Smt. Smita Ashok Thakkar Vs DCIT (ITAT Mumbai)
In the case of Smt. Smita Ashok Thakkar vs. DCIT (ITAT Mumbai), the assessee challenged the order passed by the Commissioner of Income Tax (Appeals)-54, Mumbai, related to Assessment Year 2012–13. The dispute arose from a penalty of ₹5,28,234 levied under Section 271(1)(c) of the Income Tax Act. This penalty followed a search conducted on the Thakkar Group, during which jewellery worth ₹26.98 lakhs (with an additional ₹10.02 lakhs on a protective basis) was found in a locker and deemed unexplained under Section 69A. The assessee argued that the jewellery belonged to her daughter and was not concealed income. However, the CIT(A) confirmed the penalty, stating that the assessee failed to substantiate her claims.
A significant point of contention was the legality of the penalty notice issued under Section 274 read with Section 271(1)(c). The assessee’s representative contended that the Assessing Officer failed to strike out the irrelevant limb in the show cause notice, which should have specified whether the penalty was for “concealment of income” or “furnishing inaccurate particulars.” The assessee relied on the precedent set by the Full Bench of the Bombay High Court in Mohammed Farhan A. Shaikh vs. CIT, which held that such omission renders the notice and the resulting penalty proceedings invalid. The Department, on the other hand, cited Veena Estates Pvt. Ltd. vs. CIT, claiming the notice was valid since the issue was not raised at earlier stages in that case.
