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Facts
The assessee appealed against a penalty levied under Section 271(1)(c) of the Income-tax Act for Assessment Year 2013-14. The assessee's counsel argued that the notice issued by the Assessing Officer for initiating penalty proceedings was vague and did not specify the exact charge.
Held
The Tribunal, relying on a co-ordinate bench decision and a jurisdictional High Court judgment, held that a notice issued under Section 274 that is vague and fails to specify the particular ground for imposing penalty (whether for concealment of income or furnishing inaccurate particulars) is defective and bad in law. Consequently, the penalty imposed under Section 271(1)(c) was quashed.
Key Issues
Whether a penalty levied under Section 271(1)(c) of the Income-tax Act is sustainable if the notice issued under Section 274 for initiating penalty proceedings is vague and does not clearly specify the charge.
Sections Cited
271(1)(c), 274, 143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
Asst.Year 2013-2014 Popular Mega Motors (India) The Dy.Commissioner of Private Limited v. Income-tax, Cir. 2(1) Kuttukkaran Centre, Kochi. Mamangalam Ernakulam – 682 025. PAN : AABCP6105H. (Appellant) (Respondent) Appellant by : Sri.P.M.Veeramani, CA Respondent by : Smt.Leena Lal, Senior AR Date of Pronouncement : 30.05.2025 Date of Hearing : 27.05.2025. O R D E R
Per Prakash Chand Yadav, JM :
The present appeal of the assessee is arising from the order of the National Faceless Appeal Centre / learned Commissioner of Income-tax (Appeals [“CIT(A)” for short] dated 17th March, 2025, and relates to assessment year 2013-2014.
At the outset, we find that the solitary issue involved is regarding levy of penalty u/s.271(1)(c) of the Income-tax Act. The learned Counsel for the assessee drawn the attention of the bench towards page 46 of the paper book, which the copy of the notice issued by the Assessing Officer before initiating penalty proceedings. It is the contention of the learned Counsel for the assessee that the notice issued by the AO was a vague
The learned DR relied upon the orders of the authorities below.
We have heard the rival submissions and perused the material available on record. We observe that similar issue has been decided by the co-ordinate bench in the case of Riyas Nelliyote in (order dated 8th April, 2025), wherein the co-ordinate bench has observed as under:-
“8. We have heard rival submissions and perused the material available on record. Copy of the assessment order dated 09.10.2018 passed u/s.143(3) r.w.s. 147 of the Act is placed on record. On perusal of the same, it is seen that it has merely mentioned that penalty proceedings have been initiated separately. A copy of the notice issued u/s.274 of the Act for is also placed on record. On perusal of the notice, we find it is defective and the same has not specified the particular ground on which the AO has proceeded against the assessee for imposing of penalty, viz., whether it is for “concealment of income”, “furnishing inaccurate particulars of income” or for both. The Hon’ble jurisdictional High Court in the case of PCIT v. Shri Ambady Krishna Menon (supra) had held as follows:- “11. We also find merit in the finding of the Appellate Tribunal in Annexure 'I' order that the notice proposing penalty, that was issued to the respondent/assessee, was inherently defective, in that, it had not specified the particular ground on which the Revenue was proceeding against the assessee for the imposition of the penalty. Thus, in any view of the matter, we find that the imposition of penalty under Section 271(1)(c) of the I.T. Act on the respondent/assessee for the assessment year 2011-12 cannot be legally sustained.”
In the instant case, it is an undisputed fact that the assessment order and the notice issued u/s.274 is vague and is not clear under which limb the penalty has been initiated. Therefore, in the light of the judgment of the Hon’ble . Popular Mega Motors (India) Private Limited. jurisdictional High Court in the case of PCIT v. Shri Ambady Krishna Menon (supra), we hold that the notice issued u/s.274 is bad in law and consequentially the order imposing penalty u/s.271(1)(c) of the Act arising therefrom is unsustainable and we quash the same. It is ordered accordingly.”
Respectfully following the verdict of the co-ordinate bench, we allow this appeal of the assessee on the legal ground itself and the penalty levied by the AO is quashed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 30th day of May, 2025.