SAAMAG DEVELOPERS PVT. LTD.,NEW DELHI vs. DCIT, CENTRAL CIRCLE-19, NEW DELHI

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ITA 2513/DEL/2018Status: DisposedITAT Delhi25 October 2023AY 2008-09Bench: SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, SHRI CHALLA NAGENDRA PRASAD (Judicial Member)8 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice was bad in law as it failed to specify whether the penalty was for concealment of income or for furnishing inaccurate particulars of income. Following various High Court judgments, the Tribunal directed the deletion of the penalty.

What were the facts?

The assessee's returned loss was assessed at a significantly higher figure. Subsequently, penalty proceedings were initiated under Section 271(1)(c) of the Income-tax Act. The assessee contended that the penalty notice did not specify the exact charge for which the penalty was levied.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid if the show cause notice does not specify the specific charge (concealment of income or furnishing inaccurate particulars) for which it is levied.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 153A,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(6)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI CHALLA NAGENDRA PRASAD

For Appellant: Shri M.P. Rastogi, Adv, Shri Srikanth, CA
For Respondent: Shri T. James Singson, CIT-DR
Hearing: 19.10.2023Pronounced: 25.10.2023

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

1.

This appeal by the assessee is preferred against the order of the CIT[A]- 27, New Delhi dated 31.01.2018 pertaining to Assessment Year 2008-09.

2.

The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the penalty levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [the Act, for short] when the Assessing Officer has not specified the charge in the show cause notice issued u/s 274 r.w.s 271 of the Act.

3.

The roots for levy of penalty lie in the assessment order dated 03.08.2011 framed u/s 153A r.w.s 143(3) of the Act by which the returned loss of Rs. 32.41 lakhs was assessed at Rs. 49.68 crores. Penalty proceedings were separately initiated.

4.

The entire quarrel revolves around the penalty notice, which according to the assessee, does not specify the limb under which the penalty is levied.

5.

The representatives of both the sides were heard at length, the case records carefully perused.

6.

First penalty dated 03.08.2011 read s under:

7.

Second penalty notice dated 10.02.2016 reads as under:

8.

In the first penalty notice, it is not discernible whether the penalty was leviable for concealment of income or for furnishing of inaccurate particulars of income.

9.

At para 7 of the order by which the Assessing Officer has levied penalty, the Assessing Officer has concluded as under:

“As the assessee has clearly concealed the particulars/filed inaccurate particulars of income……..”

10.

Even while levying the penalty, the Assessing Officer is not certain under which limb the penalty is to be levied.

11.

This has not been accepted by the Hon'ble Bombay High Court in the case of Mohd. Farhan A. Shaikh 434 ITR 1, Goa Dourado Promotions Pvt Ltd 433 ITR 268 and the decision of the Hon'ble Jurisdictional High Court in the case of Sahara India Life Insurance Co. Ltd 432 ITR 84 wherein the Hon'ble High Court has held as under:

““21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”

12.

Similar view was taken by 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.”

13.

A SLP of the revenue against this judgement of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in 73 taxmann.com 248.

14.

Respectfully following decisions of the Hon'ble High Courts [supra] and the binding decision of the Hon’ble Jurisdictional High Court of Delhi [supra], we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act.

15.

In the result, the appeal of the assessee in is allowed.

The order is pronounced in the open court on 25.10.2023 in the presence of both the representatives.

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