Income Tax Appellate Tribunal

Maneesh Kansal, Ghaziabad vs. ITO

MANU/ID/1896/2022

02.12.2022

Direct Taxation

Assessee must be informed of the grounds of penalty proceedings only through statutory notice

The information has been received that the assessee had deposited cash amounting to Rs. 35,60,000 to his savings bank account during the Financial Year 2008-09. Notice under Section 148 of Income Tax Act, 1961 (IT Act) was issued but the assessee has not apply to notice under Section 148 of the IT Act. Thereafter notice under Section 142(1) were issued and no compliance was made to the said notices. The said assessment order came to be passed under Section 147/144 of the IT Act, assessing the income of the assessee at Rs. 35,60,000 and simultaneously notice under Section 271(1)(c) of the Act was also issued. The penalty order came to be passed under Section 271(1)(c) of the Act by imposing penalty of Rs. 11,02,400.

As against the penalty order, the assessee has preferred an appeal before the CIT(A). Since the appeal before the CIT(A) was filed a delay of 8 months, the appeal of the assessee has been dismissed on the ground of delay in latches. As against the order, the assessee has preferred the present appeal.

On verifying the notice issued under Section 274 read with Section 271 of the IT Act, it is found that the said notice is stereotype one and the AO has not specified any limb or charge for which the notice was issued i.e. either for concealment of particulars of income or furnishing of inaccurate particulars of such income. It can be seen from the notice issued under Section 274 read with Section 271(1)(c) of the IT Act, Assessing Officer did not strike off irrelevant limb in the notice specifying the charge for which notice was issued.

In the case of Mr. Mohd. Farhan A. Shaikh v. ACIT, while dealing with the issue of non-strike off of the irrelevant part in the notice issued under Section 271(l)(c) of the Act, held that assessee must beinformed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness.

Ratio of this full bench decision of the Bombay High Court (Goa) squarely applies to the facts of the Assessee's case as the notice under Section 274 read with Section 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued.

The penalty order passed under Section 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous. Accordingly, the penalty order passed by the A.O for Assessment Year 2009-10 is quashed. Appeal filed by the assessee is allowed.

Tags : Penalty Imposition Legality

Share :