Sudesh Gupta Vs ACIT (ITAT Delhi)
The appeal filed by Sudesh Gupta against the CIT(A) order dated November 8, 2019, involved a penalty of Rs. 13,60,455 under Section 271(1)(c) of the Income Tax Act for the assessment year 2013-14. The Assessee argued that the addition made under Section 2(22)(e) concerning deemed dividends was wrongly treated as concealment of income, especially since a similar addition had been made in the hands of another entity, Biggesto Technologies Ltd., for the same amount and under the same circumstances. The Assessee contended that this duplication of the same addition was inappropriate and could not be a ground for imposing a penalty.
The primary issue in the case was the legality of the penalty notice issued by the AO. The Assessee pointed out that the notices under Section 274 read with Section 271 of the Income Tax Act, dated November 24, 2016, and February 11, 2019, did not specify whether the penalty was for concealment of income or for furnishing inaccurate particulars, which rendered the notice defective and non-compliant with legal standards. The ITAT reviewed case law, including decisions in Biotronic Medical Devices Pvt Ltd and M.A. Projects Pvt Ltd, which established that an omnibus notice without specifying the charge was invalid. In light of this, the ITAT quashed the penalty and allowed the Assessee’s appeal.
