Absence of mentioning Specific Charge u/s 274 by AO Renders Penalty Levied Unsustainable: ITAT [Read Order]
ITAT noted that unclear or omnibus notice suffers from vagueness and is legally invalid
![Absence of mentioning Specific Charge u/s 274 by AO Renders Penalty Levied Unsustainable: ITAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/01/ITAT-Penalty-Penalty-Levied-Unsustainable-taxscan.jpg "Absence of mentioning Specific Charge u/s 274 by AO Renders Penalty Levied Unsustainable: ITAT [Read Order]")
The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) rendered the penalty levied against the assessee as unsustainable due to the absence of mentioning a specific charge under Section 274 of the Income Tax Act, 1961 by the assessing officer ( AO ). The assessee has appealed against the order passed under Section 250 of the Income Tax Act, 1961, by the Commissioner of Income Tax...
The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) rendered the penalty levied against the assessee as unsustainable due to the absence of mentioning a specific charge under Section 274 of the Income Tax Act, 1961 by the assessing officer ( AO ).
The assessee has appealed against the order passed under Section 250 of the Income Tax Act, 1961, by the Commissioner of Income Tax ( Appeals ) [ CIT( A ) ] for the Assessment Year ( AY ) 2015-16.
The assessing officer for the assessment year 2015-16, disallowed the loss on derivatives claimed by the assessee amounting to Rs. 81,84,285 and imposed a penalty under Section 271(1)(c) of the Income Tax Act.
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The issue in this case is that the penalty notice issued by the Assessing Officer (AO) under Section 274 did not specify whether the penalty was being imposed for “concealment of income” or for “furnishing inaccurate particulars of income.”
The bench relied on the Karnataka High Court’s judgment in CIT vs. Manjunatha Cotton and Ginning Factory, which held that a notice under Section 274 must specifically state the grounds for the penalty. The bench also referred to the judgement of the Bombay High Court in Mohd. Farhan A. Shaikh vs. ACIT, where it was ruled that an unclear or omnibus notice suffers from vagueness and is legally invalid.
The ITAT comprising Dr. BRR Kumar (Vice President) and Shri TR Senthil Kumar (Judicial Member) quashed the penalty and allowed the appeal in favor of the assessee.
To Read the full text of the Order CLICK HERE
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Aahvan Agencies Limited VS Deputy Commissioner of Income-tax , 2025 TAXSCAN (ITAT) 201 , ITA No.1530/Ahd/2024 , 11 December 2024 , S.N. Soparkar & Parin Shah , Rignesh Das