Pradeep Garg Vs ITO (ITAT Jaipur)
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has set aside a penalty of Rs. 1,71,452/- levied under Section 271(1)(c) of the Income Tax Act, 1961, against assessee Pradeep Garg for the assessment year 2010-11. The penalty, initially imposed by the Income Tax Officer (ITO) and confirmed by the National Faceless Appeal Centre (NFAC), was challenged on grounds of jurisdiction, a vague show cause notice, and the merits of the additions.
The case originated from the reopening of Pradeep Garg’s assessment for AY 2010-11 under Section 147 of the Income Tax Act. His original return declared an income of Rs. 3,47,613/-, which was later revised to Rs. 21,59,025/- after additions for unexplained investments in the construction of boundary walls on two plots of land and other disallowances. While some additions were deleted in quantum appeal, two additions related to boundary wall expenses, totaling Rs. 5,79,822/-, were sustained. These pertained to a property in Pushkar (Rs. 2,03,925/-) and land near Suchna Kendra, Ajmer (Rs. 3,75,917/-).
Assessee’s Contentions and Tribunal’s Observations
The assessee, Pradeep Garg, raised several arguments against the penalty. Primarily, he contended that the show cause notice issued under Section 274 read with Section 271(1)(c) was vague. It did not specify whether the penalty proceedings were initiated for “concealment of particulars of income” or “furnishing of inaccurate particulars of income.” He argued that such an ambiguous notice, failing to strike out the non-applicable limb, rendered the penalty proceedings invalid.
