PCIT 27 Vs Late Gordhandas S. Garodia Through L/h Shri Mahesh G Garodia (Bombay High Court)
The Bombay High Court dismissed the Revenue’s appeal challenging the ITAT’s deletion of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The Revenue contended that the penalty notice was valid because penalty had been levied on both grounds mentioned in Section 271(1)(c), and therefore there was no requirement to strike off any irrelevant portion of the notice.
Read SC Judgment in this case: SC Declines Interference With Penalty Deletion Over Ambiguous Section 271(1)(c) Notice
The Court referred to the Full Bench decision in Mohd. Farhan A. Shaikh Vs. Deputy Commissioner of Income Tax, Central Circle 1, Belgaum, which held that ambiguous notices cannot form the foundation for imposing penalty. The Court found that, on examining the show cause notice in the present case, it was not clear whether the penalty was proposed for concealment, disclosure of incorrect particulars, or both. Therefore, the defect identified by the Full Bench equally applied to the notice in this case.
Since the ITAT had followed the Full Bench decision of the Bombay High Court, the Court held that the proposed question could not be regarded as a substantial question of law. The appeal was accordingly dismissed without any order as to costs.
