Case Law Details
DCIT Vs Akc Retailers Private Limited (ITAT Delhi)
The Delhi ITAT dismissed the Revenue’s appeal and upheld the order of the CIT(A) deleting a penalty of ₹1,10,49,260 imposed under Section 271(1)(c) of the Income-tax Act for Assessment Year 2015-16. The Assessing Officer had levied the penalty on the ground that the assessee had furnished inaccurate particulars of income. However, during the hearing, the assessee raised a legal objection that the penalty show-cause notice issued under Sections 271(1)(c) and 274 dated 15 December 2017 did not specify the particular charge or limb under which the penalty proceedings were initiated.
The Revenue argued that such a defect was merely procedural and should not invalidate the penalty. The Tribunal examined the issue in light of the decisions of the Delhi High Court in Pr. CIT v. Sahara India Life Insurance Co. Ltd. and Pr. CIT v. Gopal Kumar Goyal. Relying on these precedents, the Tribunal noted that where the Assessing Officer fails to specify the relevant limb in the penalty show-cause notice, the defect goes to the root of the matter and vitiates the penalty proceedings.
Finding no infirmity in the CIT(A)’s order, the Tribunal upheld the deletion of the penalty and dismissed the Revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
This Revenue’s appeal for assessment year 2015-16, arises against the Commissioner of Income Tax (Appeals)-3 [in short, the “CIT(A)”], Noida order dated 11.09.2025, involving proceedings under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
2. At the threshold, it reveals during the course of hearing that the AO has held that assessee has furnished it’s inaccurate particulars of income to levy section 271(1)(c) penalty in question amounting to 1,10,49,260/- vide Assessing Officer’s order dated 16.03.2022 which was deleted by the Ld. CIT(A)’s in his detailed order dated 11.09.2025.
3. At the time of hearing, ld. AR has raised its legal argument that once the Assessing Officer had admittedly issued his penalty show-cause notice(s) u/s 271(1)(c) r.w.s. 274 of the Act dated 15thDecember, 2017, not specifying any specific limb thereunder; and, his failure to this effect vitiates the entire proceedings itself. The Revenue on the other hand has vehemently argued that such a defect is only a procedural one which is not fatal to the impugned penalty.
4. In view of the aforesaid facts and circumstances, we quote the decision in the case of Pr. CIT v. Sahara India Life Insurance Co. Ltd. [2021] 432 ITR 84 (Delhi) and Pr. CIT v. Gopal Kumar Goyal [2024] 462 ITR 313 (Delhi) wherein, the Hon’ble Court has concluded that once the Assessing Officer had nowhere specified the corresponding limb in his section 271(1)(c) penalty show-cause notice forming part of the case records, his failure to this effect indeed vitiates the penalty proceedings itself. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and thus upheld the same.
5. This Revenue’s appeal is dismissed.
Order pronounced in the Open Court on 20.05.2026.
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