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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
Keshav Kumar Nachani, DCIT-1(1), बनाम/ 69, Basantipuri, Indore Vs. Tejpur Gadbadi, Indore (Assessee/Appellant) (Revenue/Respondent) PAN:AAXPN8516F Assessee by Shri Kailash Agrawal, AR Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 17.11.2025 Date of Pronouncement 28.11.2025 O R D E R Per Bench:
The captioned three (3) appeals are filed by same assessee against three (3) separate orders of first-appeal dated 16.12.2024/20.05.2023 passed by learned Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)”], which in turn arise out of respective penalty-orders dated 27.03.2018/ 30.08.2017 passed by learned JCIT(OSD), Circle-2(1), Indore/DCIT-2(1), Indore [“AO"] u/s 271(1)(c) of the Income Tax Act, 1961 [“the Act”] for three (3) Assessment Years [“AYs”] 2009-10, 2010-11 & 2012-13.
Page 1 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13
Heard the learned Representatives of both sides and case record perused.
The background facts leading to these appeals are such that a search u/s 132 was conducted upon assessee-individual on 25.11.2010 pursuant to which the assessments of AY 2009-10 & 2010-11 were made u/s 153A r.w.s. 143(3) vide assessment-orders dated 28.03.2013 and the assessment of AY 2012-13 was made u/s 143(3) vide assessment-order dated 30.03.2015. The AO made certain additions in these assessment-orders.
Simultaneously, the AO also initiated proceeding u/s 271(1)(c) and issued show-cause notices u/s 274 read with section 271(1)(c). Copies of show- cause notices are placed in respective Paper-Books (Page 4 of Paper-Book of AY 2009-10, Page 3 of Paper-Book of AY 2010-11, Page 2 of Paper-Book of AY 2012-13). Ultimately, the AO imposed penalty u/s 271(1)(c) of Rs. 51,46,802/-, Rs. 4,54,203/- and Rs. 4,94,625/- respectively for AYs 2009- 10, 2010-11 and 2012-13. Aggrieved, the assessee carried matters in first- appeals but did not get any success. Now, the assessee has come in next appeals before us.
4. The grounds raised in these appeals are identical. For reference purpose, we re-produce the grounds raised in one of the appeals:
“1. On the facts and in the circumstances of the case, the learned Assessing Officer / CIT(A) has erred in levying/upholding the penalty with no specific
Page 2 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 whether the assessee has concealed the particulars of his income or he has furnished inaccurate particulars of his income. 2. The assessee craves leave to make an addition, alteration, modification and/or deletion of any grounds of appeal arising out of this order.”
5. Ld. AR for assessee opened his arguments by drawing our attention to the show-cause notice dated 28.03.2013 for AY 2009-10 & dated 30.03.2015 for AY 2012-13 issued by AO u/s 274 read with section 271(1)(c) placed in Paper-Books. For the sake of immediate reference, we re-produce below these notices:
Page 3 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13
Page 4 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13
Referring to above notice of AY 2009-10, Ld. AR demonstrated that the AO has specified both limbs of section 271(1)(c) in a stereo-type language by Page 5 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 mentioning that the assessee has “concealed the particulars of income” or “furnished inaccurate particulars of income”. Further, in the notice of AY 2012-13, the AO has not specified any charge against assessee at all.
Ld. AR thereafter submitted that the notice u/s 274 sets in motion the penalty-proceeding. According to Ld. AR, the aforesaid notices issued by AO are lacking the exact charge of default committed by assessee; these notices clearly reflect that the AO is himself not sure about the default committed by the assessee. According to Ld. AR, there are innumerable decisions of the Hon’ble Courts and ITAT where it has been loudly held that if the show- cause notice does not spell out the specific charge of default committed by assessee, the notice and subsequent proceeding founded thereon are invalid.
In support of his contention, the Ld. AR placed a strong reliance on the decision of Hon’ble Jurisdictional High Court of M.P. in the case of Pr. CIT-I, vs. Kulwant Singh Bhatia, to 14 of 208, order dated 9th May 2018, wherein it was held as under:
“8. In the case of CIT V/s. Manjunatha Cotton Ginning Factory (supra), it was observed by the Karnataka High Court in para 59 that the practice of the Department sending a printed form where all the ground mentioned in Section 271 are mentioned would not satisfy the requirement of law when the consequences of the assessee not rebutting the initiated presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the provisions have to be held to be strictly construed, notices issued under Section 274 should satisfy the grounds, which he has to meet specifically. Otherwise, principle of natural justice is offended if the show cause notice is vague. Even in the matter of search case where penalty is levied under Explanation 5A to Section 271(1)(c), it was held by the Karnataka High Court that the show-cause notice under Section 274 was defective as it does not spell out the ground on which the penalty is sought to be imposed and consequently penalty imposed was cancelled. The decision of CIT V/s. Manjunatha Cotton Ginning Factory (supra) was further followed by the Karnataka High Court in the case of CIT V/s. SSA'S Emerald Meadows,
Page 6 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13
(2016) 73 taxman.com 248 (SC) / dated 23.11.2015 (ITA 380/2015), the High Court has dismissed the appeal of the revenue by observing that the Tribunal has allowed the appeal of the assessee holding that the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Act of 1961 was bad-in-law as it did not specify which limb of Section 271(1)(c) of the Act of 1961, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars. The Tribunal while allowing the appeal of the assessee, had relied on the decision of the Division Bench of Karnataka High Court decision in the case of CIT V/s. Manjunatha Cotton Ginning Factory (supra). It is further pointed out that the SLP filed by the Deptt. before the Apex Court on 5.8.2016 in the matter of CIT V/s. SSA'S Emerald Meadows (supra) was dismissed. In the case of CIT V/s. Suresh Chandra Mittal, (2000) 251 ITR 9 (SC), the Apex Court has upheld the decision of M.P. High Court wherein, in similar circumstances, it was held that the initial burden lies on the revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. In the present case, in show-cause notice the Assessing Officer has not specified specifically charges, there was no such mention.
11. On due consideration of the arguments of the learned counsel for the appellant, so also considering the fact that the ground mentioned in show- cause notice would not satisfy the requirement of law, as notice was not specific, we are of the view that the learned Tribunal has rightly relying on the decision of CIT V/s. Manjunatha Cotton Ginning Factory (supra) and CIT V/s. SSA'S Emerald Meadows (supra) rightly allowed the appeal of the assessee and set aside the order of penalty imposed by the authorities. No substantial question of law is arising in these appeals. ITA. No(s). 9/2018, 10/2018, 11/2018, 12/2018, 13/2018 and 14/2018, filed by the appellant have no merit and are hereby dismissed.”
Ld. AR submitted that the present case of assessee stands fully covered by this binding decision of Hon’ble jurisdictional High Court and in view of the same, the penalty-order passed by AO is totally invalid.
Ld. DR, though could not contradict the applicability of decision of Hon’ble jurisdictional High Court on facts and in law, strongly supported the penalty-order passed by AO. He drew us to the underlying assessment- orders passed by AO wherein the additions giving rise to penalty were made and wherein the AO has either mentioned “Penalty proceedings u/s 271(1)(c) are initiated” or “Therefore, I am satisfied that assessee has concealed his
Page 7 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 income and has furnished inaccurate particulars of his income, hence penalty u/s 271(1)(c) is being initiated”. Therefore, he submitted that the AO’s intention/satisfaction to impose penalty u/s 271(1)(c) is clearly mentioned in respective additions.
We have considered rival submissions of both sides and perused the case-records including the show-cause notice and order of penalty made by AO in the light of decision of Hon’ble Jurisdictional High Court. On perusal of the show-cause notice of AY 2009-10, we find that the same contains both of the charges viz. “concealed the particulars of income” or “furnished inaccurate particulars of income” and AO has not stricken-off any one.
Further, the notice of AY 2012-12 does not contain any charge at all.
Therefore, the whole proceeding of penalty conducted by the AO is illegal and unsustainable as per the decision of Hon’ble jurisdictional High Court in Kulwant Singh Bhatia (supra).
The decision of Kulwant Singh Bhatia (supra) takes into account the earlier judicial precedents of CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 35 taxmann.com 250 (Karnataka) and CIT Vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 248 (SC). Therefore, we would also to like to re-produce the relevant portion of these decisions:
CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 35 taxmann.com 250 (Karnataka): “61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income
Page 8 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of T. Ashok Pai v. CIT [2007] 292 ITR 11/161 Taxman 340 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of CIT v. Manu Engg. [1980] 122 ITR 306 and the Delhi High Court in the case of CIT v. Virgo Marketing (P.) Ltd. [2008] 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind.” The decision in Manjunatha (supra) was upheld by Hon’ble Karnataka High Court in CIT Vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 241 (Karnataka), the relevant portion of order is re-produced below:
“3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.).
In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed. Thereafter, the Hon’ble Supreme Court upheld the decision of Hon’ble Karnataka High Court by dismissing SLP filed by revenue in CIT Vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 248 (SC).
Ld. DR could not controvert the applicability of above judgements.
Therefore, in the light of binding decisions as noted above, we are satisfied
Page 9 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 that the penalty imposed by AO is not valid on this very reasoning.
Accordingly, without going into merits of penalty, we quash the penalty- proceeding at the very threshold on legality aspect itself as claimed by assessee. Consequently, the appeals of AY 2009-10 & 2012-13 are allowed.
ITA No. 137/Ind/2025 (AY 2010-11):
The registry has informed that this appeal has been filed on 31.01.2025 against impugned order of first-appeal dated 20.05.2023 after a delay of 550 days (the assessee has computed delay of 562 days) and therefore time-barred. Ld. AR for assessee submitted that the assessee has filed a condonation-application/affidavit. Referring to contents of same, Ld. AR submitted that the appellant was earlier engaged in (i) gold/silver bullion business, and (ii) real estate business. The bullions business was later closed and while being engaged in real estate activities, the assessee faced several legal complications and had to be behind bars for a period of about one and half year. During this challenging period, the assessee suffered financial stress, the staffs left job which resulted in chaos and mismanagement of affairs including the tax and legal compliances.
Ultimately, after recovering from those setbacks and on being notified about orders for AY 2009-10 & 2012-13 dated 16.12.2024, the assessee got to know that the impugned order dated 20.05.2023 for AY 2010-11 having been passed by CIT(A) ex-parte to assessee. Immediately, thereafter the assessee filed this appeal on 31.01.2025 alongwith other two appeals of AY
Page 10 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 2009-10 & 2012-13. Ld. AR accordingly submitted that there was a ‘sufficient cause’ for delay in filing this appeal and the same must be condoned. He submitted that the case of assessee is quite meritorious and the assessee is certain to succeed on merit.
In response to a question raised by bench regarding the custodial period when the assessee was behind bars, the Ld. AR informed that the said period was 21.03.2021 to 29.11.2021. He, however, added that the assessee had to re-organise the staff who had left the job and gone.
Replying to same, Ld. DR for revenue strongly opposed the submissions of Ld. AR and requested that the delay cannot be condoned in present case. Ld. DR raised following contentions:
(i) That the custodial period was over as early as on 29.11.2021 and has no relation with the delay. The assessee wants to influence the bench unnecessarily by tagging to custody.
(ii) Ld. DR drew us to the following details of hearing notices issued by CIT(A):
S.No. Date of Date of Remarks Notices sent to notice/issued compliance mail_ids 1 29.12.2020 15.01.2021 No response kcagrawalco from the @gmail.com. appellant 2 18.04.2023 24.04.2023 Sought mpbullion@ adjournment gmail.com, no reply kcagrawalco @gmail.com mpbullion@
Page 11 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 gmail.com, chugh_orbit @yahoo.com 3 11.05.2023 19.05.2023 No response mpbullion@ from the gmail.com, appellant kcagrawalco @gmail.com mpbullion@ gmail.com, chugh_orbit @yahoo.com Referring to same, he submitted that the CIT(A) has given sufficient hearings to assessee and served notices of hearings on multiple e- mails out of which one e-mail kcagrawalco@gmail.com is of the Ld. AR himself. When it is so, there was no reason for non-participation before CIT(A) and for not filing present appeal in time.
(iii) That the delay of 562 days is ‘very inordinate’ and the assessee has failed to give any explanation, much less ‘sufficient cause’, for condonation of delay.
We have considered rival contentions of both sides and perused the condonation application/affidavit filed by assessee as well as the orders of lower-authorities. After a careful consideration, we find that the present appeal has been filed by assessee on 31.01.2025 impugning the order of first-appeal passed by CIT(A) on 20.05.2023. There is a delay of about 562 days in filing present appeal. The assessee is claiming that such delay had occurred for the reason that the assessee had to go behind the bars. But during hearing when we dug from Ld. AR and raised a query qua the Page 12 of 14 137 & 161/Ind/2025 A.Ys.: 2009-10 , 2010-11 & 2012-13 custodial period, Ld. AR reported that the period was 21.03.2021 to 29.11.2021. Thus, the custodial period expired on 29.11.2021 whereas the impugned order was passed by CIT(A) on 20.05.2023 and the assessee filed present appeal on 31.01.2025. Thus, there is a huge gap between 29.11.2021 to 31.01.2025 and the support being taken by assessee from being in custody is a futile attempt having no merit. The Ld. DR for revenue is very correct in claiming also that the CIT(A) issued multiple notices of hearing to multiple e-mail ids including one e-mail was of the Ld. AR arguing this appeal. Thus, we find that the assessee has miserably failed to advance sufficient cause for inordinate delay of 562 days in filing present appeal. Accordingly, we are inclined to reject the condonation request and we do so. Consequently, the appeal of AY 2010-11 is dismissed in limine as being time-barred. is dismissed.
Order pronounced in the open court on 28/11/2025