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Facts
The assessee challenged the confirmation of penalty under Section 271(1)(c) by the CIT(A) for A.Y. 2015-16. The grievance was that the penalty notice issued by the Assessing Officer did not strike off the irrelevant portion, failing to specify whether the penalty was for concealment of income or furnishing inaccurate particulars. The facts were similar to the assessee's preceding assessment year where the co-ordinate bench had decided in their favor.
Held
The Tribunal, relying on binding decisions of the Delhi High Court and Supreme Court, held that the defective penalty notice, which did not specify the exact charge under Section 271(1)(c), indicated a lack of proper application of mind by the Assessing Officer. Consequently, the penalty levied under Section 271(1)(c) was deemed invalid and directed to be deleted.
Key Issues
Whether a penalty under Section 271(1)(c) can be sustained if the notice issued by the AO fails to specifically mention the ground for penalty (concealment or inaccurate particulars) by not striking off the irrelevant limb.
Sections Cited
Section 271(1)(c), Section 274, Income-tax Act, 1961
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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI VIKAS AWASTHY & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 18.04.2024 pertaining to A.Y 2015-16.
The sum and substance of the grievances of the assessee is that the ld. CIT(A) erred in confirming the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 [the Act, for short] without assuming jurisdiction and without complying with the mandatory conditions laid down under the said section.
Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules.
At the very outset, the ld. counsel for the assessee relying upon the decision of the co-ordinate bench in assessee’s own case for the immediately preceding A.Y 2014-15 submitted that the facts of the present A.Y are similar to those of A.Y 2014-15 and the case is squarely covered in favour of the assessee. The ld AR submitted that the notice u/s 271(1)(c ) did not strike off the relevant portion in the notice.
The ld. DR fairly conceded to the contention of the ld. counsel for the assessee.
We have considered the rival submission and examined the documents on record. We find that the notice issued u/s 271(1)(c) of the Act reads as under:
“NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF INCOME TAX АСТ, 1961 PAN: AAGPG6935LOffice of the Assistant Commissioner of Income-Tax Circle-61(1), 20th Floor, Room No. 2005 Dr. SP Mukherjee, Civic Centre, Jawahar Lal Nehru Marg New Delhi-110002 Dated: 23.12.2017 To SHRI. ASHOK KUMAR GROVER 19, SIRI FORT ROAD, NEW DELHI-110049. Whereas in the course of proceedings before me for the assessment year 2015-16, It appears to me that you:-
*have concealed the particulars of your Income or furnished inaccurate particulars of such Income.
You are hereby requested to appear before me at 02:30 AM/PM on 22.01.2018 and show cause why an order imposing a penalty on you should not be made under section 271(1)(c) of the Income- Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through nuthorized representative you may show cause in writing on or before the sald date which will be considered before any such order la made under section 271. Yours faithfully, (Shatarupa Mishra) Assistant Commissioner of Income-TAX Circle-61(1), New Delhi
A perusal of the above shows that the Assessing Officer has not struck off the relevant portion in the notice which shows that the AO was not certain whether penalty was leviable for concealment of income or for furnishing of inaccurate particulars of income.
We have given thoughtful consideration to the orders of the authorities below as well as the judicial decisions relied upon by the ld. counsel for the assessee. The Hon’ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd while deciding the identical issue, endorsed the decision of the Hon’ble High Court of Karnataka in the case of SSA Emerald Meadows of 2015.
The relevant findings of the judgement read as under:
“Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The issue was decided in favour of the assessee.”
A SLP of the revenue against this judgement of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in73 taxmann.com 248. Similarly, the Hon’ble Apex court dismissed the SLP in the case decided by Bombay High Court in the case of Principal Commissioner of Income Tax,(Central) vs Golden Peace Hotels and Resorts (P.) Ltd reported in [2021] 124 taxmann.com 249 (SC). The Bombay High Court had held that :
“where the notices issued had not struck off the portion which was inapplicable, it can be concluded that there was no proper record of satisfaction or proper application of mind in matter of initiation of penalty proceedings. Similar decision was made by the Hon’ble Delhi Court in the case of Shyam Sunder Jindal [2023] 156 taxmann.com 625 (Delhi).”
Respectfully following the binding decisions of the Hon’ble Jurisdictional High Court of Delhi, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act.
In the result, the appeal of the assessee in is allowed.
The order is pronounced in the open court on 14.11.2024.