Nilima Agrawal Vs ITO (ITAT Raipur)
ITAT Allows Appeal Because Ambiguous Penalty Notice Violated Natural Justice; Penalty Proceedings Invalid Because Both Limbs Were Clubbed Without Clarity; CIT(A) Order Set Aside Because Defective Notice Made Proceedings Void Ab Initio; Appeal Allowed Because AO Did Not Apply Mind While Issuing Penalty Notice
The Income Tax Appellate Tribunal adjudicated an appeal arising from the order of the Commissioner of Income Tax (Appeals)/NFAC dated 8 January 2025 for Assessment Year 2015–16. The assessee challenged the validity of penalty proceedings initiated under Section 271(1)(c) read with Section 274 of the Income Tax Act, 1961.
At the outset, the assessee contended that the penalty notice issued was ambiguous, as it failed to specify the exact limb under which penalty was proposed. The notice referred to both grounds—concealment of particulars of income and furnishing inaccurate particulars—without striking off the irrelevant portion. It was argued that such ambiguity reflected lack of satisfaction on the part of the Assessing Officer (AO) regarding the specific charge.
The departmental representative supported the findings of the revenue authorities but conceded that the notice was vague and did not clearly indicate the applicable limb of Section 271(1)(c).
The Tribunal examined judicial precedents on the issue. It referred to the decision of the Delhi High Court in the case of CIT Vs. Gragerious Projects Pvt Ltd, where it was held that the revenue must clearly specify whether penalty proceedings are initiated for concealment of income or furnishing inaccurate particulars, and both charges cannot be clubbed together. In the absence of a specific charge, the levy of penalty was held to be invalid.
