ITAT deletes Penalty since AO issued Notice without specifying Charge [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has quashed a penalty order issued by the income tax department since the Assessing Officer failed to specify the relevant charge against the assessee as per the conditions prescribed in section 271(l)(c) of the Income Tax Act, 1961.

Before the Tribunal, the assessee contended that the penalty order is bad in law as the penalty proceedings were initiated and penalty was levied without specifying the exact limb of Section 271(1)(c) of the Act.

Allowing the above contention, a bench comprising ITAT President Mr. G S Pannu and Judicial Member Mr. Challa Nagendra Prasad relied on the decision of the Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh v. ACIT wherein the High Court, while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.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.

Granting relief to the assessee, the Tribunal held that “Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus, respectfully following the said decision we hold that the penalty order passed u/s. 271(l)(c) of the Act by the Assessing Officer is bad in law and accordingly the penalty order passed u/s. 271(l)(c) of the Act for Assessment Year 2003-04 is quashed. As we have decided the additional ground in favour of the assessee by quashing the penalty order the other grounds raised by the assessee on merits are not gone into as the adjudication of these grounds become only academic at this stage.”

To Read the full text of the Order CLICK HERE

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