ACIT Vs Torane Ispat Udyog Private Limited (ITAT Mumbai)
No Specific Limb Mentioned, No Penalty – Defective Notice Cannot Be Cured by Section 292B – ITAT Deletes 271(1)(c) Penalty- Ambiguous 274 Notice Fatal
The Revenue appealed against the order of CIT(A), NFAC, Delhi dated 21.02.2025 deleting a penalty of ₹4,01,723 levied u/s 271(1)(c) for alleged concealment of income on bogus purchases. Assessee filed a cross objection, contending that the penalty notice was invalid as it did not specify the charge under which penalty was proposed.
Assessee-company had filed a return declaring Nil income for AY 2011–12. Based on information from DGIT (Investigation), AO found that Assessee had taken accommodation entries of ₹13,00,076 from M/s. Mumbai Trading Company, a hawala operator. AO reopened the assessment, disallowed the purchases, & initiated penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income. A penalty of ₹4,01,723 (100% of tax sought to be evaded) was imposed.
CIT(A) deleted the penalty, holding that the notice u/s 274 r.w.s 271(1)(c) was defective, as it did not strike off the irrelevant limb – i.e., whether the penalty was for concealment of income or furnishing inaccurate particulars. Department appealed, arguing that the omission was a typographical mistake covered by Section 292B, & that the penalty was rightly imposed.
