Case Law Details
Virtual Software & Training Vs ITO (Delhi High Court)
Delhi High Court has held that issuance of notice under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceeding has been initiated is bad in law.
Facts-
In the instant case the Assessee by filing its return of income on 31.10.2001 declared an income of Rs. 13,32,019/- which was selected for scrutiny and during the assessment proceedings the AO observed that by virtue of acquisition agreement dated 16.02.2000, the Assessee has transferred its business of software development to M/s Suri Capital and leasing Ltd. in lieu of 45 lakh shares of face value of Rs. 10 each. The Assessee furnished an agreement of transfer of software business, as per Article 3 of which the Assessee himself admitted that this is a slump sale. Consequently the AO treated the transaction as slump sale under the provisions of Section 50B of the Act and accordingly completed the assessment u/s 143(3) on 31.3.2004 at an income of Rs. 3,15,60,109/-.
AO in due course of time initiated penalty proceedings u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income and consequently issued notice dated 30-122008 u/s 274 of the Act and ultimately vide penalty order dated 29.11.2017 imposed penalty to the tune of Rs. 1,19,85,719/- @ 100% of the tax sought to be evaded on account of slump sale which is declared as undisclosed income.
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