PCIT Vs Pacific Organics Pvt. Ltd. (Bombay High Court)
In the case of Principal Commissioner of Income Tax (PCIT) vs Pacific Organics Pvt. Ltd., the Bombay High Court dismissed the Revenue’s appeal concerning the Assessment Year 2011–12, involving a tax effect of ₹53.79 lakh. Although the Revenue argued that the appeal fell within the “exempted categories,” the Court proceeded to assess the matter on merits without addressing that specific classification.
The core issue revolved around an ambiguous show cause notice issued to the assessee under Section 274 read with Section 271(1)(c) of the Income Tax Act. The Income Tax Appellate Tribunal (ITAT) had ruled in favour of the assessee, observing that the notice was unclear—neither the relevant charge was ticked nor the irrelevant parts struck off.
The High Court noted that this matter was settled by its Full Bench in Mohd. Farhan A. Shaikh vs DCIT [(2021) 125 taxmann.com 253(Bom)], which held that an ambiguous notice without deletion of inapplicable parts could not sustain penalty proceedings. The Tribunal’s view was in line with this binding precedent.
The Revenue’s reliance on Veena Estate (P.) Ltd. vs CIT [(2024) 158 taxmann.com 341 (Bom)] was rejected, as the facts differed materially. In Veena Estate, the assessee had not objected to the ambiguity of the notice at any earlier stage. In contrast, the issue was consistently contested in the present case.
