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Facts
The assessee filed an original return of income, which was selected for scrutiny. The assessment was completed with a disallowance on account of sundry creditors' bills. Penalty proceedings were initiated. The CIT(A) confirmed the disallowance and penalty.
Held
The Tribunal held that the penalty notice issued under section 274 read with section 271(1)(c) of the Act was vague. The notice mentioned "have concealed the particulars of your income", while the Assessing Officer's order mentioned "furnishing inaccurate particulars of income", failing to specify the exact charge. Relying on High Court and Supreme Court decisions, the Tribunal found the notice to be bad in law.
Key Issues
Whether the penalty notice issued under section 274 r.w.s. 271(1)(c) was vague for not specifying the exact charge against the assessee (concealment vs. inaccurate particulars).
Sections Cited
271(1)(c), 274, 143(2), 143(3), 133(6), 271AAB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order
: January 28, 2026 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee is directed against the order dated 22.07.2025 of the National Faceless Appeal Centre (hereinafter referred to as the “CIT(A)”) passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2015–16.
Facts in brief are that the assessee is an individual and filed its original return of income declaring income of Rs. 8,68,870/- for the A.Y. 2015-16. Further the case of the appellant was selected for the scrutiny and the notice u/s. 143(2) was issued. The assessment was completed u/s 143(3) of Act after making the disallowance on account of sundry creditors Bills amounting to Rs.38,35,643/-. The Assessing Officer also initiated penalty proceedings u/s 271(1)(c) of Act.
Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A), wherein, the appeal of the assessee has been dismissed Ramesh Chowdhury and the penalty u/s 271(1)(c) as made by the Assessing Officer was confirmed by ld. CIT(A).
Being aggrieved, the assessee is in appeal before us. At the time of hearing, the learned counsel of the assessee pressed the Ground No.1 raised before us contending that the notice issued u/s 274 r.w.s. 271(1)(c) of the Act is vague as in the said notice, it was mentioned that ‘have concealed the particulars of your income’ wherein in the order of the Assessing Officer, the penalty proceedings u/s 271(1)(c) was initiated for ‘furnishing inaccurate particulars of income’. The ld. AR, therefore, stated that the Assessing Officer failed to mention any specific charge against the assessee for imposing the penalty u/s 271(1)(c) in this case and the penalty is itself null and void ab initio. Consequently, he argued that the entire proceedings need to be quashed and penalty imposed needs to be deleted in full. In support of his contention, the ld. counsel has placed reliance on the decision of Commissioner of Income- tax v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Karnataka) wherein it was held that the imposition of penalty under section 271(1)(c) of the Act is bad in law and invalid for the reasons where the show cause notice under section 274 of the Act did not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income.
Contrary to that, the ld. DR supports the impugned order.
We have heard the submissions of the counsels of the respective parties and perused the materials available on record. Before adverting, it will be relevant to reproduce the notice u/s 274 r.w.s 271 of the Act issued by the department, which is as under:
6.1 We find that in the above notice u/s 274 r.w.s. 271 of the Act dated 29.12.2017, the Assessing Officer has mentioned that ‘have concealed the particulars of your income’. In this context, we also find that in the 2nd page of the order of the Assessing Officer, the Assessing Officer mentioned as under:
6.2 On perusal of the above, we find that the Assessing Officer in his order while initiating the penalty proceedings u/s 271(1)(c) had mentioned that ‘furnishing inaccurate particulars of income’ and the notice u/s 274 r.w.s. 271 of the Act dated 29.12.2017, the Assessing Officer itself mentioned ‘have concealed the particulars of your income’. We note that the Assessing Officer failed to clearly specify as to what limb, the penalty was proposed to be levied. In other words, the Assessing Officer has stated both the limbs in different times for imposing the said penalty in this case. Therefore, we find merit in the contention of the assessee that the notice has been issued in a mechanical manner without application of mind, with the result that assessee could not reply the correct charge under which the penalty was proposed to be levied. We further find that Hon'ble Jurisdictional High Court in the case of KPC Medical College and Hospital vs. PCIT reported in [2025] 173 taxmann.com 581 (Calcutta) dated 19-03-2025 on similar issue has decided in favour of the assessee following the cited decision of ld. counsel in the case of CIT v. Manjunatha Cotton & Ginning Factory (supra) by observing and holding as under: -
“13. We have perused the notice and we find that none of the relevant columns have been indicated nor have the irrelevant columns been struck off. Identical issue came up for consideration wherein one of the questions which was Ramesh Chowdhury considered was with regard to the validity of the notice issued under Section 274 read with 271 wherein the Court also took into consideration the effect of Section 271AAB read with 162 and answered the questions in favour of the assessee and against the revenue in the following terms : "In CIT v. SSA'S Emerald Meadows [2016] 73 taxmann.com 241 (Karnataka) the High Court of Karnataka following the decision in Commissioner of Income-tax v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Karnataka) held that the imposition of penalty under section 271(1)(c) of the Act is bad in law and invalid for the reasons where the show cause notice under section 274 of the Act did not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The said decision of the High Court of Karnataka was affirmed by the Hon'ble Supreme Court in the decision reported in Commissioner of Income-tax v. SSA'S Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180 (SC). On the same lines it is the decision of this court in Pr. CIT v. Brijendra Kumar Poddar in [ITAT No. 215 of 2018, dated 23-11-2021]. As pointed out earlier, the show cause notice issued under Section 274 read with Section 271 of the Act did not furnish any particulars and all the relevant columns have been left blank. Thus, by applying the legal position in the aforementioned decision, this court has no hesitation to hold that the show cause notice was bad in law consequently the initiation of penalty proceedings is vitiated."
Thus, for the above reasons, the appeals filed by the assessee are allowed and the substantial questions of law are answered in favour of the assessee.”
Respectfully following the above decision of the Hon'ble Jurisdictional High Court, we hold that the said notice issued u/s 274 r.w.s. 271 of the Act dated 29.12.2017 of the Act is invalid and accordingly, the consequent penalty order framed is also invalid and is hereby quashed.
In the result, the appeal of the assessee is allowed.
Kolkata, the 28th January, 2026.