की ितिलिप अ ेिषत/Copy of the Order forwarded to :
अपीलाथ / The Appellant 2. थ / The Respondent. 3. संबंिधतआयकरआयु / Concerned CIT 4. आयकरआयु(अपील) / The CIT(A)- 5. िवभागीयितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड फाईल/ Guard file.
आदेशानुसार/ BY ORDER,उप/सहायक पंजीकार (Dy./Asstt.