SANJAY KUMAR AGRAWAL,BURHANUPUR vs. JOINT COMMISIIONER OF INCOME TAX -OSD, CENTRAL-1, INDORE , INDORE

ITA 715/IND/2024Status: DisposedITAT Indore15 September 2025AY 2013-149 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty orders passed by the AO were invalid on a preliminary legal ground. The Tribunal found that the show-cause notices issued by the AO under Section 274 of the Act contained both charges, namely, "concealed the particulars of income" or "furnished inaccurate particulars of income," without striking off either alternative. This practice was held to be illegal and unsustainable by the Hon'ble Jurisdictional High Court in the case of *Kulwant Singh Bhatia*. The Tribunal noted that this decision relied on the precedents set in *CIT vs. Manjunatha Cotton & Ginning Factory* and *CIT vs. SSA’s Emerald Meadows*, which were also upheld by the Supreme Court. These judgments established that a penalty levy must be clear as to the specific limb of Section 271(1)(c) for which it is levied, and a standard proforma notice without striking off the relevant clauses indicates a non-application of mind. Consequently, the Tribunal quashed the penalty proceedings at the threshold on the legality aspect, without going into the merits of the penalty. The assessee's grounds of appeal related to the invalidity of the show-cause notices (Grounds 2 to 4) were allowed. The appeals were allowed.

What were the facts?

The assessee, Sanjay Kumar Agrawal, filed three appeals before the Income Tax Appellate Tribunal (ITAT), Indore Bench, challenging the consolidated penalty order dated 23.07.2024 passed by the Commissioner of Income Tax (Appeals)-3, Bhopal. This order arose from a penalty order dated 28.06.2018 passed by the Deputy Commissioner of Income Tax (Central)-1, Indore (AO) under Section 271(1)(c) of the Income Tax Act, 1961. The penalties were imposed for Assessment Years (AYs) 2012-13, 2013-14, and 2014-15. These penalties followed assessments framed under Section 153A read with Section 143(3) after a search under Section 132 conducted on 23.09.2015. The AO had made additions to income in the assessment orders and initiated penalty proceedings by issuing show-cause notices on 29.12.2017, followed by letters on 31.05.2018. The penalties imposed were Rs. 2,10,000/-, Rs. 2,70,000/-, and Rs. 3,20,000/- for the respective AYs. The assessee's first appeals to the CIT(A) were unsuccessful.

What were the issues?

The primary issue before the Tribunal was whether the penalty orders passed by the AO under Section 271(1)(c) of the Income Tax Act, 1961, were valid. Specifically, the Tribunal had to decide: 1. Whether the show-cause notices issued by the AO under Section 274, initiating penalty proceedings, were vague and invalid for failing to specify the exact charge of default against the assessee. Assessee's Contentions: The assessee argued that the show-cause notices were vague as they contained the stereotyped language of Section 271(1)(c), mentioning both "concealed the particulars of your income" and "furnished inaccurate particulars of such income" without striking off one of the alternatives. This indicated a lack of application of mind by the AO. The assessee relied on the decision of the Hon'ble Jurisdictional High Court of M.P. in *Pr. CIT-I vs. Kulwant Singh Bhatia* and the decisions in *CIT vs. Manjunatha Cotton Ginning Factory* and *CIT vs. SSA’s Emerald Meadows* (upheld by the Supreme Court), which held that such non-specific notices render the penalty proceedings invalid. Revenue's Contentions: The Revenue's representative, while not contradicting the applicability of the jurisdictional High Court's decision, strongly supported the penalty order passed by the AO.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 153A,Section 143(3),Section 139,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI

For Appellant: Shri Anil Kamal Garg, AR
For Respondent: Shri Raghunath, CIT- DR
Hearing: 01.09.2025Pronounced: 15.09.2025

Per B.M. Biyani, A.M.:

The captioned three (3) appeals are filed by same assessee against a single consolidated order of first-appeal dated 23.07.2024 passed by learned Commissioner of Income Tax (Appeals)-3, Bhopal [“CIT(A)”], which in turn arises out of a single consolidated penalty-order dated 28.06.2018 passed by learned DCIT-Central-1, Indore [“AO"] u/s 271(1)(c) of the Income Tax Act, 1961 [the Act”] for three (3) Assessment Years [“AYs”] 2012-13, 2013-14 &

2014-15. 2. Heard the learned Representatives of both sides and case record

perused. Sanjay Kumar Agrawal

LT.A No. 714 to 716/Ind/2024

A.Ys.: 2012-13 to 2014-15

3.

The order continues below.

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