Dhanraj Distributors Pvt. Ltd. Vs DCIT (ITAT Indore)
Summary: The ITAT Indore allowed the appeal of Dhanraj Distributors Pvt. Ltd. against the penalty imposed under the Income Tax Act for A.Y. 2005-06. The assessee had declared total income of Rs. 2,33,750/-, while scrutiny assessment resulted in additions aggregating Rs. 6,09,500/-. The AO subsequently imposed penalty of Rs. 2,05,469/- in respect of the first two additions. Before the Tribunal, the assessee challenged the validity of the penalty notice issued under Section 274 read with Section 271(1)(c), contending that the AO had not specified whether the charge was concealment of income or furnishing inaccurate particulars. The assessee relied upon the jurisdictional Madhya Pradesh High Court decision in Kulwant Singh Bhatia. The Tribunal found that the notice contained both charges without striking off either one. Following the jurisdictional High Court decision, it held the penalty proceedings illegal and unsustainable. The Tribunal therefore quashed the penalty proceedings at the threshold on the legality issue without examining the merits of the penalty. The appeal was allowed.
The issue of defective penalty notices under Section 274 read with Section 271(1)(c) has also been addressed in other TaxGuru case-law coverage, including ITAT decisions concerning defective Section 274 notices.
Cases Discussed
- Pr.CIT-I, vs. Kulwant Singh Bhatia, ITA No. 9 to 14 of 208, order dated 9th May 2018
- CIT V/s. Manjunatha Cotton Ginning Factory (Karnataka High Court)
- CIT V/s. SSA’S Emerald Meadows, (2016) 73 taxmann.com 241 (Karnataka); (2016) 73 taxmann.com 248 (SC)
- CIT V/s. Suresh Chandra Mittal, (2000) 251 ITR 9 (SC)
FULL TEXT OF THE ORDER OF ITAT INDORE
