Defect in Proper Notice u/s 274 vitiates the Assumption of Jurisdiction by AO: ITAT [Read Order]

Income Tax Appellate Tribunal(ITAT), Delhi bench has held that defect in proper notice u/s 274 vitiates the assumption of jurisdiction by AO.

The appeal is preferred by the assessee, M/s Ashoka Machine Tools Intl. Pvt. Ltd. against the order of the Commissioner of Income Tax (CIT). The Counsel for the assessee , Manish Malik and Vinod Gupta submitted that the entire proceedings initiated vide impugned notice by the Assessing Officer is illegal and unjustified and contrary to the law.

The Counsel for the respondent, Om Prakash submitted that the assessee cannot take benefit of procedural irregularity and that the assessee participated in the proceedings and, therefore, the assessee was aware with the reason for which the penalty was being imposed.

Kul Bharat, Judicial Member relied on the judgment in PCIT v. Sahara India Life Insurance Company Limited  and CIT v. Manjunatha Cotton & Ginning Factory where the Karnataka High Court stated that “the notice issued by the Assessing Officer(AO) would be bad in law if it did not specify under which limb of section 271(l)(c) of the Act the penalty proceedings had been initiated and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(l)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income It is, therefore, clear that for the AO to assume jurisdiction u/s 271(l)(c), proper notice is necessary and the defect in notice u/s 274 of the Act vitiates the assumption of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, facts stated supra, clearly establish that the notice issued under section 274 read with 271 of the Act is defective and, therefore, we find it difficult to hold that the learned AO rightly assumed jurisdiction to pass the order levying the penalty. As a consequence of our findings above, we direct the Assessing Officer to delete the penalty in question.”

To Read the full text of the Order CLICK HERE

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