ATN Infratech Private Limited Vs DCIT (ITAT Delhi Bench)
AO Kept Both Charges Alive, So the Penalty Died: Vague Notice u/s 274 Invalidates Penalty u/s 271(1)(c)
Background: ATN Infratech Private Limited’s return for AY 2013-14 was selected for scrutiny under CASS. The AO completed assessment u/s 143(3) on 07.03.2016, determining total income at ₹55,37,870.
During assessment, expenditure aggregating to ₹7,13,859 was disallowed & added to the assessee’s income. The AO also initiated penalty proceedings u/s 271(1)(c).
A notice u/s 274 r.w.s. 271(1)(c) was issued to the assessee. However, the notice contained both possible charges prescribed by s.271(1)(c)—concealment of particulars of income & furnishing inaccurate particulars of income. The AO did not strike off the inapplicable portion or otherwise inform the assessee which specific allegation it was required to answer.
The penalty proceedings eventually culminated in an order dated 03.02.2022 imposing penalty of ₹2,20,583. The CIT(A)/NFAC confirmed the levy by order dated 30.05.2025.
The assessee challenged the penalty before the Delhi Tribunal.
Two Charges, One Uncertain Notice
The assessee’s principal contention was that the penalty notice did not disclose the precise charge for which proceedings had been initiated.
Section 271(1)(c) contained two separate defaults. An assessee may either conceal particulars of income or furnish inaccurate particulars of such income. Although both defaults may produce similar tax consequences, they operate in different factual fields & require different explanations.
