The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has quashed the Penalty Order as it suffered from vagueness, and did not provide sound legal basis for imposition of penalty.
The assessee, Aesthetica Enterprises Pvt. Ltd. has challenged the penalty levied under Section 271(1)(c) of the Act is void as the notice under section 274 read with Section 271 is bad and defective as it is issued without deleting the appropriate clause under which the penalty is proposed to be imposed is either for filling of inaccurate particular of income or concealment of particulars of income and as such the notice is not sustainable and not curable.
It has been pointed out that the nature of default committed by the assessee is not known as the inappropriate portion in the relevant column of the show cause notice has not been struck off. Consequently, the Assessing Officer himself was unsure of the category under which the default is blamed on the assessee. Consequently, the penalty order passed in consequence of such defective notice suffers from non application of mind and lack of satisfaction towards the nature of default. It was further pointed out that the assessee belongs to Rockland Group of companies where the search was conducted, and in the identical set of facts, the penalty imposed under section 271(1)(c) was deleted in other group cases owing to similar defective notice.
The coram of Judicial Member, Kul Bharat and Accountant Member, Pradeep Kumar Khedia accepted the plea of the assessee that the notice issued for the purposes of imposition of penalty, which suffers from the vice of vagueness, does not provide sound legal basis for imposition of penalty. Consequently, set aside the order of the CIT(A) and quash the impugned penalty order.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
