Case Law Details
Landcraft Developers (Pvt.) Ltd Vs ACIT (ITAT Delhi)
Introduction: In the case of Landcraft Developers (Pvt.) Ltd Vs ACIT, the issue of penalty u/s 271AAB of the Income Tax Act was contested. The appeal arose from the order of the Commissioner of Income Tax (Appeals)-29, New Delhi, concerning the Assessment Year 2013-14. The primary question before the Income Tax Appellate Tribunal (ITAT) was whether the penalty levied under section 271AAB was justified.
Detailed Analysis: The crux of the matter revolved around the validity of the show cause notice issued by the Assessing Officer (AO) on 31/03/2015 for initiating penalty proceedings under section 271AAB of the Income Tax Act. The notice failed to specify the offense committed by the assessee and did not mention the rate of penalty to be levied, rendering it defective. The ITAT observed that the notice used the format meant for initiating penalty proceedings under section 271(1)(c) of the Act, which was inappropriate for section 271AAB.
Furthermore, the notice did not comply with the provisions of section 271AAB(2) of the Act, which stipulate that no penalty under section 271(1)(c) could be levied in cases where undisclosed income is offered pursuant to a search conducted on or after 01/07/2012. The lack of specificity and failure to adhere to statutory requirements rendered the notice defective and the penalty proceedings void ab initio.
The ITAT cited judicial precedent, including the case of Sushil Kumar Paul vs. ACIT, to support its decision that a defective notice vitiates penalty proceedings. As the show cause notice did not comply with statutory provisions and failed to specify the charge against the assessee, the penalty levied under section 271AAB was deemed unsustainable in law.
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