Jayco Promoters & Developers Pvt. Ltd. Vs ITO (ITAT Delhi)
Defective Penalty Notice Invalidates Section 271(1)(c) Penalty: ITAT Delhi Follows Jurisdictional High Court
The Delhi Bench of the ITAT deleted the penalty levied under section 271(1)(c) for AY 2007-08 on the ground that the penalty notice issued under section 274 was fundamentally defective. The Tribunal found that the Assessing Officer failed to strike off the inapplicable portion in the notice and did not specify whether the penalty was being initiated for “concealment of income” or for “furnishing of inaccurate particulars of income.”
Relying on the Full Bench decision of the Bombay High Court in Mohd. Farhan A. Shaikh v. DCIT and the jurisdictional Delhi High Court ruling in PCIT v. Sahara India Life Insurance Co. Ltd., the ITAT held that such omnibus and vague notices reflect non-application of mind and violate mandatory procedural requirements embedded in section 271(1)(c). Since the defect goes to the root of the penalty proceedings, no further prejudice need be demonstrated.
Applying the settled legal position, the Tribunal directed deletion of the penalty in entirety and allowed the assessee’s appeal, holding that once the penalty notice itself is invalid, the consequential penalty cannot survive
FULL TEXT OF THE ORDER OF ITAT DELHI
