PCIT-7 Vs Quippo Telecom Infrastructure Pvt. Ltd. (Delhi High Court)
Delhi High Court held that issuance of notice for initiating penalty proceedings under section 271(1)(c) of the Income Tax Act without specifying the limb under which the penalty was proposed to be levied is bad-in-law. Accordingly, appeal of revenue dismissed.
Facts- AO disallowed the Assessee’s claim for expenditure of ₹2,50,00,000/- for availing professional services and further disallowed a sum of ₹223,03,31,321/- on account of interest claimed by the Assessee u/s. 36(1)(iii) of the Act and assessed the total income of the Assessee at ₹20,54,110/-. Additionally, the AO also directed “issuance of notice under Section 271(1)(c) of the Act”. Thereafter, notice dated 15.03.2013 u/s. 274 r.w.s. 271(1)(c) of the Act was issued to the Assessee. AO determined that the tax evaded was to the extent of ₹76,65,87,116/- and determined the penalty amount within the band of 100% to 300% of the said amount.
ITAT allowed the Assessee’s appeal in respect of an order dated 25.01.2017 passed by the CIT(A) confirming the penalty imposed on the Assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- This court in Commissioner of Income Tax v. M/s Sahara India Life Insurance Company Ltd. whereby this court had faulted the issuance of such a notice for initiating penalty proceedings on the ground that notice did not specify under which limb of Section 271(1)(c) of the Act, the penalty proceedings were initiated.
