Case Law Details
Jyoti Samer Garg & Co. Vs ITO (ITAT Delhi)
ITAT held that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable.
When the very initiation of the penalty by way of issuance of vague and ambiguous notices u/s 271(1)(c) read with section 274 of the Act without specifically charging the assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is preferred against the order of the CIT(A)-34, New Delhi dated 27.09.2019 pertaining to A.Y.2014-15.
2. The sum and substance of the grievance of the assessee is that the CIT(A) erred in confirming the levy of penalty u/s. 271 (1) (c) of the Act on the basis of vague and unspecific charges mentioned in the assessment order and show caused notice.
3. The roots for the levy of penalty lie in the assessment order dated 15.12.2016 framed u/s.144 of the Act wherein the returned income of Rs.692690/- was assessed at Rs.5472390/- .
4. Penalty proceedings were separately initiated and accordingly notices u/s.274 r.w.s. 271 was issued and served upon the assessee. The penalty was levied at Rs.1402479/-.
5. Assessee agitated the matter before the CIT(A) but without any success.
6. None appeared on behalf of the assessee inspite of notice we decided to proceed expate. The DR was heard at length. Case records carefully perused.
7. The bone of contention is that the penalty notice issued by the AO which does not specify under which limb of section 271 (1) (c) the penalty is leviable.
8. This issue has been duly considered and decided by the Hon’ble High Court of Delhi in the case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. ITA 475 of 2019, while deciding the identical issue held as under:
“21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA’s Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”
9. Similar view was taken by the Hon’ble High Court of Karnataka in the case of SSA Emerald Meadows ITA No. 380 of The relevant findings of the judgement read as under:
“Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The issue was decided in favour of the assessee.”
10. A SLP of the revenue against this judgment of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in 73 com 248.
11. We are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable.
12. The decisions relied upon by the ld. DR are misplaced and the decision of the Hon’ble Jurisdictional High Court [supra] is directly on the point.
13. In view of what has been discussed above, following the decisions rendered by Hon’ble High Courts discussed in the preceding paras and without entering into the other aspects of the case, we are of the considered view that when the very initiation of the penalty by way of issuance of vague and ambiguous notices u/s 271(1)(c) read with section 274 of the Act without specifically charging the assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable and as such, the appeal filed by the assessee is allowed.
14. Respectfully following the decisions [supra] we direct the Assessing Officer to delete the penalty levied u/s 271(1)(c) of the Act.
15. In the result, the appeal of the assessee is allowed.
16. Decision announced in the open court on 22.03.2023.
