DCIT, CIRCLE- 1(3)(1), INTERNATIONAL TAXATION, NEW DELHI vs. GENPACT SERVICES LLC, DELHI

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

2. Whether on facts and circumstances of the case, Ld. CIT(A) erred in holding that the assessee did not file inaccurate particulars of income though it claimed expenditure incurred towards acquisition of collection and analytics Business from another company namely Genpact India as revenue expenditure; which was actually capital expenditure.

3. Whether on facts and circumstances of the case, the Ld. CIT(A) has erred in giving benefit of doubt to the assessee that expenditure on acquisition of business of another

Genpact Services LLC company could be classified as revenue expenditure though the conduct the assessee shows that it was well aware of true nature of the expenditure.” 3. In the entire grounds taken up by the Revenue, there was no mention of “Section 271(1)(c)” of the Income Tax Act, 1961. 4. At the outset, the ld. AR brought to our attention, the notice issued u/s 274 r.w.s. 271 of the Income Tax Act, 1961 dated 01.05.2014. The same is reproduced as under:

Genpact Services LLC 5. From the perusal of the notice, we find that the ADIT omitted to delete in appropriate words and paragraphs and failed to specifically state, the limb on which the penalty was proposed.

1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically.

Genpact Services LLC 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180]