PCIT Vs Blackroak Securities Pvt Ltd (Delhi High Court)
The Delhi High Court dealt with an appeal filed by the revenue concerning Assessment Year 2014–15, challenging an order of the Income Tax Appellate Tribunal (ITAT) dated 5 May 2020. The Tribunal had set aside the order of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer (AO) to delete a penalty amounting to ₹7,99,90,570 imposed under Section 271(1)(c) of the Income Tax Act, 1961.
The Tribunal’s decision was based on the lack of clarity in the initiation of penalty proceedings by the AO. It observed that the AO failed to specify the exact limb of Section 271(1)(c) under which the penalty was proposed. The provision contemplates two distinct grounds: concealment of particulars of income and furnishing inaccurate particulars of income. The penalty order indicated both limbs without clearly identifying which one was applicable, thereby creating ambiguity.
The Court examined the reasoning of the Tribunal and found it to be correct. It emphasized that an assessee must be clearly informed of the specific charge against them. The absence of such clarity renders the penalty proceedings legally unsustainable. The Court referred to several of its earlier decisions supporting this position, including rulings in cases such as Pr. CIT vs Minu Bakshi and Pr. CIT vs Unitech Reliable Projects Pvt Ltd, among others.
