MAHESH GUPTA,NAGPUR vs. DCIT, CENTRAL CIRCLE 2(1), NAGPUR, NAGPUR

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ITA 75/NAG/2025Status: DisposedITAT Nagpur17 June 2025AY 2005-063 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under section 271(1)(c) of the Income Tax Act, 1961, is unsustainable. The reasoning is based on the binding judicial precedents of the Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh v/s ACIT and the Hon'ble Jurisdictional High Court in PCIT v/s Times Global Broadcasting. These judgments held that a notice under section 271(1)(c) read with section 274 of the Act is invalid if it does not specify whether the penalty proceedings are initiated for concealment of income or for furnishing inaccurate particulars. Since the penalty was found to be unsustainable on a legal aspect, the Tribunal refrained from delving into the merits of the case, considering it a futile exercise. The appeal of the assessee was allowed.

What were the facts?

The assessee, Mahesh Gupta, filed an appeal against the order dated 28/11/2024, passed by the learned Commissioner of Income Tax-3, Nagpur. The appeal pertains to assessment year 2005-06 and challenges the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer had issued two notices under section 274 read with section 271(1)(c) for concealment of income or furnishing inaccurate particulars, ultimately leading to a penalty of ₹7,46,117 for concealment of income. The assessee relied on High Court judgments concerning the validity of such notices.

What were the issues?

1. Whether the penalty levied under section 271(1)(c) of the Income Tax Act, 1961, is sustainable when the notice issued under section 274 read with section 271(1)(c) does not specify whether the penalty is for concealment of income or for furnishing inaccurate particulars. Assessee's contention: The assessee argued that the penalty is unsustainable. They relied on the Full Bench decision of the Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh v/s ACIT and the subsequent decision of the Hon'ble Jurisdictional High Court in PCIT v/s Times Global Broadcasting, which held that a penalty is unsustainable if the notice under section 271(1)(c) r/w section 274 does not specify the limb for initiating penalty proceedings. Revenue's contention: The judgment does not record any specific contention from the revenue.

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, NAGPUR BENCH, NAGPUR

Before: SHRI NARENDER KUMAR CHOUDHRY

Date of Hearing – 17/06/2025 Date of Order – 17/06/2025

O R D E R PER K.M. ROY, A.M.

This appeal by the assessee is against the impugned order dated 28/11/2024, passed by the learned Commissioner of Income Tax–3, Nagpur, [for short, “learned CIT(A)”] for the assessment year 2005–06, challenging the levy of penalty under section under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act").

2 Mahesh Gupta ITA no.75/Nag./2025

2.

Admittedly, in this case, the Assessing Officer (for short, “the A.O.”) had issued two notices dated 24/12/2007 and 12/03/2018 under section 274 read with section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") for concealment of income “or” furnishing of inaccurate particulars of income, which resulted into levy of penalty of ` 7,46,117, for concealment of income. The Hon’ble Bombay High Court in Full Bench in Mohd. Farhan A. Shaikh v/s ACIT, [2021] 434 ITR 1 / 200 DTR 65 / 320 CTR 26 / 280 Taxman 334 / 125 taxmann.com 253 (FB) (Bom. HC) which has recently been followed by the Hon’ble Jurisdictional High Court in PCIT v/s Times Global Broadcasting, [2025] 172 taxmann.com 786 (Bom.), of 2018, decided on 27/02/2025, identical notice was considered by the Hon’ble Court, wherein the limb was not specified for initiating the penalty proceedings by issuing notice under section 271(1)(c) r/w section 274 of the Act and, therefore, the penalty under consideration was held to be unsustainable. Respectfully relying upon the binding judicial precedents, the levy of penalty is unsustainable. As we have allowed the appeal on legal aspect, we refrain from delving into merits of the case as, the same will prove futile exercise.

3 Mahesh Gupta ITA no.75/Nag./2025

3.

In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 17/06/2025

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