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

Facts

The assessee filed six appeals against penalty orders for AYs 2008-09 to 2012-13 (u/s 271(1)(c)) and AY 2014-15 (u/s 271AAB(1)(c)). These penalties stemmed from significant additions made to his income after a search and seizure operation, primarily related to undisclosed foreign bank accounts, deemed rental income from multiple properties, and disallowance of commission payments. The CIT(A) had upheld these penalties, leading the assessee to further appeal to the ITAT.

Held

The Tribunal held that the penalty notices issued under Section 271(1)(c) were defective as they simultaneously charged both "concealment of income" and "furnishing inaccurate particulars of income" without specifying the applicable limb, contrary to Supreme Court and High Court precedents. For penalties under Section 271AAB(1)(c), the Tribunal found that the underlying additions for deemed rent were based on estimation and additions from seized documents had already been deleted by a prior Tribunal order. Consequently, the Tribunal deleted all penalties imposed on the assessee.

Key Issues

Whether penalty notices under Section 271(1)(c) are valid if they simultaneously charge both 'concealment of income' and 'furnishing inaccurate particulars' without specific designation. Whether penalties under Section 271(1)(c) or 271AAB(1)(c) can be levied on additions based on estimation or which have been subsequently deleted by higher appellate authorities.