Delhi Building & Others Vs DDIT(E) (ITAT Delhi)
Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside penalties aggregating to over ₹40 crores imposed on the Delhi Building and Other Construction Workers Welfare Board. The Tribunal emphasized that compliance with the statutory requirement of specifying the exact limb under Section 271(1)(c) of the Income Tax Act, 1961, is mandatory while imposing a penalty.
The Income Tax Appellate Tribunal (ITAT) Delhi has set aside penalties levied against Delhi Building & Others for the Assessment Years 2007-08 and 2008-09. The penalties, amounting to ₹14.84 crore and ₹26.10 crore respectively, were imposed under Section 271(1)(c) of the Income Tax Act, 1961, for alleged concealment of income and furnishing inaccurate particulars.
The core of the assessee’s argument was that the Assessing Officer (AO) failed to specify the particular limb(s) of Section 271(1)(c) in the penalty show-cause notices issued on December 21, 2009, and December 24, 2010. The Revenue contended that the lower authorities’ actions were valid.
The ITAT, citing judicial precedents from the Delhi High Court in PCIT vs. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del.) and PCIT vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Del.), ruled in favor of the assessee. The tribunal concluded that the AO’s failure to specify the corresponding limb(s) in the show-cause notices vitiated the entire penalty proceedings.
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