The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held the penalty proceedings-initiated under Section 271(1)(c) of the Income Tax Act, 1961 as non- sustainable, when notices issued by the A.O turned to be bad in law, being vague.
The aforesaid observation was made by the Delhi ITAT, when an appeal was preferred before it by the Assessee, as against the order of the CIT(A), New Delhi, dated 27.09.2019, pertaining to A.Y.2014-15.
The sum and substance of the grievance of the Assessee being that the CIT(A), had erred in confirming the levy of penalty under Section. 271 (1) (c) of the Income Tax Act, on the basis of vague and unspecific charges mentioned in the assessment order and the show caused notice, the roots for the levy of penalty lied in the assessment order dated 15.12.2016, framed under Section.144 of the Income Tax Act, wherein the returned income of Rs.692690/- was assessed at Rs.5472390/.
The penalty proceedings being separately initiated, accordingly, notices under Section.274 r.w.s. 271, were issued and served upon the Assessee. And, the penalty was levied at Rs.1402479/.
Being agitated by the same, the Assessee appealed the matter before the CIT(A) but without any success. And, it is in this situation that the Assessee has presently preferred the instant appeal before the Delhi ITAT.
With no one having appeared on behalf of the Assessee, despite notice being issued, the ITAT heard Sh. Anuj Garg, the SR DR at length, while carefully perusing the case records and identifying the bone of Assessee’s contention that the penalty notice issued by the AO does not specify as to under which limb of section 271 (1) (c) the penalty in question is leviable.
Hearing the opposing contentions of both sides, and thereby perusing the materials available on record, the Delhi ITAT observed:
“We are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings-initiated under Section 271(1)(c) are not sustainable.”
“The decisions relied upon by the ld. DR are misplaced and the decision of the Hon’ble Jurisdictional High Court is directly on the point.”, relying upon various precedents of the Delhi High court in this regard, the ITAT added.
“ In view of what has been discussed above, following the decisions rendered by Hon’ble High Courts discussed in the preceding paras and without entering into the other aspects of the case, we are of the considered view that when the very initiation of the penalty by way of issuance of vague and ambiguous notices under Section 271(1)(c) read with section 274 of the Act without specifically charging the Assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable and as such, the appeal filed by the Assessee is allowed”, the ITAT Coram comprising of Anubhav Sharma, the Judicial Member , along with N.K Billaiya, the Accountant Member further added.
Thus, the Delhi ITAT finally held:
“Respectfully following the decisions as discussed above, we direct the Assessing Officer to delete the penalty levied under Section 271(1)(c) of the Act. In the result, the appeal of the Assessee is allowed.”
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