Klin Industries Vs ACIT (ITAT Rajkot)
Defective Penalty Notice Vitiates 271(1)(c) Proceedings – ITAT Rajkot Deletes Penalty Despite AMT Liability
The Rajkot Bench of the ITAT allowed the assessee’s appeal and deleted penalty of ₹6.21 lakhs levied u/s 271(1)(c) for AY 2014-15, holding that the penalty notice was defective and the proceedings were invalid in law.
The assessee had originally filed a nil return claiming deduction u/s 80JJA. The case was later reopened and assessed u/s 147 r.w.s. 144 by bringing the income to tax under the AMT provisions of section 115JC, followed by levy of penalty for “concealment of income”. The CIT(A) confirmed the penalty on the ground that the assessee failed to disclose deemed income under section 115JC in the return.
Before the Tribunal, it was noted that the Assessing Officer had issued a vague penalty notice without striking off the irrelevant limb and without clearly specifying whether the charge was for “concealment of income” or “furnishing inaccurate particulars”. Relying on the Bombay High Court decisions in Goa Coastal Resorts, Samson Perinchery, New Era Sova Mine and Mohd. Farhan A. Shaikh, the Tribunal held that such a defective notice and absence of clear satisfaction vitiates the entire penalty proceedings.
Accordingly, the penalty was deleted on technical grounds, and other issues on merits were held to be academic. The assessee’s appeal was fully allowed.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
