The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty on finding that the issue of defective notice was without striking off the irrelevant limb.
A penalty proceeding had been initiated against the assessee, Ancha Shankar Rao, for the assessment year 2008-09 and the order of penalty was passed on 23.03.2018 on the ground that assessee had furnished his return of income for the assessment year 2008-09 on 14.05.2015, which was beyond the end of the relevant assessment year.
V. K. Bindal, on behalf of the assessee, submitted that the notice issued under section 274 read with section 271 of the Income Tax Act, 1961 was without mentioning the limb of the penalty on which the penalty proceedings was to be initiated against the assessee. relying on the various judicial pronouncements, he further submitted that in view of the defective penalty notice the entire penalty proceedings deserved to be deleted.
P. Praveen Sidharth, on behalf of the revenue, relied on the orders of the lower authorities.
The Division Bench of B.R.R. Kumar, (Accountant Member) and Yogesh Kumar Us, (Judicial Member) on verifying the above notice issued under Section 274 read with Section 271 of the Income Tax Act 1961, found that the said notice was stereotype one and the AO had not specified any limb or charge for which the notice was issued i.e., either for concealment of particulars of income or furnishing of inaccurate particulars of such income. It could be seen from the said notice; the Assessing Officer had not struck off an irrelevant limb in the notice specifying the charge for which notice was issued.
The Bench referred to the decision of Bombay High Court (full bench at Goa) in the case of Mohd. Farhan A. Shaikh vs. ACIT quashed the impugned order and deleted the penalty holding that, “Issue of non-strike off of the irrelevant part in the notice issued under Section 271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness.”
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