MRS. PRAJAKTA KANITKAR,PUNE vs. INCOME-TAX OFFICER, WARD - 1, RATNAGIR

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ITA 818/PUN/2019Status: DisposedITAT Pune30 August 2022AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued by the Assessing Officer was not specific regarding the default, which is fatal to the penalty proceedings. Following the jurisdictional High Court's decision, the penalty was deleted on this ground alone.

What were the facts?

The assessee's appeal concerns a penalty levied under section 271(1)(c) for the assessment year 2011-12. The penalty was confirmed by the CIT(A) following an addition made on account of long-term capital gain from the sale of shares.

What were the issues?

Whether a penalty under section 271(1)(c) is sustainable if the penalty notice does not specify the exact default (concealment or furnishing inaccurate particulars).

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “B”

Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE

For Respondent: Shri M.G.Jasnani – DR
Hearing: 22/07/2022

ORDER

PER DR. DIPAK P. RIPOTE, AM:

1.

This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-2, Kolhapur for the A.Y. 2011-12 dated 09.04.2019, emanating from the Penalty Order u/s 271(1)(c) of the Act. The assessee raised following grounds of appeal:

1. On the facts and circumstances of the case and in law the CIT(A) erred in confirming the penalty levied by the AO in respect of additional income in the form of Long Term Capital Gain arising on sale of shares in Indian Company.

2. On the facts and circumstances of the case and in law the CIT(A) erred in confirming the penalty levied by the AO in respect

A.Y. 2011-12 Mrs. Prajakta Kanitkar [A] of additional income in the form of Long Term Capital Gain arising on sale of shares in Indian Company even though the notice issued initiating the penalty proceedings is not specific as to the default under which the said proceedings are initiated.”

2.

In this case, penalty under section 271(1)(c) of the Act has been levied by the Assessing Officer, Ward-1, Ratnagiri vide order dated 07.09.2016. In the assessment order passed under section 143(3) of the Act dated 11.03.2016 there has been addition on account of [sale of 2917 shares of ABB Limited on 09.08.2010 for a consideration of Rs.26,25,300/-].

3.

Aggrieved by the order of the AO, the Assessee filed an appeal before the ld.CIT(A).The ld.CIT(A) confirmed the order u/s.271(1)(c) of the Act passed by the AO.

4.

Aggrieved by the Penalty Order the Appellant assessee filed appeal before this Tribunal.

5.

At the outset of hearing, no one appeared on behalf of the assessee. The case is decided ex-parte based on records.

6.

The ld.Departmental Representative(ld.DR) for the Revenue relied on the orders of the lower authorities.

A.Y. 2011-12 Mrs. Prajakta Kanitkar [A]

7.

Heard ld.DR and Perused the records. The Assessee has challenged the “Penalty Notice” in the Ground No.2. A perusal of the Assessing Officer’s show-cause notice dated 11.03.2016 issued to the assessee u/s.274 r.w.s 271(1)(c) of the Act nowhere specified as to whether it had concealed the particulars of income or furnished inaccurate particulars of such income. This clinching fact has gone unrebutted from the Revenue’s side.

8.

Faced with the situation, we quote the Hon’ble Jurisdictional High Court’s recent Full Bench decision in Mohd. Farhan A Shaikh Vs. ACIT [2021] 434 ITR 1 (Bom) that such a failure in Assessing Officer’s part in not specifying the corresponding limb in the penalty show cause notice itself is very much fatal to the entire process and not sustainable in law. We adopt the very reasoning herein as well to delete the impugned penalty for this precise reason alone.

9.

Respectfully following the proposition of law laid down by the Hon’ble Bombay High Court(supra), we are of the opinion that failure on Assessing Officer’s part in not specifying the corresponding limb in the penalty show cause notice itself is very much fatal to the entire process and not sustainable in law. Therefore, we direct the AO to delete the penalty, accordingly, Ground No.2of appeal raised by the assessee is allowed. We have A.Y. 2011-12 Mrs. Prajakta Kanitkar [A] not adjudicated on Ground No.1 which is on merits of the penalty as it has become academic in nature.

10.

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

Order pronounced in the open Court on 30th August, 2022.

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