The New Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) quashed Tata Teleservice Penalty Notice Due to Assessing Officer ( AO )’s vague justification and Non-application of mind.
Tata Teleservices Ltd., the assessee received a penalty notice under Section 271(1)(c) of the Income-tax Act, 1961, for alleged concealment of income or furnishing inaccurate particulars of income.
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The assessee challenged the penalty notice on the grounds that it was vague, as the Assessing Officer ( AO ) did not specify whether the penalty was for “concealment of income” or for “furnishing inaccurate particulars.”
The primary issue is whether the penalty notice issued under Section 274 read with Section 271(1)(c) of the Income-tax Act, 1961 is valid when the AO did not specify which offense Tata Teleservices committed—whether it concealed income or furnished inaccurate particulars.
The assessee’s counsel argued that the penalty notice was vague because it did not clearly specify whether the penalty was being levied for concealment of income or furnishing inaccurate particulars. The AO failed to strike off the irrelevant portion of the penalty notice.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The assessee’s counsel relied on various judgments, particularly the Bombay High Court’s decision in Mohd. Farhan A Shaikh vs. DCIT and the Delhi High Court‘s ruling in PCIT vs. Sahara India Life Insurance Co. Ltd, which held that such vague penalty notices are invalid due to non-application of mind by the AO.
The two-member bench comprising M. Balaganesh ( Accountant Member ) and Vimal Kumar ( Judicial Member ) observed that the AO had not struck off the irrelevant portion of the penalty notice, which made it unclear whether the assessee was being penalized for concealing income or for furnishing inaccurate particulars.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The tribunal referenced Apex Court rulings, which emphasized that such ambiguity in a penalty notice reflects non-application of mind and is fatal to the penalty proceedings. Therefore, the tribunal ruled that the penalty notice was indeed invalid because of the lack of specificity.
Thus, the tribunal directed the AO to delete the penalty imposed under section 271(1)(c). The assessee’s cross-objection was allowed.
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