Case Law Details
Raj Kumar Karanwal Vs ITO (ITAT Delhi)
Introduction: The appeals of Raj Kumar Karanwal against the orders of the Commissioner of Income Tax (Appeals) involve the crucial question of the validity of penalty proceedings under Section 271(1)(c) of the Income Tax Act. The central issue revolves around the specificity of the penalty notice issued by the Income Tax Officer (ITO) and the subsequent confirmation of the penalty by the Commissioner. This article delves into the details of the case and explores the recent decision of the Income Tax Appellate Tribunal (ITAT) Delhi.
Detailed Analysis: The crux of the matter lies in the penalty notice issued by the ITO, where the relevant portion specifying the offense under Section 271(1)(c) was not struck off. This procedural lapse becomes a pivotal point in the case, questioning the validity of the penalty proceedings. The appellant contends that the absence of a clear indication of the offense in the penalty notice renders the penalty order illegal.
The legal position on this issue gains prominence through a reference to the Full Bench decision of the Bombay High Court in the case of Mohd. Farhan A. Shaikh vs. DCIT. The Bombay High Court, in its judgment, held that failure to strike off irrelevant portions in the penalty notice would vitiate the entire penalty proceedings. The court emphasized the importance of precision in the notice to avoid ambiguity, and any deviation from this principle was deemed to betray a lack of application of mind.
The appellant argues that the penalty notice, lacking specificity on whether there was concealment of income or furnishing of inaccurate particulars, violates the mandatory provisions of Section 271(1)(c). The reliance on the Bombay High Court’s decision becomes crucial in challenging the penalty imposed by the Commissioner.
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