Toshiba Water Solutions (P) Ltd. Vs ACIT (ITAT Delhi)
Omnibus Notice without Striking Irrelevant Limb Held Invalid- ITAT Delhi Quashes Penalty u/s 271(1)(c) for Defective Notice
Assessee had filed return declaring income of ₹5.64 crore. AO passed assessment order u/s 143(3) making additions & computing income at ₹8.07 crore. Consequent penalty proceedings culminated in an order dated 28.04.2023 levying penalty u/s 271(1)(c), confirmed by CIT(A).
Before Tribunal, the Assessee argued that penalty notice issued u/s 274 r.w.s. 271 was defective as the AO failed to strike off the irrelevant portion & did not specify whether penalty was for “concealment of particulars” or for “furnishing inaccurate particulars”. This rendered the notice vague & invalid.
Tribunal observed that the notice was in a stereotyped format, with irrelevant portions not struck off. Relying on the Full Bench decision of the Bombay High Court (Goa) in Mohd. Farhan A. Shaikh Vs ACIT [434 ITR 1], Tribunal held that penalty proceedings must stand on their own & assessee must be clearly informed of the exact charge. An omnibus notice suffers from the vice of vagueness & betrays non-application of mind. Such defective notice cannot sustain penalty proceedings.Accordingly, Tribunal held that the penalty order & the appellate order confirming it were erroneous & unsustainable. The penalty levied u/s 271(1)(c) was quashed & the appeal of Assessee was allowed.
