Case Law Details
Gawar Constructions Co. Pvt. Ltd. Vs DCIT (ITAT Delhi)
The case of Gawar Constructions Co. Pvt. Ltd. Vs DCIT deliberated by ITAT Delhi concerns an appeal against penalty orders under Section 271(1)(c) of the Income Tax Act, 1961. The appellant challenged the imposition of penalties for different assessment years, arguing for a lack of clarity in the particulars leading to these penalties.
The ITAT Delhi assessed the circumstances surrounding the penalties imposed under Section 271(1)(c) on the appellant for different assessment years. The crux of the issue was that the Assessing Officer (AO) had initially drawn satisfaction towards the concealment of particulars of income during the assessment proceedings. However, the penalties were eventually imposed on the grounds of furnishing inaccurate particulars of income, demonstrating a disconnect between the initial basis of satisfaction and the eventual penalties imposed.
The appellant cited a precedent set in the case of Hatis Prabhu Das Chaudhary vs. ITO, where a similar discrepancy was noted. It was argued that the ambiguity in the penalty notice and the departure from the initial basis of satisfaction to a different ground for imposing the penalty were not tenable in law.
Upon review, the ITAT Delhi agreed with the appellant’s contention. The Tribunal noted the inconsistency between the initial basis for satisfaction, drawn during the assessment proceedings, and the actual basis for the imposition of penalties. The Tribunal decided that the penalty orders passed by the AO were not sustainable in law due to the lack of continuity between the ‘satisfaction’ at the quantum stage and the penalty stage. As a result, the Tribunal set aside the impugned penalty orders and cancelled the penalties imposed under Section 271(1)(c), demonstrating the crucial need for clarity and continuity in tax assessment and penalty imposition procedures.
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