Section 271(1)(c) Penalty Proceedings Failed Because Levy Exceeded Scope of Notice

Corteva Agriscience Seeds Pvt. Ltd. Vs Additional/Joint/Deputy ACIT (ITAT Delhi)

ITAT Delhi quashes ₹99.77 cr penalty: Inconsistent charge of concealment vs. inaccurate particulars vitiates 271(1)(c)

Delhi Tribunal allowed the assessee’s appeal and quashed the penalty of ₹99.77 crore levied u/s 271(1)(c). The Tribunal noted that while the show-cause notice & initiation of penalty proceedings alleged furnishing of “inaccurate particulars of income”, the final penalty order proceeded on the footing that both concealment of income and furnishing of inaccurate particulars were present and ultimately computed penalty on the basis of “concealed income”. This clear variance between the charge in the notice and the basis of levy was held to be fatal. Relying on Ashok Pai v. CIT (SC) and Manjunatha Cotton & Ginning Factory (Karnataka HC), the Tribunal held that concealment and furnishing of inaccurate particulars are distinct offences and penalty must be confined strictly to the specific limb invoked at initiation. Since the AO travelled beyond the notice and mixed up the two limbs while imposing penalty, the levy was held to violate principles of natural justice and was unsustainable in law. Accordingly, the entire penalty was quashed and the assessee’s appeal was allowed.

FULL TEXT OF THE ORDER OF ITAT DELHI