The Income Tax Appellate Tribunal (ITAT), Delhi Bench presided by Mr. N.K. Billaiya, Accountant Member, and Mr. N.K. Choudhry, Judicial Member has deleted the penalty imposed under section 271(1)(c) since the notice under section 274 fails to specify concealment or furnishing of inaccurate particulars of income.
During the scrutiny assessment of the appellant, Kalra Papers Pvt. Ltd., the Assessing Officer disallowed the claimed loss of Rs.1,50,00,00/- on the loss of properties and Rs.3,33,893/- on account of electricity expenses. the CIT(A) affirmed the disallowances and penalty of Rs.3,33,893/- on account of electricity expenses and Rs.11,08,598/- out of Rs. 1.5Crores on account of property loss claimed by the appellant.
The AO thereafter initiated penalty proceedings under section 271(1)(c) for concealment of particulars of income or furnishing inaccurate particulars of such income and ultimately imposed a penalty of Rs.6,00,000/-. The aggrieved appellant filed an appeal before CIT(A), which confirmed the imposition of the penalty.
The aggrieved appellant filed an appeal before the ITAT. The counsel for the appellant submitted that the AO initiated a penalty under section 271(1)(c) of the Act for ‘concealing the particulars of income or furnishing inaccurate particulars of Income without specifying any particular limb of the penalty in the notice under section 274.
The counsel for the appellant placed reliance on the decision of the Apex Court in M/s. SSA’s Emerald Meadows. The Apex Court has held that “the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particularsof income”.
The Tribunal while deleting the imposition of penalty observed that the notice under section 274 read with section 271(1)(c) of the Act without specifying the limb under which the penalty proceedings have been initiated and proceeded, proves that the notice is issued in a stereotyped manner without applying mind which is bad in law, hence cannot be considered a valid notice sufficient to impose penalty u/s 271(1)(c).
Mr. Anil Jain and Mr. Anuj Garg appeared on behalf of the appellant and respondent respectively.
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