DCIT Vs Akc Retailers Private Limited (ITAT Delhi)
The Delhi ITAT dismissed the Revenue’s appeal and upheld the order of the CIT(A) deleting a penalty of ₹1,10,49,260 imposed under Section 271(1)(c) of the Income-tax Act for Assessment Year 2015-16. The Assessing Officer had levied the penalty on the ground that the assessee had furnished inaccurate particulars of income. However, during the hearing, the assessee raised a legal objection that the penalty show-cause notice issued under Sections 271(1)(c) and 274 dated 15 December 2017 did not specify the particular charge or limb under which the penalty proceedings were initiated.
The Revenue argued that such a defect was merely procedural and should not invalidate the penalty. The Tribunal examined the issue in light of the decisions of the Delhi High Court in Pr. CIT v. Sahara India Life Insurance Co. Ltd. and Pr. CIT v. Gopal Kumar Goyal. Relying on these precedents, the Tribunal noted that where the Assessing Officer fails to specify the relevant limb in the penalty show-cause notice, the defect goes to the root of the matter and vitiates the penalty proceedings.
Finding no infirmity in the CIT(A)’s order, the Tribunal upheld the deletion of the penalty and dismissed the Revenue’s appeal.
