ASHALATA KULSHRESTHA,AHMEDABAD vs. DCIT, CIRCLE - 3(1)(1), AHMEDABAD
Facts
The assessee filed an income tax return for AY 2016-17, which was selected for scrutiny, leading to an assessment where income was determined higher than declared, particularly regarding capital gains and deduction claimed under section 54. Subsequently, the Assessing Officer initiated penalty proceedings under Section 271(1)(c), imposing a penalty of Rs. 78,97,358/-, which was partly upheld by the CIT(A). This appeal challenges the penalty order.
Held
The Tribunal held that the penalty levied under Section 271(1)(c) was not sustainable because the show cause notice and penalty order failed to specify the precise limb (furnishing inaccurate particulars or concealment of income) under which the penalty was imposed. Additionally, considering that the assessee's quantum appeal was partly allowed, the department could not sufficiently prove either ground. Consequently, the penalty order does not survive, and the appeal is allowed.
Key Issues
Whether a penalty under Section 271(1)(c) is valid if the specific limb (inaccurate particulars or concealment) is not mentioned in the show cause notice and penalty order, especially when the quantum appeal was partly allowed.
Sections Cited
139, 143(1), 54, 143(3), 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 05-06- 2025 passed by National Faceless Appeal Centre(NFAC), Delhi for assessment year 2016-17.
The grounds of appeal are as under:- “1. On the facts and circumstances of the case, the Ld. CIT(A) erred in law and facts in holding that penalty has been initiated and levied on the ground of furnishing inaccurate particulars of income ignoring the clear indisputable finding recorded in penalty order vide para no. 17 on page no. 16. Since initiation of penalty for one ground and levy of penalty on other ground is not permissible, I request Hon'ble Court to delete the penalty on this ground.
I.T.A No. 1737/Ahd/2025 Ashalata Kulshrestha, A.Y. 2016-17
On the facts and circumstances of the case, the Ld. CIT(A) erred in law and facts by not deleting the penalty on the ground that issuance of final show cause notice (SCN) Dt. 29-04-2019 without mentioning the specific charge is invalid. Since mentioning of the ground on which Ld. AO wants to levy Penalty is a this is prerequisite and substantive requirement, which is not fulfilled in this case, I therefore humbly request Hon'ble Court to delete the penalty on this ground.
On the facts and circumstances of the case, the Ld. CIT(A) erred in law and facts in confirming the penalty amount on capital gain on sale of Property, offered for tax in the ITR by your appellant, as long term and considered by Ld. AO as Short term. In the quantum proceedings, the Hon'ble ITAT vide their order Dt. 28-06-2023 has accepted the capital gain of major portion of the property as a long-term capital gain as against the entire amount of LTCG considered by Ld. AO as STCG. Under these circumstances, your appellant humbly requests Hon'ble Court to delete the penalty for the reason that mere change in head of the income in assessment can never be considered as neither concealment of income nor furnishing inaccurate particulars of income.
On the facts and circumstances of the case, the Ld. CIT(A) erred in law and facts by not deleting the penalty on the ground that penalty proceedings are different from Asst. proceedings. Without bringing on record any new evidence, which proves that your appellant has either concealed such income or furnish inaccurate particulars of income, penalty cannot be levied. Your appellant therefore requests Hon'ble Court to delete the penalty on this ground.
Your appellant craves leave to add, alter, amend, and/or delete any grounds as mentioned above during the course of appeal hearing.”
Original return of income was filed u/s. 139 of the Act on 19-07-2016 declaring total income of Rs. 18,54,950/-. The said return of income was processed u/s. 143(1) on 14- 09-2016 resulting in refund of Rs. 160/-. The case was selected for limited scrutiny on the ground that whether deduction from capital gain has been claimed correctly. The assessee declared heads of income from pension of Rs.
I.T.A No. 1737/Ahd/2025 Ashalata Kulshrestha, A.Y. 2016-17 5,70,912/-, other source of Rs. 15,60,0000/- claimed deduction in chapter VI of the Act of Rs. 2,76,072/-. Further as per point no. B of Schedule CG-capital gain, return of income, the Assessing Officer noticed that the assessee has noticed that assessee has sold immoveable property of Rs. 2,31,00,000/- and claimed deduction u/s. 54 of the Act of Rs. 1,84,51,674/- resulting in long term capital gain at nil. Assessment proceedings u/s. 143(3) of the Act were completed on 14-12-2018 determining assessed income at Rs. 2,45,39,650/-. Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. In the meanwhile, the Assessing Officer initiated penalty proceedings u/s. 271(1)(c) thereby issuing show cause notice dated 29-04- 2019. The assessee filed response to the said show cause notice. After going through the said reply of the assessee, the Assessing Officer imposed penalty of Rs. 78,97,358/-.
Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The ld. A.R. submitted that there is a delay of 12 days for which the assessee has filed affidavit. The reasons stated for the delay in filing the present appeal appears to be genuine. Hence, the appeal is condoned.
At the time of hearing, none appeared on behalf of the assessee. But the condonation of delay application is filed
I.T.A No. 1737/Ahd/2025 Ashalata Kulshrestha, A.Y. 2016-17 by the assessee. Therefore, the delay of 12 days in filing the present appeal is condoned. We are taking this matter on the basis of the submissions made by the assessee before the Assessing Officer as well as before the CIT(A) which are quoted in the respective orders. The ld. D.R. relied upon the assessment order, penalty order and the order of the CIT(A).
We have heard the ld. D.R. and perused all the relevant material available on record. The assessee as per records filed before the Tribunal has also filed the order passed by the Tribunal in quantum appeal dated 28-06- 2023 (ITA No. 738/Ahd/2019 A.Y. 2016-17). From the perusal of the show cause notice which is quoted in the penalty order which can be seen that the Assessing Officer has not specified under which sub-section of section 271(1)(c) the penalty was supposed to be levied on the assessee. In fact, the penalty order clearly is not mentioning a limb of section 271(1)(c) whether the penalty is in respect of inaccurate particulars of income furnished by the assessee or concealment of income by the assessee. Beside this, the Tribunal is partly allowed the appeal of the assessee in his quantum appeal. In the light of this, the penalty does not survive on its merit as the Department/Revenue could not make out whether the assessee has furnished in accurate particulars of income or concealment of income. Thus, the penalty order does not survive. The appeal of the assessee is allowed.
I.T.A No. 1737/Ahd/2025 Ashalata Kulshrestha, A.Y. 2016-17 8. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 08-01-2026
Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 08/01/2026 a.k.
आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद
