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Facts
The assessee's appeal is against an order confirming a penalty of Rs. 8,29,874/- levied under section 271(1)(c) of the Income Tax Act, 1961. The penalty stemmed from an addition of Rs. 1,56,14,393/- on account of alleged bogus purchases, which was later restricted to 2% of the profit by the CIT(A) and then re-estimated at Rs. 24,98,303/-, leading to the penalty.
Held
The Tribunal noted that the penalty notice issued by the AO under section 274 read with section 271(1)(c) was vague. It did not specify under which limb of section 271(1)(c) the penalty proceedings were initiated. This lack of specificity renders the notice bad in law, as held by the Supreme Court in M/s SSA's Emerald Meadows and other High Court decisions.
Key Issues
Whether the penalty notice under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961, is bad in law for not specifying the limb under which it was issued.
Sections Cited
271(1)(c), 143(3), 147, 274
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI SANDEEP SINGH KARHAIL, HON’BLE
Shri Vimal Punmiya, A/R Assessee by : Revenue by : Smt. Mahita Nair, Sr. D/R सुनवाई की तारीख/Date of Hearing : 12/08/2024 घोषणा की तारीख/Date of Pronouncement : 14/08/2024 आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM :
This appeal by the assessee is preferred against the order dated 22/05/2024, by NFAC, Delhi, pertaining to Assessment Year 2011-12.
The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the penalty of Rs.8,29,874/- levied by the AO u/s 271(1)(c) of the Act. 3. The roots for the levy of penalty lie in the assessment order dated 30/11/2016 framed u/s 143(3) r.w.s. 147 of the Act. The returned income of the assessee amounting to Rs.1,22,74,851/- was assessed at Rs.2,78,86,243/- after making addition of Rs.1,56,14,393/- on account of alleged bogus purchases.
2 4. The quarrel relating to the alleged bogus purchases travelled up to this Tribunal in & C.O. No. 240/Mum/2018 and the Tribunal vide its order dt. 01/04/2021, confirmed the findings of the ld. CIT(A) who restricted the addition on account of alleged bogus purchases to 2% of the profit on account of alleged bogus purchases. The estimated addition of Rs.1,56,14,393/-, made by the AO was re-estimated by the ld. CIT(A) at Rs.24,98,303/- and the penalty was accordingly levied.
The notice u/s 274 r.w.s. 271(1)(c) of the Act reads as under:-