The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the penalty cannot be sustained on the fact that the notice issued doesn’t disclose a specific charge, the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961.
The assessee had filed an income tax return declaring a total income of Rs.14,52,020/- from Salary, house property, capital gains, and income from other sources.
The case of the assessee was re-opened for scrutiny under Section 147/148 of the Income Tax Act for the reason that the assessee had purchased the penny scrip for Rs.12,35,000/- and sold the same for INR 26,00,000/-.
The Assessing Officer that the assessee had shown taxable short-term capital gain amounting to INR 10,17,175/- in her computation of income. The assessee has not offered the whole amount of Short-Term Capital Gain of INR 13,62,657/- earned on penny scrips.
The Assessing Officer framed the assessment under Section 147 read with Section 143(3) of the Income Tax Act, assessed the income of the assessee at INR 17,97,502/- and initiated penalty under Section 271(1)(c) of the Income Tax Act separately.
The counsel for the assessee submitted that the impugned penalty cannot be sustained in view of the fact that the notice issued by the Assessing Authority does not disclose the specific charge. He submitted that the issue is squarely covered in favour of the assessee.
The Departmental Representative opposed the submissions and supported the orders of the authorities below. He submitted that the assessee was well aware of the charge and he participated in the proceedings. Therefore, it cannot be constituted that he was not aware of the specific charge.
In the case of Pr.CIT vs M/s. Sahara India Life Insurance Company Ltd. [2021] 432 ITR 84 (Del.) has decided the issue in favour of the assessee. Under the identical facts, High Court has ruled against the Revenue.
The Two-member bench comprising of Kul Bharat (Judicial member) and B.R.R Kumar (Accountant member) held that the facts are not under dispute regarding the notice being defective. Therefore, the impugned penalty imposed under Section 271(1)(c) of the Income Tax Act by the Assessing Officer was deleted.
Thus, the appeal of the assessee was allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
