ITAT quashes Levy of Penalty u/s 271(1)(c) without mentioning Specific Charge in the Notice issued u/s 274 [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench presided by Mr. Challa Nagendra Prasad, Judicial Member has quashed levy of penalty under section 271(1)(c) without mentioning specific charge in the notice issued under section 274.

The appellant, Mr. Atul Kumar Bansal filed an appeal against the confirmation of imposition of penalty by the first appellate authority under section 271 (1)(c) of the Income Tax Act, 1961.

The counsel for the appellant by relying on the decision of the Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows submitted that initiation and levy of penalty under Section 271(1)(c) of the Act is bad in law as there is no specific charge mentioned in the notice issued under Section 274 read with section 271(1)(c) of the Act as to whether the notice was issued for concealment of income or for furnishing inaccurate particulars of income.

The Authority observed that the Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh v. ACIT 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”. Thus Authority further observed that the department failed to intimate the assessee of the relevant limb and charge for which the notices were issued.

The Authority has held that “we hold that the penalty order passed u/s. 271(1)(c) of the Act by the Assessing Officer is bad in law and accordingly, the penalty order passed u/s. 271(1)(c) of the Act for Assessment Years 2000-01 to 2003-04 is quashed”.

Advocate Mr. V. K. Sabharwal and Mr. Sumesh Swani appeared on behalf of the appellant and revenue respectively.

To Read the full text of the Order CLICK HERE

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