Ashalata Kulshrestha Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad Deletes Penalty u/s 271(1)(c): Defective Show Cause Notice and Partial Quantum Relief Fatal to Penalty
The Ahmedabad Bench “A” of the ITAT allowed the assessee’s appeal for AY 2016-17 and deleted the penalty of ₹78.97 lakh levied under section 271(1)(c). The Tribunal held that the penalty proceedings were vitiated because the Assessing Officer failed to specify the exact charge—whether for “concealment of income” or “furnishing inaccurate particulars”—in the show cause notice dated 29.04.2019 as well as in the penalty order. Such non-specification of the limb of section 271(1)(c) was held to be a substantive defect, rendering the penalty invalid.
Further, the Tribunal noted that in the quantum proceedings, the ITAT had already granted partial relief by accepting the assessee’s claim of long-term capital gains on a major portion of the property, as against the AO’s treatment of the entire gain as short-term. The ITAT reiterated that mere change in the head of income or a debatable issue cannot automatically lead to penalty. In the absence of any finding of deliberate concealment or furnishing of inaccurate particulars, and with a defective initiation of penalty proceedings, the penalty could not survive. Accordingly, the appeal was allowed and the penalty was deleted in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This is an appeal filed against the order dated 05-06-2025 passed by National Faceless Appeal Centre(NFAC), Delhi for assessment year 2016-17.
