DCIT, NEW DELHI vs. M/S SAHARA INDIA LTD., LUCKNOW

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ITA 5771/DEL/2010Status: DisposedITAT Delhi10 April 2023AY 1992-934 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal admitted the assessee's additional legal ground, finding the penalty notice to be an omnibus notice lacking specificity regarding the charge (concealment of income or furnishing inaccurate particulars). Relying on High Court precedents, the Tribunal held that such a notice renders the penalty unsustainable.

What were the facts?

The Revenue appealed against the deletion of penalty by the CIT(A), while the assessee filed a cross-objection supporting the deletion. The assessee also raised an additional ground in the cross-objection regarding the validity of the penalty notice.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid when the notice issued is omnibus and does not specify whether it is for concealment of income or furnishing inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI

Before: SHRI SHAMIM YAHYA & MS. ASTHA CHANDRA

Hearing: 28.03.2023

Heard together (2 matters)

I.T.A.No.5771/Del/2010
CO No. 23/Del/2011

Read from the judgment's own cause title. This page is filed under one of them.

आदेश /O R D E R PER SHAMIM YAHYA, A.M.

1.

This appeal by the Revenue and Cross Objection by the assessee arise out of the order of Learned Commissioner of Income Tax (Appeals),

I.T.A.No.5771/Del/2010 & CO No. 23/Del/2011 New Delhi dated 14.09.2010 and pertains to the AY 1992-93. Grounds raised in Revenue’s appeal are as under: -

“On the facts and in the circumstances of the case the Ld.CIT(A) has erred in: - 1. “The order of the Ld.CIT(A) is not correct in law and facts;

2.

On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting penalty of Rs.65,08,230/- imposed u/s 271(1)(c) of the I.T. Act;

3.

The appellant craves leave to add, alter or amend any/all of the grounds of appeal

before or during the course of the hearing of the appeal.”

2. In the Cross Objection assessee has raised the following grounds: -

1. “That the Ld.CIT(A) is fully justified in deleting the penalty u/s 271(1)(c) of the Income Tax Act, 1961 on the facts and circumstances of the case as well as in law;

2. That without prejudice, in any view of the matter the Ld. Assessing Officer has not given proper effect to the appellate order as a consequence of which the quantification of the penalty is incorrect.

3. That the Respondent craves leave to add, alter, amend or withdraw any or all the grounds of Cross Objections on or before the date of hearing.” 3. Furthermore, Assessee has filed an additional ground in the Cross Objection with prayer to admit the same. The ground raised in this regard read as under: -

“The following ground of cross objection was left inadvertently to be taken at the time of filing of the cross objections: ‘That in any view of the matter the order passed by the Ld. Assessing Officer levying penalty u/s 271(1)(c) of the Income Tax Act is not tenable in law as it is not discernible 2

I.T.A.No.5771/Del/2010 & CO No. 23/Del/2011 descramble from the notice issued by the Assessing Officer as to whether the penalty is for concealment of income or for furnishing inaccurate particulars of income.’ The above ground is purely a legal ground arising from the order of the Assessing Officer passed u/s 271(1)(c) and, therefore, it is prayed that the same be kindly admitted, heard and decided on merits.” 4. We have heard both the parties and perused the records, we find that the additional ground raised in the cross objection goes to the root of the matter. The same is a legal ground hence, we admit the same.

The ground raised in the cross objection speaks of notice u/s 271(1)(c) of the Act not specifying the charge as to whether the penalty is for concealment of income or for furnishing particulars of income.

5.

We have gone through the said notice and it is clear that it is an omnibus notice without identifying the limb under which assessee has been charged. In such circumstances, the penalty levied cannot be sustained. For this proposition, we rely upon the full bench decision of Hon’ble Bombay High Court in the case of Md. Farhan A. Shaikh vs DCIT 125 taxmann.com 253 (Bom) 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 3

I.T.A.No.5771/Del/2010 & CO No. 23/Del/2011 through statutory notice. An omnibus notice suffers from the vice of vagueness Similar proposition was laid down in Pr. CIT vs Sahara India Life Insurance Co. Ltd. [2021] 432 ITR 84 (Del.) Thus, since the penalty notice is omnibus and the charge has not been specified, the penalty is not sustainable.

6. Since we have quashed the penalty on account of jurisdictional defect, adjudication of Revenue’s appeal has become infructuous.

Hence, we are not engaging with this.

6.

In the result, the cross objection is allowed and the Revenue’s appeal is dismissed as infructuous.

Order pronounced in the open court on 10.04.2023

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