In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) invalidated an ambiguous penalty notice under Section 271(1)(c) of the Income Tax Act,1961.
In this case, the assessee, Del Monte Foods P. Ltd., has appealed against the order of the Commissioner of Income Tax (Appeals) [ CIT( A ) ] for the assessment year [ AY ] 2007-08.
During assessment proceedings, the assessing officer ( AO ) added Rs. 3.2 crore for advances written off and initiated penalty under Section 271(1)(c) of the Income Tax Act,1961 for furnishing inaccurate income particulars.
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It was contended by the counsel on behalf of the assessee that a penalty notice dated 31.12.2009 under Section 274 r.w.s 271(1)(c) of the Income Tax Act was issued in a preprinted format, failing to strike off irrelevant clauses, making it ambiguous. It was submitted that the subsequent notice on 07.06.2019 also lacked clarity, as it did not specify the charge under Section 271(1)(c) of the Income Tax Statute.
The assessee submitted that the notices were deemed invalid due to ambiguity.
It was observed by the tribunal that the assessing officer had not struck off irrelevant clauses in the preprinted performa and that the omnibus notice was vague.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The bench was of the opinion that the subsequent notice was also ambiguous
The ITAT noted that the subsequent notice dated 07.06.2019 was ambiguous, as it failed to specify the charge under Section 271(1)(c of the Income Tax Act. It was of the opinion that the defect not striking irrelevant clauses made the notice vague, invalidating the penalty proceedings.
The bench, comprising S. Rifaur Rahman ( Accountant Member ) and Vikas Aswathy ( Judicial Member ) set aside the impugned order and allowed the appeal filed by the assessee.
The appellant was represented by Anil Bhalla and the respondent by Vivek Kumar Upadhyay.
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