Case Law Details
PCIT Vs Bhudeva Estate Pvt. Ltd. (Delhi High Court)
PCIT vs. Bhudeva Estate Pvt. Ltd.: Delhi High Court Upholds Penalty Deletion on Account of Inadequate Notice
Introduction: The Delhi High Court recently addressed the matter of PCIT (Principal Commissioner of Income Tax) vs. Bhudeva Estate Pvt. Ltd., concerning the Assessment Year 2008-09. The appeal sought to challenge the order of the Income Tax Appellate Tribunal (ITAT) dated September 2022, which had upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) had set aside a penalty order dated March 31, 2017, issued under Section 271(1)(c) of the Income Tax Act, 1961. The central argument revolved around the deficiency in the notice, which failed to specify the grounds for imposing the penalty, whether for concealment of income or furnishing inaccurate particulars.
Condonation of Delay: Before delving into the substantive issues, the court considered two applications seeking condonation of delay in filing and re-filing the appeal. The appellant, representing the revenue, claimed a delay of 21 days in filing the appeal and an additional delay of 60 days in re-filing. The court, taking into account the submissions and finding no objections from the respondent’s counsel, duly condoned the delays.
Background of the Appeal: The appeal pertained to the assessment year 2008-09, challenging the ITAT’s decision on the appeal filed against the CIT(A)’s order dated January 30, 2020. The CIT(A) had set aside a penalty order issued by the Deputy Commissioner of Income Tax (DCIT) on March 31, 2017, under Section 271(1)(c) of the Act.
Basis of CIT(A) and ITAT Decisions: Both the CIT(A) and ITAT arrived at the conclusion that the penalty order lacked a crucial detail—the notice did not specify whether the penalty was being imposed for concealment of income or furnishing inaccurate particulars. The court noted that a similar issue had been addressed in Pr. Commissioner of Income Tax-3 vs. Minu Bakshi (2022:DHC:2814-DB), where it was observed that such notices were deficient.
Legal Precedents and Decision: The court cited various legal precedents, including CIT and Anr. v M/s SSA’s Emerald Meadows, Commissioner of Income Tax v Manjunatha Cotton and Ginning Factory, and PCIT vs M/s Sahara India Life Insurance Company Ltd. The decisions emphasized that notices for penalty under Section 271(1)(c) must explicitly specify the grounds for penalty imposition. The court, in alignment with these precedents, asserted that no substantial question of law arose in this case. The deficiency in the notice was evident, and the court was bound by the decisions of the coordinate bench and other courts.
Conclusion: In light of the above, the court concluded that the appeal lacked merit. The deficiency in the notice, which failed to clearly specify the charge against the respondent/assessee, rendered the penalty order unsustainable. Therefore, the appeal was closed, and pending applications were also disposed of accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 38411/2023[[Application filed on behalf of the appellant/revenue seeking condonation of delay of 21 days in filing the appeal]
CM APPL. 38412/2023 [Application filed on behalf of the appellant/revenue seeking condonation of delay of 60 days in re-filing the appeal]
1. These are applications seeking condonation of delay in filing and re-filing.
2. According to the appellant/revenue, there is a delay of 21 days in filing of the appeal and 60 days in re-filing of the appeal.
3. Counsel for the respondent/assesee submits that they would have no objection if the delay is condoned.
4. It is ordered accordingly.
5. The applications shall stand disposed of, in the aforesaid terms.
ITA 415/2023
6. The above-captioned appeal concerns Assessment Year (AY) 2008- 09.
7. Via, this appeal, the appellant/revenue seeks to assail the order dated 09.2022 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”].
8. The Tribunal via the impugned order dismissed the appeal of the appellant/revenue preferred against order dated 30.01.2020 passed by the Commission of Income Tax (Appeals) [in short, “CIT(A)”].
9. The CIT(A) has set aside the penalty order dated 31.03.2017 passed under Section 271(1)(c), read with Section 274 of the Income Tax Act, 1961 [in short, “the Act”] passed by the Deputy of Commissioner of Income Tax [in short, “DCIT”].
10. Both the Tribunal and the CIT(A) set aside the penalty order on the ground that the notice issued to the respondent/assessee with regard to imposition of penalty did not specify the appropriate limb under which the penalty is sought to be imposed. In other words, the notice did not specify as to whether the penalty was being imposed for concealment of income or for furnishing inaccurate particulars.
11. This question, recently, came up before the coordinate bench of which one of us [i.e., Rajiv Shakdher, J.] was a member in Pr. Commissioner of Income Tax-3 vs. Minu Bakshi 2022:DHC:2814-DB wherein, the following was observed:
7. In our opinion, the conclusion reached by the Tribunal in the instant case that the notice for imposition of penalty under Section 271(1) (c) of the Act, did not specify which limb of the said provision the penalty was sought to be levied, is covered by the following decisions, which includes a decision rendered by a coordinate bench of this Court.
(i) CIT and Anr. v M/s SSA’s Emerald Meadows, passed in ITA No. 380/2015, dated 23.11.2015.
(ii) Commissioner of Income Tax v Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar.)
(iii) PCIT vs M/s Sahara India Life Insurance Company Ltd., passed in ITA No.475/2019, dated 02. 08.2019.
7.1 To be noted, the Special Leave Petition filed against the judgement in SSA’s Emerald (mentioned above) was dismissed via order dated 08.2016.
7.2 We are in agreement with the view taken by the Karnataka High Court in the above-mentioned judgements (in SSA’s Emerald and Manjunatha Cotton) and, in any event, are bound by the view taken by the coordinate bench of this court in the Sahara India case”.
12. Having regard to the above, according to us, no substantial question of law arises, as it is not disputed that the notice issued to the respondent/assessee did not specify, clearly, the charge levelled against the respondent/assessee which triggered the process of imposition of penalty.
13. Accordingly, the appeal is closed.
14. Pending applications shall also stand closed.
