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Facts
The revenue filed an appeal against the order of the Ld. CIT(A) which deleted a penalty of Rs. 2,67,23,487/- levied under section 271(1)(c) of the Income-tax Act, 1961. The penalty was initiated for concealment of income or furnishing inaccurate particulars of income.
Held
The Tribunal held that the penalty notice issued under section 274 r.w.s. 271(1)(c) was defective because it failed to specify whether the penalty was for concealment of income or for furnishing inaccurate particulars. This lack of specificity renders the penalty proceedings void ab initio and unsustainable in law, following judicial precedents.
Key Issues
Whether the penalty proceedings initiated under section 271(1)(c) are valid when the notice under section 274 fails to specify the limb of offense (concealment of income or furnishing inaccurate particulars)?
Sections Cited
271(1)(c), 274, 250, 144, 263, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI ANIKESH BANERJEE, JM
O R D E R Per: Anikesh Banerjee, JM The instant appeal of the revenue was filed against the order of the Learned Commissioner of Income tax (Appeal), Kochi-3 [for brevity, ‘Ld. CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, the Act’) for Assessment Year 2016-17, date of order 09/06/2025. The impugned order was emanated from the order
The brief facts of the case are that the assessee’s case was assessed u/s 144 r.w.s. 263 of the Act, passed on 30/03/2023. The addition was confirmed u/s 68 of the Act related to unexplained credit amount to Rs.9,56,04,655/-. The Ld.AO initiated the penalty proceedings u/s 271(1)(c) / 274 of the Act and income of which the tax sought to be evaded amount to Rs.9.56 crores on which the tax sought to be evaded amount to Rs.2,67,23,487/-. Accordingly minimum penalty was levied @100% of tax which comes to Rs.2,67,23,487/- U/s 271(1)(c) of the Act. Being aggrieved, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) considering the validity of notice U/s 271(1)(c) of the Act deleted the penalty. Being aggrieved, the revenue preferred an appeal before us.
The Ld. DR argued and stated that the Ld. CIT(A), has ignored the fact that the said notice bearing a validDIN (ITBA/PNL/S/271(1)(c) /2022-23/1051734270(1)) based on which penalty has beeninitiated is a system generated one where the wordings are auto populated. He further argued that without considering the fact of the case the Ld. CIT(A) passed the appellate order which is bad in law.
Rajkumari Shopping Mall LLP 4. The Ld.AR argued and filed a written submission, containing pages 1 to 33, which is kept on record. The Ld.AR first argued the legal issue related to jurisdiction for issuance of notice by the Ld.AO u/s 274 without specifying the limb under which the penalty was being initiated. The relevant notice dated 31/03/2023is annexed in APB page 6.
The Ld. AR invited our attention in impugned appellate order page 11 to 13. The relevant paragraphs are reproduced as below.
“4.1. The appellant has contended that the notices issued by the Assessing Officer for imposing penalty u/s. 271(1)(c) of the Act has not specifically mentioned whether the penalty is proposed in respect of concealment of income or for furnishing inaccurate particulars of income. The appellant contended that in the absence of specific and particular mentioning of the reason for the penalty, the penalty notice itself is invalid and as a result the imposition of penalty u/s.271(1)(c), without specific finding, is illegal and liable to be cancelled. The appellant has also cited various judicial pronouncements to support his stand. Further, during the course of proceedings, the appellant has specifically relied upon the decision of the Hon'ble High Court of Kerala in the case of Principal Commissioner of Income Tax Vs. Ambadi Krishna Menon (163 taxmann.com 141)(Ker). In support of its claims, the AR of the appellant has filed a copy of the notice u/s.274 r.w.s. 271(1)(c) of the IT Act dated 31/03/2023, issued by the AO to the appellant.
6. In respectful obedience to the decision of the various Hon'ble High Courtscited by the appellant and also the judgement of the jurisdictional High Court in the case of Principal Commissioner of Income Tax Vs. Ambadi Krishna Menon ( I.T.A.NO.75 OF 2020)(supra), the ground raised by the appellant on the validity of the notice u/s.271(1)(c) is accepted. Accordingly, it is held that the proceedingsinitiated u/s.271(1)(c) are void abinitio and hence not sustainable.”
We have heard the rival submissions, perused the material placed on record, and carefully considered the judicial precedents relied upon. The primary contention of the assessee is that the notices issued under section 274 r.w.s. 271(1)(c) of the Act suffer from a fundamental defect inasmuch as the Assessing Officer failed to specify the particular limb—whether the penalty proceedings were initiated for “concealment of income” or for “furnishing inaccurate particulars of income.” It is well-settled by the Hon’ble High Court of Kerala inPCIT vs. Ambadi Krishna Menon (163 taxmann.com 141) (Ker) as well as by the Hon’ble Karnataka High Court in CIT vs. SSA’s Emerald Meadows(73 Taxmann.com 241) (Kar), affirmed by the Hon’ble Supreme Court, that such omnibus notices betray non-application of mind and vitiate the penalty proceedings.
In the present case, a perusal of the assessment order as well as the penalty notices reveals that the Ld. AO has mechanically referred to Rajkumari Shopping Mall LLP “concealing of income and/or furnishing of inaccurate particulars of income” without striking off the irrelevant portion. This ambiguity clearly violates the mandatory requirement of law and the principles of natural justice. We are therefore unable to accept the contention of the revenue that such defect is a mere technicality, particularly when penalty provisions under section 271(1)(c) of the Act carry severe and penal consequences.In the absence of a valid notice specifying the exact charge, the penalty proceedings themselves are rendered void ab initio. The Ld. DR was unable to controvert the arguments advanced by the Ld. AR by placing on record any contrary judicial precedent. Respectfully following the ratio laid down in the above judicial precedents, we hold that the penalty order passed under section 271(1)(c) of the Act is not sustainable in law. Accordingly, we upheld the order of the appellate authority and direct the Ld. AO to delete the penalty of Rs. 2,67,23,487/-.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 29th October, 2025.