Chiragkumar Rajendrabhai Shah Vs ITO (ITAT Mumbai)
The assessee challenged penalty of ₹70 lakh levied u/s 271(1)(c) arising from addition treated as unexplained expenditure u/s 69C. ITAT allowed the appeal holding that penalty proceedings were vitiated due to defective notice and violation of principles laid down by jurisdictional High Courts.
Tribunal observed that the original notice dated 30.03.2014 issued u/s 274 r.w.s. 271(1)(c) did not specify whether penalty was for concealment of income or furnishing inaccurate particulars, thereby depriving assessee of proper opportunity to defend. Further, subsequent notice dated 28.03.2018 fixed compliance date as 13.04.2018 but AO passed penalty order earlier on 30.03.2018 itself, rendering the opportunity illusory and invalid.
Relying on Bombay HC Full Bench decision in Md. Farhan A Shaikh, and other precedents, ITAT held that non-striking of irrelevant limb in standard notice reflects non-application of mind and makes penalty unsustainable. Since jurisdictional defect went to the root, merits of penalty were not required to be examined.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the Assessee against the order dated 27.08.2025, impugned herein, passed by the National Faceless Appeal Centre (NFAC)/Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2009-10.
