Shring Construction Company Pvt. Ltd. Vs DCIT (ITAT Delhi)
Vague 271(1)(c) Notice Fatal: Delhi ITAT Quashes ₹2.01 Cr Penalty for Not Specifying Charge
Delhi ITAT, Delhi Bench ‘F’, in Shring Construction Company Pvt. Ltd. Vs DCIT (ITA No.7056/Del/2018; AY 2011-12; order dated 19-12-2025), allowed the assessee’s appeal and deleted penalty of ₹2.01 crore levied u/s 271(1)(c) on the ground of invalid and ambiguous penalty notice.
The Tribunal found that the show-cause notice u/s 274 r.w.s. 271(1)(c) was issued in a mechanical, proforma manner, without specifying whether the penalty was for “concealment of particulars of income” or “furnishing of inaccurate particulars of income”. Even subsequent notices and the final penalty order failed to record a clear satisfaction as to the exact limb invoked. Such non-application of mind, the Tribunal held, goes to the root of jurisdiction and vitiates the entire penalty proceedings.
Relying on the landmark rulings in Manjunatha Cotton & Ginning Factory (Karnataka HC) and SSA’s Emerald Meadows (SC), the Tribunal reiterated that penalty proceedings are quasi-criminal in nature and the assessee must be clearly informed of the precise charge it has to meet. A vague notice striking both limbs simultaneously is bad in law and incurable. Accordingly, the penalty imposed for additions relating to LTCG recomputation, share application money and PF contribution was quashed in toto, and the appeal of the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
