Case Law Details
Thakur Dass (since deceased) Through legal heir Karan Harjani Vs ITO (ITAT Delhi)
It can be observed from penalty notice that the AO had failed to distinguish and inform the Assessee as to if the notice was issued for concealment of income or for furnishing inaccurate particulars and a proforma in a mechanical manner the notice was issued. The judgment relied by the ld counsel for the Assessee in the case of Ganga Iron & Steel Trading Co. Vs. CIT (supra) reiterates the settled provision of law that if notice is vague then the penalty proceedings initiated on that basis were vitiate and for that purpose Hon’ble High court relied its full bench judgment in Mohd. Farhan A Shaikh Vs. CIT (2021) 424 ITR 1. In the light of the aforesaid, the penalty proceedings are void ab initio.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal has been preferred by the Assessee against the order dated 07.06.2019 of Ld. Commissioner of Income Tax (Appeals)-12, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal No. 42/18-19 arising out of an appeal before it against the penalty order dated 28.06.2018 passed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ld AO, ITO, Ward-36(2), New Delhi (hereinafter referred as the Ld. AO).
2. Facts in brief are that the assessment order was passed making disallowances u/s 14A of the Act read with Rule 8D of the Rules making a disallowance of Rs. 11,10,840/- but the exempt dividend income earned by the Assessee being Rs. 7,33,393/-. The disallowances was restricted to this amount and a penalty proceedings u/s 271(1)(c) of the Act was initiated with a notice issued on 30.12.2017 and 30.05.2018. The ld AO while passing the impugned order dated 28.06.2018 observed that the Assessee has used the business borrowed fund and he himself knows that interest paid on these sums up to the use of earning exempt dividend income. The same are not allowable and as the Assessee had not preferred appeal against the assessment order passed u/s 143(3) of the Act a penalty of Rs. 2,26,918/-to the extent of 100% of the tax sought to be evaded was levied and the ld CIT(A) had sustained the same while passing the impugned order.
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