Case Law Details
PCIT Vs Shyam Sunder Jindal (Delhi High Court)
Introduction: The Delhi High Court, in the case of Principal Commissioner of Income Tax (PCIT) vs. Shyam Sunder Jindal, addressed appeals related to Assessment Years (AYs) 2011-12, 2008-09, 2010-11, and 2009-10. The core issue revolved around the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961, and whether the penalty notices provided sufficient specificity regarding the grounds for imposition.
Background: The appeals challenged the common order passed by the Income Tax Appellate Tribunal in June 2021.
Penalty Notices and Lack of Specificity: The appellant/revenue did not dispute that none of the penalty notices issued to the respondent/assessee for the mentioned AYs specified the particular limb of Section 271(1)(c) of the Income Tax Act that was triggered.
Legal Precedents and Considerations: The court referred to previous judgments, including the case of Commissioner of Income Tax-3 vs. Ms Minu Bakshi. The court emphasized that the penalty notices must indicate whether the penalty is being levied for concealment of particulars of income or furnishing inaccurate particulars. The lack of such specificity has been consistently held against the revenue in various cases.
Observations and Conclusion: Citing the Minu Bakshi case and other precedents, the court reiterated that penalty proceedings entail civil consequences, and the Assessing Officer (AO) must clearly indicate the specific provision/limb under which the penalty is being initiated. The court emphasized that the AO needs to apply his mind to the material particulars and state clearly what is being alleged against the assessee.
In light of these considerations, the court concluded that no substantial question of law arises for consideration. As a result, the appeals were not admitted, and the case was closed.
This judgment underscores the importance of precision and clarity in penalty notices, ensuring that taxpayers are informed of the specific grounds for the penalty imposition, in compliance with the provisions of Section 271(1)(c) of the Income Tax Act.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. These appeals concern the following Assessment Years (AYs): AY 2011-12 (in ITA 189/2023), AY 2008-09 (in ITA 190/2023), AY 2010-11 (in ITA 191/2023) and AY 2009-10 (in ITA 192/2023).
2. Via these appeals, a challenge has been laid to the common order dated 06.2021 passed by the Income Tax Appellate Tribunal.
3. Counsel for the appellant/revenue does not dispute that none of the penalty notices issued to the respondent/assessee for the aforementioned AYs advert to the specific limb of Section 271(1)(c) of the Income Tax Act, 1961 [in short, “the Act”] which is triggered against him.
4. In other words, it is not clear whether the Assessing Officer (AO) intended to levy a penalty on the respondent/assessee for concealment of particulars of his income, or furnishing inaccurate particulars. This issue is covered against the appellant/revenue in a catena of judgments, including the judgment rendered by the coordinate bench in the matter of Commissioner of Income Tax-3 v. Ms Minu Bakshi. 2022:DHC:2814-DB.
4.1 The relevant observations made in the said judgment are extracted hereafter:
“7. In our opinion, the conclusion reached by the Tribunal in the instant case that the notice for imposition of penalty under Section 271(1) (c) of the Act, did not specify which limb of the said provision the penalty was sought to be levied, is covered by the following decisions, which includes a decision rendered by a coordinate bench of this Court.
(i) CIT and v M/s SSA’s Emerald Meadows, passed in ITA No. 380/2015, dated 23.11.2015.
(ii) Commissioner of Income Tax v Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar.)
(iii) PCIT vs M/s Sahara India Life Insurance Company , passed in ITA No.475/2019, dated 02.08.2019.
7.1 To be noted, the Special Leave Petition filed against the judgement in SSA’s Emerald (mentioned above) was dismissed via order dated 08.2016.
7.2 We are in agreement with the view taken by the Karnataka High Court in the above-mentioned judgements (in SSA’s Emerald and Manjunatha Cotton) and, in any event, are bound by the view taken by the coordinate bench of this court in the Sahara India case.”
5. This view has also been followed by this court in Pr. Commissioner of Income Tax, Delhi-7 v. Unitech Reliable Projects Pvt. Ltd., 2023:DHC:4258-DB.
5.1 The following observations made in the PCIT v. Unitech Reliable Projects case, being relevant insofar as this case is concerned, are extracted hereafter:
“19. We may note, that even the assessment order dated 14.03.2015, whereby penalty proceedings were triggered, did not indicate as to which limb of Section 271(1)(c) was being triggered qua the petitioner. This is evident from the following observation made by the AO: “Penalty proceeding u/s 271(1)(c) is being initiated separately for concealment of income & for furnishing inaccurate particulars of income.”
20. We may note, that another coordinate bench of this Court, of which one of us [i.e., Rajiv Shakdher, J.] was a party has reached the same conclusion in PCIT vs. Minu Bakshi 222 (7) TMI 1370-Delhi. 21. Penalty proceedings entail civil consequences for the The AO is required to apply his mind to the material particulars, and indicate clearly, as to what is being put against the respondent/assessee when triggering the penalty proceedings.
21. Penalty proceedings entail civil consequences for the The AO is required to apply his mind to the material particulars, and indicate clearly, as to what is being put against the respondent/assessee when triggering the penalty proceedings.
22. In case the AO concludes, that a case is made out under Section 271(1)(c) of the Act, he needs to indicate, clearly, as to which limb of the said provision is attracted. The reason we say so is, that apart from anything else, the pecuniary burden may vary, depending on the infraction(s) committed by the respondent/assessee. In a given case, where concealment has taken place, a heavier burden may be imposed, than in a situation where an assessee is involved in furnishing inaccurate particulars.”
23. Therefore, it is necessary for the AO to indicate, broadly, as to the provision/limb under which penalty proceedings are triggered against the assessee.
[Emphasis is ours]
6. In view of the foregoing, we are not inclined to admit these appeals, as according to us, no substantial question of law arises for our consideration.
7. Accordingly, the appeals are closed.
