PANKAJ CHIMANLAL LODHIYA,RAJKOT vs. THE ACIT, CENTRAL CIRCLE-2, RAJKOT, RAJKOT

Facts

The assessee faced penalty proceedings under sections 271(1)(c) and 271AAB(1)(c) of the Income Tax Act for Assessment Years 2008-09 to 2012-13 and 2014-15. These penalties arose from various additions to income identified during a search and seizure operation, including undisclosed foreign bank accounts, deemed rental income, and disallowed commission payments, as well as additions related to seized documents. The CIT(A) had confirmed these penalties, leading the assessee to appeal before the Tribunal.

Held

The Tribunal held that the penalty notices issued under section 271(1)(c) were defective as they ambiguously charged both "concealment of income" and "furnishing inaccurate particulars of income" without specifying which limb applied, thereby vitiating the proceedings ab initio. For penalties under section 271AAB(1)(c), it was determined that no penalty could be levied on additions based on estimation or on those that had already been deleted by the Tribunal. Consequently, the penalties were deleted.

Key Issues

1. Whether penalty notices issued under section 271(1)(c) are valid if they charge both 'concealment of income' and 'furnishing inaccurate particulars of income' simultaneously without specifying the applicable limb. 2. Whether penalties under section 271AAB(1)(c) can be levied on additions made on an estimated basis or on additions subsequently deleted by the Tribunal.