Trilok Chand Chaudhary, New Delhi V. ACIT, Central Circle- 26, New Delhi

CO 138/DEL/2018

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted a penalty of Rs. 2,25,75,000 imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961. The assessee, Trilok Chand Chaudhary, also filed a Cross Objection challenging the penalty order on the grounds that the show cause notice did not specify under which limb of section 271(1)(c) the penalty was levied. The Tribunal, referencing decisions from the Delhi and Karnataka High Courts, found the penalty notice to be invalid as it lacked specific details regarding the limb under which the penalty was imposed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300979 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 08-07-2018
• Other Referred Cases: Pr. CIT vs. Sahara India Life Insurance Company Ltd., CIT v. Manjunatha Cotton & Ginning Factory, Commissioner of Income Tax v. SSA's Emerald Meadows
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 274; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 4282/DEL/2018 [A.Y. 2012-13] The A.C.I.T. Vs. Trilok Chand Chaudhary Central Circle-26 39, Gadai Pur, Mehrauli New Delhi New Delhi PAN: AAEPC 0683 P CO No. 138/DEL/2018 [ITA No. 4282/DEL/2018 [A.Y. 2012-13]] Trilok Chand Chaudhary Vs. The A.C.I.T. 39, Gadai Pur, Mehrauli Central Circle-26 New Delhi New Delhi PAN: AAEPC 0683 P (Applicant) (Respondent) Assessee By : Shri C.S. Anand, Adv Department By : Shri H.K. Choudhary, CIT-DR Date of Hearing : 12.01.2023 Date of Pronouncement : 12 .01.2023 2 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the Revenue and Cross Objection by the assessee are preferred against the order of the ld. CIT(A) – 26, New Delhi dated 12.03.2018 pertaining to Assessment Year 2012-13. 2. The solitary grievance of the Revenue is that the ld. CIT(A) erred in deleting the penalty of Rs. 2,25,75,000- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] and the Cross Objection of the assessee is that the penalty order has been passed based upon the show cause notice issued u/s 274 of the Act r.w.s 271 of the Act wherein the Assessing Officer failed to specify under which limb the impugned penalty has been levied. 3. Since the Cross Objection goes to the root of the matter, we deem it fit to address it first. 3 4. We have given thoughtful consideration to the orders of the authorities below. The undisputed fact is that notice served upon the assessee u/s 274 of the Act r.w.s 271(1)(c) of the Act did not specify under which limb of the section he is proposing to levy penalty under section 271(1)(c) of the Act. 5. This issue has been decided by the Hon’ble Delhi High Court in favour of the assessee and against the Revenue in the case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. ITA 475 of 2019 held as under: “21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.” 4 6. Similar view was taken by the Hon’ble High Court of Karnataka in the case of SSA Emerald Meadows ITA No. 380 of 2015. The relevant findings of the judgement read as under: “Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act 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 particulars of income. The issue was decided in favour of the assessee .” 7. A SLP of the revenue against this judgement of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in 73 taxmann.com 248. 8. Respectfully following the binding decision of the Hon’ble Jurisdictional High Court of Delhi, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act. Accordingly, the Cross Objection of the assessee is allowed. 5 9. Since we have quashed the penalty order itself, we do not find it necessary to dwell into the merits of the case. Appeal of the Revenue becomes otiose. 10. In the result, Cross objection of the assessee in CO No. 138/DEL/2018 is allowed whereas the appeal of the Revenue in ITA No. 4282/DEL/2018 is dismissed. The order is pronounced in the open court on 12.01.2023. Sd/- Sd/- [ANUBHAV SHARMA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12 th January, 2023. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi 6 Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order