The Income Tax Appellate Tribunal (ITAT), Delhi Bench held that the penalty imposed Section 271(1)(c) without specifying the limb is invalid.
The assessee Company, Elite Realtech Pvt. Ltd. has been engaged in the business of real estate. A search and seizure action under section 132 was conducted in the BPTP Group of cases in which the assessee was also covered. Accordingly, proceedings under section 153A were initiated in assessee’s case. A notice under section 153A of the Act was issued requiring the assessee to furnish the true and correct return of income.
In response thereto, the return of income was filed declaring a total loss of Rs. 3,100/-. The assessment was completed under section 153A or 143(3) for the Assessment Year 2011-12 vide order by the Assessing Officer at income of Rs. 1,31,28,977/- thereby making an addition of Rs. 1,31,32,077/- on account of interest on Post Dated Cheques (PDCs).
Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee vide order. In the meanwhile, the penalty proceedings under section 271(1)(c) of the Act were initiated for the present Assessment Year and penalty order was passed thereby levying penalty of Rs.10,62,998/-. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A) and the same was dismissed.
The assessee submitted that as relates to penalty appeal, the penalty levied is bad in law also on account of the reason that notice under section 274 read with Section 271(1)(c) did not specify the specific limb of Section 271(1)(c) for which penalty proceedings have been initiated by way of striking off the inappropriate words in penalty notice.
The coram of R.K.Panda and Suchitra Kamble noted that the assessee company was not in existence when the first search took place on the group of BPTP and the seized material therein clearly does not belong to assessee company. Secondly, at the time of the second search no incriminating material was found in respect of the assessee company.
Hence, the Tribunal held that the addition made on PDC’s based on the first search does not have any corroborative evidence which has been brought by the Revenue on record. The CIT(A) as well as the Assessing Officer has failed to establish that the assessee company was involved in unexplained/unaccounted money transactions.
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