Moraj Group Hospitalities INC Vs Central Circle 5(2) (ITAT Mumbai)
This appeal concerns the assessee’s challenge to a penalty of ₹24,72,000 levied under section 271(1)(c) of the Income-tax Act for Assessment Year 2015-16. The CIT(A) upheld the penalty, following which the assessee appealed to the ITAT Mumbai.
The assessee raised multiple grounds, primarily asserting that the penalty was unlawful because the Assessing Officer (AO) failed to clearly specify whether the penalty was imposed for concealment of income or furnishing inaccurate particulars of income. According to the assessee, the AO did not identify which limb of section 271(1)(c) applied, resulting in a vague and defective penalty initiation and order. The assessee contended that such ambiguity rendered the penalty invalid. It further argued that no concealment occurred, full particulars were furnished, and the addition itself was under dispute before appellate authorities. Additional grievances included denial of proper opportunity of hearing and violation of natural justice principles.
In the assessment proceedings, the assessee, a partnership firm, had filed a return declaring nil income. The AO assessed income at ₹80 lakh after making an addition relating to a loan from Dhanvi Corporation. In the assessment order, the AO recorded initiation of penalty proceedings for “furnishing inaccurate particulars of income.” However, in notices issued under section 274 read with section 271(1)(c), the AO used the expression “concealed the particulars of income and furnished inaccurate particulars,” combining both charges. The penalty order also concluded that the assessee’s default involved both elements—concealment and furnishing inaccurate particulars—and levied a penalty at 100% of the tax sought to be evaded.
