Case Law Details
Singh Consultancy Pvt. Ltd. Vs ITO (ITAT Delhi)
In a significant ruling delivered on April 9, 2021, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, has set aside a substantial penalty of Rs. 74,12,046 levied against Singh Consultancy Pvt. Ltd. for the Assessment Year 2009-10. The Tribunal’s decision, stemming from an appeal against an order by the Commissioner of Income Tax (Appeals) [CIT(A)], was primarily based on a critical procedural flaw: the ambiguity and vagueness of the penalty initiation notice issued under Section 271(1)(c) read with Section 274 of the Income Tax Act, 1961. This judgment underscores the fundamental requirement for tax authorities to precisely specify the charges against an assessee in penalty proceedings, thereby affirming principles of natural justice and due process in tax administration.
Case Genesis: Unsecured Loan and Initial Assessment
Singh Consultancy Pvt. Ltd., operating as a private limited company involved in share, commodity trading, and investment activities, filed its income tax return for Assessment Year 2009-10. The return declared a loss of Rs. 2,20,67,431. Subsequently, on December 30, 2011, the Assessing Officer (AO) completed the assessment under Section 143(3) of the Act. During this process, the AO made a substantial addition to the company’s income, specifically Rs. 2,47,06,820. This amount, identified as an unsecured loan, was treated by the AO as “bogus and ingenuine.” Consequently, the AO determined the assessee’s total income at Rs. 26,39,389.
Following the finalization of this assessment, the AO initiated penalty proceedings against Singh Consultancy Pvt. Ltd. under Section 271(1)(c) of the Act. The AO’s finding was that the assessee had “concealed its income to the extent of Rs. 2,47,06,820 willfully and knowingly by furnishing inaccurate particulars of income.” Based on this finding, a penalty equivalent to 100% of the tax sought to be evaded, totaling Rs. 74,12,046, was imposed on the company.
Appellate Review: CIT(A) Upholds Penalty
Singh Consultancy Pvt. Ltd. challenged the penalty order before the CIT(A)-22, New Delhi. However, the CIT(A) sustained the penalty, concurring with the AO’s stance. The CIT(A) observed that “non-filing of complete details/information amounts to suppression of material facts.” Furthermore, the appellate authority noted that the factual findings of the CIT(A) had not been overturned by the ITAT, and that legal precedents cited by the assessee did not preclude penalty levy even in instances of material fact suppression. The CIT(A) concluded that the addition made by the AO fell within the definition of “deemed concealment” as per Explanation 1 to Section 271(1)(c) of the Act, thereby affirming the penalty imposition.
Assessee’s Grounds for Appeal Before ITAT
Aggrieved by the CIT(A)’s decision, Singh Consultancy Pvt. Ltd. lodged an appeal with the ITAT, presenting a comprehensive set of nine grounds to challenge the legality and validity of the penalty. These grounds focused on procedural irregularities, jurisdictional questions, and substantive disagreements with the penalty:
1. Vague and Illegal Notice: The primary argument centered on the penalty notice itself. The assessee contended that the notice issued under Section 274 read with Section 271 was fundamentally flawed due to its inherent vagueness. It was argued that the standard proforma notice failed to clearly strike off the inapplicable language, resulting in ambiguity as to whether the penalty was initiated for “concealment of income” or for “furnishing inaccurate particulars of income.”
2. Lack of Valid Satisfaction: The assessee asserted that the AO did not record a valid “satisfaction”—a mandatory jurisdictional prerequisite—before initiating the penalty proceedings. The assessment order, while generally mentioning penalty initiation, failed to specifically identify the precise limb of default attributable to the assessee under Section 271(1)(c).
3. Jurisdiction of AO: A challenge was also raised regarding the jurisdiction of the specific AO who issued the penalty order.
4. Absence of Specific Charge: It was argued that without a specific and clear charge identifying the nature of the alleged default, the initiation and subsequent levy of the penalty were illegal and liable to be quashed.
5. Non-Applicability of Penalty Provisions: The assessee contended that additions made during quantum assessment proceedings, such as the treatment of an unsecured loan as income, do not automatically attract penalty provisions under Section 271(1)(c).
6. Debatable Issue: The addition of the unsecured loan was characterized as a “highly debatable and contentious issue,” suggesting that such matters should not automatically invite penal action under Section 271(1)(c).
7. Against Established Jurisprudence: The penalty order was challenged as being contrary to well-established legal norms and the settled jurisprudence governing penalties under the Income Tax Act, including decisions from the ITAT, various High Courts, and the Supreme Court.
8. Erroneous Application of Explanation 1: The CIT(A)’s finding that the appellant had “suppressed material facts” and was thus liable under Explanation 1 to Section 271 was disputed as erroneous, particularly given the alleged absence of a proper inquiry by the AO.
9. Improper Consideration of Explanations: The assessee maintained that the explanations and supporting material provided during the assessment proceedings were not properly considered or legally interpreted, thereby rendering the imposed penalty unjustified by the available record.
Counsel’s Submissions and Cited Precedents
During the ITAT proceedings, the learned counsel for Singh Consultancy Pvt. Ltd. vehemently argued against the penalty, placing significant emphasis on the procedural defects. The counsel highlighted that the notice issued under Section 274 merely contained a generic “tick mark” against both “concealed the particulars of income” and “furnished inaccurate particulars of such income,” along with a broad reference to “Explanation 1, 2, 3, 4 and 5.” This generalized indication, it was argued, demonstrated a clear “non-application of mind” by the AO, thereby fundamentally vitiating the penalty proceedings. Despite the penalty order subsequently specifying “furnishing inaccurate particulars,” the counsel contended that this retrospective clarification could not cure the initial, incurable defect in the show-cause notice.
The counsel stressed the legal mandate that recording of satisfaction by the AO is a ‘sine qua non’ (an indispensable condition) for valid penalty initiation. In support of this, reference was made to the Delhi High Court’s decision in Madhushree Gupta vs. Union of India (317 ITR 143 Del), which firmly established prima facie satisfaction as a jurisdictional fact that cannot be overlooked.
Furthermore, the assessee’s representative questioned the substantive basis of the unsecured loan addition. It was pointed out that the AO had seemingly relied solely on findings from a previous assessment year (AY 2008-09) without conducting an independent inquiry into the evidence provided for the current year’s cash credit. This reliance, it was argued, meant the addition was not based on a proper rejection of evidence after due inquiry, rendering it untenable in law. Several judicial pronouncements were cited to buttress this argument, including:
- CIT vs. Goel Sons Golden Estate Pvt Ltd. (ITA 212/2012 Del)
- CIT Vs Laxman Industrial Resources Ltd (397 ITR 106 Del)
- CIT vs. Green Valley Plywood Limited (ITA No. 358/2016 Del)
- CIT vs Rakam Money Matters Pvt Ltd (ITA 778/2015 Del)
- CIT vs M/s Russian Technology Centre (P) Ltd (300 CTR 0501 Del)
The assessee consistently maintained that all requisite evidence supporting the cash credit was duly furnished, and therefore, the case could not be construed as one involving “furnishing inaccurate particulars.” It was also contended that an assessee is legally entitled to raise new pleas during penalty proceedings, even if the quantum addition has attained finality.
In response, the learned Departmental Representative (DR) supported the orders of both the AO and the CIT(A). The DR argued that the AO had indeed recorded satisfaction, and the tick mark in the notice was sufficient to indicate the basis for initiation, specifically for concealment of particulars of income. The DR further emphasized that since the quantum addition had attained finality, the penalty was validly initiated and confirmed by the CIT(A).
ITAT’s Deliberation and Binding Precedents
After careful consideration of the arguments presented by both sides and a thorough review of the assessment and appellate orders, the ITAT decisively sided with the assessee on the crucial issue of the ambiguous penalty notice. The Tribunal meticulously examined the notice issued under Section 274, confirming that it merely contained a generic tick mark without specifying the precise limb under which the penalty was being initiated—i.e., whether for “concealment of income” or “furnishing inaccurate particulars of income.” It was explicitly noted that neither the assessment order nor the penalty order clearly delineated this specific charge.
The ITAT deemed this procedural lapse to be fatal to the penalty proceedings, drawing significant strength and guidance from a series of authoritative judicial precedents that have consistently held such ambiguous notices to be legally unsound and invalid:
1. CIT v. SSA’s Emerald Meadows [(2016) 73 taxmann.com 248 (SC)]: The Tribunal prominently highlighted that the Hon’ble Supreme Court had dismissed the Revenue’s Special Leave Petition (SLP) in this case. The quashing of the penalty by the High Court (specifically the Karnataka High Court’s decision) and the Tribunal in SSA’s Emerald Meadows was explicitly based on the fundamental ground that the penalty notice failed to specify under which limb of Section 271(1)(c) the proceedings were initiated. The Supreme Court’s dismissal of the SLP effectively affirmed this crucial legal principle, making it a binding precedent.
2. CIT vs. Manjunatha Cotton & Ginning Factory (359 ITR 565 – Karnataka High Court): This case was recognized by the Tribunal as the foundational ruling that initially established the aforementioned principle. It clearly articulated that a penalty notice is considered “bad in law” if it does not precisely specify the limb of Section 271(1)(c) under which penalty proceedings are initiated. The ITAT underscored that SSA’s Emerald Meadows had explicitly followed this seminal judgment, further solidifying its legal standing.
3. Pr. CIT vs. Sahara India Life Insurance Company Ltd. (ITA No. 475, 426, 427, 429/2019 – Delhi High Court): The ITAT noted that the Delhi High Court, when confronted with an identical issue, had also consistently adhered to the precedents set in Manjunatha Cotton & Ginning Factory and SSA’s Emerald Meadows. The Delhi High Court similarly reiterated the necessity for the notice to clearly state the specific charge – whether for concealment of income or for furnishing inaccurate particulars.
The ITAT emphasized that Co-ordinate Benches of the Tribunal have consistently maintained this judicial stance, affirming that penalty proceedings initiated via a vague and ambiguous notice under Section 271(1)(c) are legally unsustainable and cannot be allowed to stand.
Tribunal’s Concluding Ruling
In respectful adherence to the aforementioned binding judicial precedents, the ITAT reached the definitive conclusion that the penalty imposed on Singh Consultancy Pvt. Ltd. was not justified. The Tribunal unequivocally held that the essential procedural requirement for valid penalty initiation was not met. This was due to the explicit fact that the specific limb of default—whether “concealment of income” or “furnishing inaccurate particulars”—was not clearly identified or distinguished in the initial penalty notice, the assessment order, or the subsequent penalty order.
Consequently, the ITAT set aside the order of the CIT(A) and issued a direct instruction to the Assessing Officer to delete the penalty of Rs. 74,12,046. The appeal filed by Singh Consultancy Pvt. Ltd. was thus allowed. This verdict serves as a significant reaffirmation of the critical principle that strict adherence to procedural regularity and the unambiguous communication of charges are fundamental prerequisites in tax penalty proceedings, ensuring transparency, fairness, and upholding the due process rights of the assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 23.12.2016 of the learned CIT(A)-22, New Delhi, relating to Assessment Year 2009-10.
2. Facts of the case, in brief, are that the assessee is private limited company, engaged in the business of share, commodity trading and investment activities. It filed its return of income on 29.09.2009, declaring loss of Rs.2,20,67431/-. The Assessing Officer completed the assessment under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) on 30.12.2011 determining total income of the assessee at Rs.26,39,389/-, wherein, he made addition of Rs.2,47,06,820/- treating unsecured loan of Rs.2,47,06,820/- as bogus and ingenuine. The addition so made was confirmed by the learned CIT(A). Thereafter, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act. Rejecting the various explanations given by the assessee and observing that the assessee has concealed its income to the extent of Rs.2,47,06,820/- willfully and knowingly by furnishing inaccurate particulars of income, he levied penalty of Rs.74,12,046/- being 100% of the tax sought to be evaded.
3. In appeal, the learned CIT(A) sustained the addition by observing as under:-
“7.1. Non filing of complete details/information amounts to suppression of material facts. Order of CIT(A) reflects facts which are different from the statement of facts filed by the appellant. Finding of facts by CIT(A) has not yet been reversed by ITAT. The case laws relied upon by the appellant, do not hold that penalty is not leviable even when there is suppression of material facts. Therefore, the addition made falls under the definition of deemed concealment under explanation 1 to section 271(1)(c) of the I.T. Act. 1961. Therefore, the penalty levied is confirmed.”
4. Aggrieved with such order of the learned CIT(A), the assessee is in appeal before the Tribunal by raising following grounds of appeal:-
1. That the CIT(A) has erred in upholding the notice issued u/s 271(l)(c) and order passed under the said section imposing penalty of Rs. 74,12,046/- since the notice issued U/s 271 r.w.s. 274 and penalty order passed is illegal, bad in law and vague.
2. That no valid satisfaction was recorded before initiation of penalty and as such the notice issued u/s 271(l)(c) and penalty order dated 28.03.2014 imposing penalty of Rs 74,12,046/- passed under said section are illegal, bad in law and without jurisdiction and liable to be quashed.
3. That the penalty order is illegal, bad in law and without jurisdiction since the AO who has passed the order had no jurisdiction to pass the order.
4. That in the absence of any specific charge against the assessee, the initiation and levying of penalty U/s 271(l)(c) is illegal, bad in law and is liable to be quashed.
5. That the CIT(A) has erred in law and on facts in not appreciating that additions made by the A.O. in quantum proceedings on account of unsecured loan being treated as income do not attract penalty provisions.
6. That the CIT(A) has erred in law and on facts in not appreciating that addition of unsecured loan received by the appellant is a highly debatable and contentious issue and hence no penalty u/s 271(l)(c) can be levied.
7. That the penalty order u/s 271(l)(c) is against the well established norms and jurisprudence of penalty under the IT Act and against various decisions of ITAT, High Court and Supreme Court.
8. That the CIT(A) has grossly erred in holding that the appellant had suppressed material facts and has further erred in holding that the appellant is liable under Explanation 1 to Sec 271 .
9. That the explanations filed before the A.O and the material available on record has not been properly considered and legally interpreted. The penalty imposed cannot be justified by any material on record.
5. The learned counsel for the assessee strongly challenged the order of the CIT(A) in confirming the penalty so levied by the Assessing Officer. Referring to the copy of the notice issued u/s 274 r.w.s. 271of the Act by the Assessing Officer on 30.12.2011, which is placed at Sl. No.6 of soft copy, he submitted that the inappropriate words in the said notice have not been struck off and it is not clear as to under which limb of section 271(1)(c) penalty has been initiated i.e. for concealment of income or for furnishing of inaccurate particulars of income. Referring to the copy of the assessment order, he submitted that the Assessing Officer is silent on particular limb of default attributable to the assessee. The order doesn’t indicate any specific default of sec 271(1)(c) attributed to the assessee although there is general satisfaction of initiation of penalty proceedings in para 3.1 thereof. Referring to the copy to penalty order, he submitted that the Assessing Officer while levying penalty records satisfaction that the assessee knowingly and willfully by furnishing inaccurate particulars of income concealed its income. He submitted that from the satisfaction in penalty order, there cannot be any dispute that the assessee is in default for furnishing of inaccurate particulars of income and no default for concealing the particulars of income is attributable to the assessee, although, the Assessing Officer finds that this default has resulted into concealment of income. He submitted that invoking of the Explanation of section 271(1)(c) across the board further shows non-application of mind by the Assessing Officer. Referring to the various decision including the decision of the Hon’ble Supreme Court in the case of CIT vs SSA’s Emerald Meadows reported in 73 taxmann.com 248 and CIT vs Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 (Kar) and the decision of the Delhi High Court in the case of Pr. CIT vs M/s Sahara India Life Insurance Company in ITA No.475, 426, 427 and 429/2019, order dated 02.08.2019 and various other decision, he submitted that the penalty levied by the Assessing Officer has been canceled on the ground of non-specification of the particular limb of default covered by the penal provision of sec 271(1)(c) of the Act. Referring to the following decisions, he submitted that where the particular limb has not been mentioned by the Assessing Officer under which the penalty has been levied, the penalty proceedings have been quashed:-
i. CIT v. Samson Perinchery 392 ITR 4 (Bombay);
ii. Manu Bali v. ACIT [ITA/790/DEL/2016; decision dated 05.10.2017];
iii. Vijay Agarwal v. DCIT [ITA/5432/DEL/2016; decision dated 05.11.2019];
iv. Sanjay Mittra vs. DCIT [ITA No.5206/Del/2016, order dated 01.10.2018];
v. DCIT vs. Gellette Diversified Operations Pvt. Ltd. [ITA No.4585/Del/2015] and vice versa [ITA No.3238/Del/2015], order dated 25th April, 2019 for A.Y. 2011-12.
6. He further submitted that a perusal of the assessment order shows that while making addition of Rs.2,47,06,820/-, there is no satisfaction whatsoever of the default committed within the meaning of section 271(1)(c) and the relevant limb of default appears in the assessment order. He submitted that recording of satisfaction is sine qua-non for valid initiation of penalty proceedings which is evident from the wording of sec 271(1) of the Act which places emphasis on the satisfaction by the AO while initiating penalty proceedings. He submitted that in absence of any satisfaction of recording nature of default by the AO in the assessment order qua this addition, the penalty cannot be imposed on such addition. Referring to the decision of the Hon’ble Delhi High Court in the case of Madhushree Gupta vs Union of India reported in 317 ITR 143(Del), he submitted that Hon’ble High Court in the said decision has held that the presence of prima facie satisfaction for initiation of penalty proceedings was and remains a jurisdictional fact which cannot be wished away as the provision stands even today, i.e post amendment. Relying on various other decisions, he submitted that where it is mentioned that penalty proceedings u/s 271(1)(c) of the Act are intiated separately, it is held that the same doesn’t comply with the word ‘direction’ as contemplated under section 271(1)(c) of the Act.
7. The learned counsel for the assessee submitted that penalty has been levied for concealment of particulars of income of Rs.2,47,06,820/- for which addition has been made u/s 68 of the Act. Referring to para-3 of the assessment order, he submitted that the Assessing Officer simply relies on the finding given in the assessment order for AY 2008-09. This shows that the Assessing Officer has not conducted any enquiry to verify the evidences furnished by the assessee in support of the cash credit of Rs.2,47,06,820/-for this year. Thus, the addition is not based on the rejection of the evidences furnished after due enquiry by the Assessing Officer. Therefore, such addition is not tenable in law in view of the following decisions:-
i. CIT vs. Goel Sons Golden Estate Pvt Ltd. ITA 212/2012 (Del);
ii. CIT Vs Laxman Industrial Resources Ltd in 397 ITR 106 (Del);
iii. CIT vs. Green Valley Plywood Limited (ITA No. 358/2016 (Del);
iv. CIT vs Rakam Money Matters Pvt Ltd ITA 778/2015 (Del);
v. CIT vs M/s Russian technology Centre (P) Ltd 300 CTR 0501 (Del).
8. He submitted that the Assessing Officer in the penalty order, failed to support the charge of furnishing of inaccurate particulars without identifying which of the particulars filed by the assessee regarding the cash credit were inaccurately furnished in the absence of enquiry conducted by him. He submitted that the assessee during the assessment proceedings had furnished the required evidences in support of the cash credit. The details furnished by the assessee during the assessment proceedings was not found to be unsubstantiated and there is no question of the same not being bona-fide and all the details regarding the acceptance of credit were furnished before the Assessing Officer and therefore, it cannot be said that it is a case of furnishing of inaccurate particulars of income. Relying on various decisions, he submitted that although the addition has attained finality in quantum proceedings, the assessee can always make a new plea during the penalty proceedings. He, accordingly, submitted that both legally and factually penalty so levied by the Assessing Officer and sustained by the learned CIT(A) is not justified.
9. Learned DR, on the other hand, strongly supported the order of the Assessing Officer and the CIT(A). He submitted that the Assessing Officer has initiated penalty proceedings after recording satisfaction. Referring to the copy of the notice issued u/s 274 r.w.s 271 of the Act on 30.12.2011, he submitted that there is tick mark against “have concealed the particulars of income or furnished inaccurate particulars of such income in terms of Explanation 1, 2, 3, 4 and 5”. This shows that Assessing Officer has put the tick mark for concealment of particulars of income, therefore, the argument of the learned counsel for the assessee that the Assessing Officer has not mentioned under which limb of section 271(1)(c) of the Act, penalty has been levied is not correct. He submitted that the addition has attained finality and the Assessing Officer has validly initiated the penalty proceeding, therefore, such order levying penalty by the Assessing Officer and sustained by the CIT(A) should be upheld.
10. We have considered the rival arguments made by both the sides, perused the orders of Assessing Officer and CIT(A) and the paper book filed on behalf of the assessee. We find that the Assessing Officer in the instant case levied penalty of Rs.74,12,046/- being 100% of tax sought to be evaded on the ground that the assessee has concealed its income to the tune of Rs. 2,47,06,820/- willingly and knowingly by furnishing inaccurate particulars of income. We find that the learned CIT(A) upheld the penalty so levied by the Assessing Officer, reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the learned counsel for the assessee that since the inappropriate words in the said notice has not been struck of, therefore, it is not clear as to under which limb the penalty u/s 271(1)(c) has been initiated. A perusal of the notice issued u/s 274 r.w.s. 271 issued by the Assessing Officer shows that the Assessing Officer has simply put a tick mark against “have concealed the particulars of income or furnished inaccurate particulars of such income in terms of Explanation 1,2,3,4 and 5”. A perusal of the assessment order shows that penalty has been initiated in general terms and the assessment order is not clear as to under which limb of the penalty i.e. for concealment of income or for furnishing inaccurate particulars of income has been mentioned. Similarly, in the case of penalty order, where it is mentioned that assessee has concealed its income to the tune of Rs.2,47,06,820/-willingly and knowingly by furnishing inaccurate particulars of income. We, therefore, find merit in the arguments of the learned counsel for the assessee that in order to initiate penalty proceedings, the Assessing Officer has to specify in the show-cause notice u/s 271(1(c) r.w.s 274 of the Act, if the assessee has concealed the particulars of income or has furnished inaccurate particulars of income which is in instant case, the Assessing Officer has failed to do. The Hon’ble Apex Court in the case of CIT vs SSA’s Emerald Meadows reported in 73 taxmann.com 248, while dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal as well as by the Hon’ble Delhi High Court on the ground that the penalty notice does not specify under which limb the penalty has been levied has held as under:-
“Section 274, read with section 271(1)(c), of the Income-tax Act, 1961 – Penalty – Procedure for imposition of (Conditions precedent) – Assessment year 2009-10 – Tribunal, relying on decision of Division Bench of Karnataka High Court rendered in case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 1TR 565/218 Taxman 423/35 taxmann.com 250, allowed appeal of assessee holding that notice issued by Assessing Officer under section 274 read with section 271 (1 )(c) was bad in law, as it did not specify under which limb of section 271 (1 )(c) penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income – High Court held that matter was covered by aforesaid decision of Division Bench and, therefore, there was no substantial question of law arising for determination – Whether since there was no merit in SLP filed by revenue, same was liable to be dismissed – Held, yes [Para 2] [In favour of assessee]”
11. Hon’ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra) while deciding the identical issue held as under :-
“21. The Respondent had challenged the upholding of the penalty imposed under Section 271 (1) (c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA’s Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”
12. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA’s Emerald Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra), the Co-ordinate Benches of the Tribunal are taking the consistent view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act the penalty notice has been issued, the penalty proceedings initiated u/s 271(1)(c) are not sustainable.
13. Respectfully following the decisions cited above, we hold that since, the particular limb under which the penalty has been levied is not coming out from the notice as well as the assessment order and penalty order, therefore, such levy of penalty under these facts and circumstances is not justified. Accordingly, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the penalty so levied.
14. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 09.04.2021
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