Penalty proceeding invalid if Assessment order nowhere states specific charge of alleged concealment and / or furnishing of inaccurate particulars of income

M/S ABR Auto PVT. LTD. Vs ACIT (ITAT Delhi)

After perusing the assessment order, we find that AO also did not record his satisfaction for initiation of penalty proceedings, because while passing the assessment order dated 30.12.2011 passed u/s. 143(3)(ii) of the Act, the AO has stated that “….. Penalty proceedings u/s. 271(1)(c) is being initiated separately for furnishing inaccurate particulars of income / concealment income…”, which is not sufficient and therefore, the penalty proceedings cannot be said to be validly initiated under such circumstances. However, nowhere in the assessment order states the specific charge of alleged concealment and / or furnishing of inaccurate particulars of income. Therefore, the entire penalty proceedings stand vitiated, because it is not in accordance with law.

Full Text of the ITAT Order is as follows:-

Assessee has filed the appeal against the Order dated 04.9.2015 passed by the Ld. Commissioner of Income Tax (Appeals-I), New Delhi pertaining to assessment year 2009-10. The solitary issue raised in the appeal is relating to upholding the penalty of Rs.36,58,000/- u/s. 271(1)(c) of the I.T. Act, 1961.

2. The facts in brief are that assessee is an investment company and has made investment in the shares of closely held unquoted companies. The total amount of investment as on 31.3.2008 was Rs. 8,04,71,569/-. The Assessment in this case was made making the following additions:-

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