POOSAPPAN ARULSUNDARAM ,ERODE vs. COMMISSIONER OF INCOME TAX, (APPEALS) , CHENNAI

At the outset, the Ld.AR of the assessee has raised the legal issue that the notice issued by the AO dated 28.03.2016 was invalid. The Ld.AR drew our attention to the impugned notice dated 28.03.2016 issued u/s.274 r.w.s.271 of the Act, and pointed out that the AO in the ibid notice had stricken off “concealed the particulars of your income” which means, assessee was put to notice for committing the fault “furnishing of inaccurate particulars of such income”. However, he brought to our notice that the AO levied penalty [by order dated 27.09.2016] for “concealed the particulars of his income” and also for “furnishing inaccurate particulars of income” which means that the AO has found the assessee for committing both the faults, after having given notice for only one fault i.e. “furnishing of inaccurate particulars of such income”. Thus, according to the Ld.AR, the AO didn’t call upon the assessee to defend the distinct fault “concealment of particulars of income” which makes the impugned notice bad in law as held by the Hon’ble jurisdictional High Court of Madras in the case of Babuji Jacob v. ITO reported in (2021) 430 ITR 259 (Mad). We find force in the submissions of the Ld.AR and also note that the Full bench of the Hon’ble Bombay High Court in the case of Mohd. Farhan A. Shaikh v. DCIT reported in [2021] 434 ITR 1 (Bombay) dated 11.03.2021 held that invalid notices vitiates the penalty levied by the AO. In the present case also we note that notice issued by AO was defective, and therefore, the assessee was handicapped from defending (AY 2013-14) Shri Poosappan Arulsundaram properly the charge/fault and resultantly, the defect in the notice, goes to the root of the penalty levied by the AO, and hence, we direct deletion of the penalty.

In the result, appeal filed by the assessee is allowed.