DCIT Vs Ajay Vision Education [P] Ltd (ITAT Delhi)
AO Must Choose the Limb—Failure Proves Costly as All Penalties Fall Flat Before ITAT; Mechanical 274 Notices Fatal: ITAT Delhi Throws Out Entire Penalty Proceedings Against Coaching Company-
Tribunal dismissed all four Revenue appeals challenging deletion of penalties imposed u/s 271(1)(c) for AY 2016-17 & u/s 270A for AYs 2017-18, 2018-19 & 2019-20. For AY 2016-17, penalty was baxsed on unrecorded cash income of Rs. 98.59 lakh which was already offered by the Assessee in the return filed in response to notice u/s 148. The notice u/s 274 did not specify whether proceedings were initiated for “concealment” or for “furnishing inaccurate particulars”, making the very foundation of penalty invalid. CIT(A) also noted that AO mechanically “disallowed” an income already offered, which itself could not attract concealment. Relying on binding decisions including Pr. CIT Vs Neeraj Jindal, Mahendra C. Shah & other judgments distinguishing concealment from inaccurate particulars, Tribunal upheld deletion of penalty.
For AYs 2017-18 to 2019-20, penalty u/s 270A also failed on the same jurisdictional defect. Notices did not specify whether the charge was “under-reporting” or “mis-reporting”, nor was any specific clause of s.270A(2) or s.270A(9) mentioned. Following Sahara India Life Insurance Co. Ltd., Manjunatha Cotton & SSA’s Emerald Meadows, Tribunal held that penalty notices lacking clear charge are void ab initio. As the foundational defect was incurable, Tribunal confirmed CIT(A)’s order deleting penalties for all years. Revenue’s appeals were accordingly dismissed.
