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Facts
The assessee was levied a penalty of Rs. 8,41,500/- under section 271(1)(c) of the Income-tax Act, 1961, for Assessment Year 2007-08, which was subsequently confirmed by the CIT(A). The core contention of the assessee was that the penalty notice issued under sections 271 read with 274 was defective and lacked specific charges.
Held
The Income Tax Appellate Tribunal found that the penalty notice was an 'omnibus notice' that did not specify the charge against the assessee. Following judicial precedents from the Hon'ble Bombay High Court and the jurisdictional High Court, the Tribunal ruled that such a defective and vague notice is fatal to the penalty proceedings. Consequently, the Tribunal set aside the orders of the lower authorities and deleted the penalty.
Key Issues
Whether a penalty imposed under section 271(1)(c) is valid if the notice issued under sections 271 read with 274 is an omnibus notice that fails to specify the exact charge.
Sections Cited
271, 271(1)(c), 274
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’ : NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER (Assessment Year: 2007-08) Umkal Healthcare Pvt. Ltd., vs. ACIT, Circle 27 (1), W-33, Greater Kailash, Part I, New Delhi. New Delhi – 110 048. (PAN : AAACU7727R) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Anil Kumar Gupta, CA Shri Tarun Rohtagi, CA REVENUE BY : Shri Vivek Kumar Upadhyay, Sr. DR Date of Hearing : 29.02.2024 Date of Order : 29.02.2024
ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the ld. CIT (Appeals)-9, New Delhi dated 06.08.2018 for the assessment year 2007-08 confirming the penalty under section 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’) amounting to Rs.8,41,500/-.
Although assessee has raised various grounds, at the outset, ld. Counsel of the assessee contended that the notice issued under section 271 read with section 274 of the Act is a defective one. The charge has not been specified in the notice, hence referring to various decisions including that of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs.
ACIT 434 ITR 1 (Bom)(FB), ld. Counsel for the assessee pleaded that the penalty order is liable to be quashed.
Upon hearing both the parties and perusing the records, we note that the penalty notice contains the following charge :-
We note that in the above notice, the charge has not been specified and it is an omnibus notice. In such circumstances, Hon’ble jurisdictional High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. 432 ITR 84 (Del.) has held that the penalty order passed is liable to be quashed on account of this defect which is fatal. We further note that Full Bench of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs.
ACIT (supra) has held that no specification of charge in the penalty notice leads to same becoming void and penalty on that count is to be deleted.
Hon’ble Court held as under :- “Head Note only :
S.271(1)(c) : Penalty – Concealment –Non-striking off of the irrelevant part while issuing notice under section 271(1)(c) of the Income-tax Act, - Order is bad in law – Assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.”
Respectfully following the precedent as above, we set aside the orders of authorities below and decide the issue in favour of the assessee.
Accordingly, we direct to delete the penalty.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on this 29th day of February, 2024.