Tahir Khan Vs ITO (ITAT Agra)
Penalty of ₹83.45 Lakh u/s 271(1)(c) Quashed for Defective Notice; Failure to Specify Charge Vitiates Proceedings – ITAT Agra
The Agra Bench of the ITAT allowed the assessee’s appeal and deleted penalty of ₹83.45 lakh levied under section 271(1)(c) for AY 2014-15, holding that the entire penalty proceedings were void ab initio due to a defective and vague show-cause notice.
The Assessing Officer had imposed penalty pursuant to large additions (mainly ₹97.31 lakh under section 56(2)(vii) and other ad-hoc disallowances). The assessee challenged the penalty on the ground that the notice issued under section 274 read with section 271(1)(c) did not specify whether the charge was “concealment of income” or “furnishing of inaccurate particulars”.
The Tribunal found that:
- The notice mechanically retained both limbs of section 271(1)(c) without striking off the inapplicable portion,
- Such non-specification reflects non-application of mind and deprives the assessee of proper opportunity, and
- This defect is jurisdictional and not curable under section 292B.
Relying on binding precedents including SSA’s Emerald Meadows (SC), Manjunatha Cotton (Karnataka HC) and the Full Bench decision of Mohd. Farhan A. Shaikh (Bombay HC), the Tribunal held that penalty cannot survive when the foundational notice itself is invalid.
Accordingly, the ITAT set aside the CIT(A)’s order and deleted the entire penalty, without going into merits of the additions. The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT AGRA
