RUDRA BUILDWELL P.LTD,DELHI vs. DCIT, CENTRAL CIRCLE, NOIDA

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ITA 3215/DEL/2018Status: DisposedITAT Delhi11 May 2023AY 2009-103 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 a penalty notice must specify the charge under Section 271(1)(c) to be valid. Since the notice was omnibus and lacked specificity, the penalty was unsustainable.

What were the facts?

The assessee's appeal challenged the penalty sustained by the CIT(A) under Section 271(1)(c). The assessee contended that the penalty notice did not specify the charge for which the penalty was levied.

What were the issues?

Whether a penalty levied under Section 271(1)(c) is valid if the notice issued under Section 274 does not specify the exact charge for which the penalty is being imposed.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ : NEW DELHI

For Appellant: Shri Parth Dawar, Advocate
For Respondent: Shri Sanjay Tripathi, Sr. DR
Hearing: 09.05.2023

(PAN : AAECR0247B) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Parth Dawar, Advocate REVENUE BY : Shri Sanjay Tripathi, Sr. DR Date of Hearing : 09.05.2023 Date of Order : 11.05.2023 ORDER

PER SHAMIM YAHYA, ACCOUNTANT MEMBER :

1.

This appeal filed by the assessee is directed against the order of ld. CIT (Appeals)-IV, Kanpur dated 28.02.2018 pertaining to Assessment Year 2009-10.

2.

In the grounds of appeal, at the outset, it is mentioned that the penalty under section 271(1)(c) of the Income-tax Act, 1961 (for short 'the Act') amounting to Rs.40,44,810/- has been wrongly sustained by the ld. CIT (A). It is the assessee’s claim that there was no specific charge under section 271 r.w.s. 274 accompanying the said assessment order.

3. We note that it is not disputed by the Revenue that the notice issued did not specify the charge. In such circumstances, Higher Courts have held that penalty notice becomes invalid and as a result, penalty levied is to be deleted. In this regard, reference is made to the decision of Full Bench of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT in & 57 of 2012 dated11.03.2021 wherein it has been 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

4.

Hon’ble jurisdictional High Court in the case of Pr. CIT vs Sahara India Life Insurance Co. Ltd. [2021] 432 ITR 84 (Del.) has also taken the same view. Hon’ble jurisdictional High Court concluded 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 ./2018 proceedings had been initiated under i.e. whether for concealment of particulars of income 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 of 2016 by order dated 5th August, 2016. 22. On this issue again this Court is unable to find any error having been committed by the ITAT. No substantial question of law arises.”

5.

In view of the above, since the penalty notice is omnibus and the charge has not been specified, the penalty is not sustainable. We direct the same to be deleted.

6.

In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on this 11th day of May, 2023.

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