RR Industries Ltd Vs DCIT (ITAT Chennai)
Defective Penalty Notice = Penalty Void – Failure to Strike Off Limb u/s 271(1)(c) Held Fatal – Doctrine of Merger Not Applicable to SLP Dismissal – ITAT Chennai
ITAT Chennai deleted penalty u/s 271(1)(c) holding that show-cause notice issued u/s 274 was vague & invalid where AO failed to specify whether charge was “concealment” or “furnishing inaccurate particulars”. Tribunal relied on jurisdictional HC ruling in Babuji Jacob & held that non-application of mind in penalty notice vitiates entire proceedings. ITAT rejected Revenue’s reliance on Gangotri Textiles, clarifying that dismissal of SLP does not attract doctrine of merger or constitute declaration of law u/Art.141. Since defective notice itself was invalid, penalty orders for all years were quashed without examining merits. Appeals allowed in favour of assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
These are appeals preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), (hereinafter in short ‘the Ld.CIT(A)’), Chennai-18, dated 07.08.2025, for the Assessment Year (hereinafter in short ‘AY’) 2008-09 to 2010-11 confirming the penalty-imposed u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act).
2. Since the facts and issues are same for all the assessment years, the penalty appeal for AY 2008-09 is taken as the lead case, and the result of which will be followed for other years/appeals. The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the penalty. The assessee is noted to have raised issues on merits including legal issues and the Ld AR drew our attention to the grounds/additional grounds of appeal filed before this Tribunal; and he wants us to examine a legal issue wherein challenge is made to the notices issued by the AO u/s.274 r.w.s.271(1)(c) of the Act dated 31.03.2015 [for AYs 2008-09 to AY 2010-11] as bad in law being defective/invalid in law and therefore, according to assessee, the penalty imposed needs to be quashed.
