Case Law Details
Orient Clothing Company Private Limited Vs ACIT (ITAT Delhi)
Introduction: The Orient Clothing Company Private Limited contested against the penalty imposed under section 271(1)(c) of the Income Tax Act. The issue revolved around the vagueness in the notices issued by the Assessing Officer (AO) without specifying the particular limb of the penalty.
Detailed Analysis: The AO initiated penalty proceedings based on the disallowance of sundry balances written off. However, the notices issued lacked specificity, and the Assessee argued that this rendered the penalty invalid. The legal argument focused on the necessity for the AO to specify the relevant limb (concealment or inaccurate particulars) while issuing notices.
The Assessee cited legal precedents, including the Hon’ble Apex Court and various High Courts, emphasizing that a generic notice without specifying the charge is bad in law. The argument centered on the importance of providing the Assessee with clarity regarding the nature of the alleged offense.
The ITAT Delhi’s decision leaned on previous judgments, such as the M/s. SSA’s Emerald Meadows case, where the Supreme Court dismissed the Revenue’s Special Leave Petition. The court upheld that the notice should explicitly mention the nature of the penalty proceedings.
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