Param Dairy Limited Vs DCIT (ITAT Delhi)
A Penalty Notice Must Tell the Assessee the Exact Charge: Delhi ITAT Quashes ₹79.56 Lakh Search Penalty
Search Assessment and Penalty
In Param Dairy Limited v. DCIT (ITA No. 6196/Del/2026), the Delhi Income Tax Appellate Tribunal quashed a penalty of ₹79,56,220 levied under section 271AAB for assessment year 2014–15. The reason was a defect in the show-cause notices: the Assessing Officer had not identified the specific clause and charge under which penalty was proposed.
The case arose from a search of the Rama and Param Group on 28 February 2014. Param Dairy had declared income of ₹2,84,44,386 in its return. Following the search assessment, its income was determined at ₹26,94,56,120. The assessment additions were confirmed in appeal, and the Assessing Officer subsequently levied the penalty. The NFAC upheld it, bringing the company before the Tribunal.
Although the assessee had raised several grounds, it argued the appeal before the Tribunal on one central point: could a section 271AAB penalty survive when the notices did not specify the applicable limb of the provision or the default alleged?
Three Notices, but No Precise Charge
The assessee pointed to notices issued on 7 June 2018, 13 February 2021 and 31 January 2022. The first referred to section 271AAB, while the later notices referred to section 271AAB(1). A corrigendum was also issued in relation to the January 2022 notice. According to the assessee, none of these communications identified the exact clause under which penalty was sought.
