RIYAZ QURESHI ,JHABUA vs. INCOME TAX OFFICER, JHABUA

ITA 665/IND/2024Status: DisposedITAT Indore15 May 2025AY 2015-1614 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty imposed by the AO was not legal. The primary issue revolved around the vagueness of the show-cause notice issued under Section 274 of the Income-tax Act, 1961. The notice, as reproduced, contained multiple potential charges under Section 271(1)(c) (concealment of income or furnishing inaccurate particulars of income) without striking off the inapplicable part or specifying the exact charge against the assessee. The Tribunal found that the AO failed to specify the exact charge. Applying the decision of the Hon'ble Jurisdictional High Court of Madhya Pradesh in Pr.CIT-I vs. Kulwant Singh Bhatia, which was binding on the Tribunal, the Tribunal concluded that the penalty proceedings conducted by the AO were illegal and could not be sustained. The Tribunal distinguished the decisions relied upon by the revenue. Regarding the second ground concerning the merit of the penalty, neither side made any submissions, and it was treated as non-pleaded. Consequently, the penalty was quashed at the threshold on legal grounds. The appeals for all three assessment years were allowed, and the penalties were deleted.

What were the facts?

The assessee, Riyaz Qureshi, filed three appeals (ITA Nos. 663 to 665/Ind/2024) before the Income Tax Appellate Tribunal (ITAT), Indore Bench, challenging penalty orders for assessment years 2013-14 to 2015-16. These penalty orders, dated 27.06.2018, were passed by the Income Tax Officer (AO), Jhabua, under Section 271(1)(c) of the Income-tax Act, 1961. The appeals were directed against the orders of the Commissioner of Income-tax (Appeals)-NFAC, Delhi, dated 18.07.2024, which had upheld the penalties. Both the assessee and the revenue agreed that the appeals involved identical issues and facts, and ITA No. 663/Ind/2024 for AY 2013-14 was taken as the lead case. The total penalty amount in dispute is Rs. 30,700/- for AY 2013-14.

What were the issues?

1. Whether the penalty levied under Section 271(1)(c) of the Income-tax Act, 1961, is illegal, wrong, and without authority of law and jurisdiction, on the grounds that the show-cause notice issued by the AO was vague and did not specify the exact charge against the assessee. 2. Whether the penalty levied is unjustified looking to the facts of the case. Assessee's contentions: For Issue 1, the assessee argued that the show-cause notice issued under Section 274 read with Section 271(1)(c) was vague as it contained the stereotype language of the section and did not strike off the inapplicable part, failing to mention a specific charge. The assessee relied on the decisions of the Hon'ble Jurisdictional High Court of Madhya Pradesh in Pr.CIT-I vs. Kulwant Singh Bhatia, and the Hon'ble Supreme Court in CIT vs. Suresh Chandra Mittal, and the Hon'ble Karnataka High Court in CIT vs. Manjunatha Cotton Ginning Factory (approved by the Supreme Court in CIT vs. SSA's Emerald Meadows), to argue that a vague notice offends the principle of natural justice and renders the subsequent proceedings invalid. Revenue's contentions: The revenue argued that the assessment order clearly mentioned concealment of income, and since penalty proceedings originate from the assessment order, the charge was specified therein. The revenue also relied on certain decisions which were distinguished by the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI,

For Appellant: Shri Ram Gilda, AR
For Respondent: Shri Ashish Porwal, Sr. DR
Hearing: 14.05.2025Pronounced: 15.05.2025

Per Bench:

The captioned three (3) appeals have been preferred by assessee assailing three separate orders of first-appeal for assessment-years [“AY”] 2013-14 to 2015-16, all dated 18.07.2024 and all passed by learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [“CIT(A)”], which in turn arise out of respective three penalty-orders all dated 27.06.2018 and all passed by learned ITO, Jhabua [“AO”] u/s 271(1)(c) of the Income-tax Act, 1961 [“the Act”).

Riyaz Qureshi ITA Nos. 663 to 665/Ind/2024 A.Ys. 2013-14 to 2015-16

2.

The learned Representatives of both sides agree that all three appeals involve identical issue of the penalty imposed/upheld by lower-authorities u/s 271(

The order continues below.

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