DEPUTY COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM V. RAJAKUMARI SHOPPING AMALL LLP, ATTINGAL

ITA 597/COCH/2025

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The case involves an appeal by the revenue against the order of the Learned Commissioner of Income Tax (Appeals), Kochi-3, which had deleted a penalty imposed on Rajkumari Shopping Mall LLP under section 271(1)(c) of the Income-tax Act, 1961. The penalty was originally levied following an assessment under sections 144 and 263, which confirmed an addition related to unexplained credit. The revenue contended that the notice for penalty was valid as it was system-generated with a valid DIN. However, the Tribunal, referencing decisions from the High Courts of Kerala and Karnataka, found the notice to be fundamentally defective as it did not specify the exact nature of the penalty, leading to its invalidation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785674 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 25-08-2025
• Other Referred Cases: Principal Commissioner of Income Tax Vs. Ambadi Krishna Menon, CIT vs. SSA's Emerald Meadows
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT KUMAR DAS
• Assessee Lawyers: V.M.VEERAMANI
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 144; 263; 271(1)(c); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI ANIKESH BANERJEE, JM ITA No. 597/Coch/2025 Assessment Year: 2016-17 DCIT, Central Circle .......... Appellant Aayakar Bhavan, Kawdiar, Thiruvananthapuram vs. Rajkumari Shopping Mall LLP ......... Respondent AMC 11/556, City Plaza, NH Road Attingal 695101 [PAN: AAQFR1222B] Assessee by: Shri V.M. Veeramani, CA Revenue by: Shri Sanjit Kumar Das, CIT-DR Date of Hearing: 27.10.2025 Date of Pronouncement: 29.10.2025 O R D E R Per: Anikesh Banerjee, JM The instant appeal of the revenue was filed against the order of the Learned Commissioner of Income tax (Appeal), Kochi-3 [for brevity, ‘Ld. CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, the Act’) for Assessment Year 2016-17, date of order 09/06/2025. The impugned order was emanated from the order Printed from counselvise.com 2 ITA No. 597/Coch/2025 Rajkumari Shopping Mall LLP of the Assessment Unit, Income Tax Department (in short, ‘Ld.AO’) passed under section 271(1)(c) of the Act, date of order 26/09/2023. 2. The brief facts of the case are that the assessee’s case was assessed u/s 144 r.w.s. 263 of the Act, passed on 30/03/2023. The addition was confirmed u/s 68 of the Act related to unexplained credit amount to Rs.9,56,04,655/-. The Ld.AO initiated the penalty proceedings u/s 271(1)(c) / 274 of the Act and income of which the tax sought to be evaded amount to Rs.9.56 crores on which the tax sought to be evaded amount to Rs.2,67,23,487/-. Accordingly minimum penalty was levied @100% of tax which comes to Rs.2,67,23,487/- U/s 271(1)(c) of the Act. Being aggrieved, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) considering the validity of notice U/s 271(1)(c) of the Act deleted the penalty. Being aggrieved, the revenue preferred an appeal before us. 3. The Ld. DR argued and stated that the Ld. CIT(A), has ignored the fact that the said notice bearing a validDIN (ITBA/PNL/S/271(1)(c) /2022-23/1051734270(1)) based on which penalty has beeninitiated is a system generated one where the wordings are auto populated. He further argued that without considering the fact of the case the Ld. CIT(A) passed the appellate order which is bad in law. Printed from counselvise.com 3 ITA No. 597/Coch/2025 Rajkumari Shopping Mall LLP 4. The Ld.AR argued and filed a written submission, containing pages 1 to 33, which is kept on record. The Ld.AR first argued the legal issue related to jurisdiction for issuance of notice by the Ld.AO u/s 274 without specifying the limb under which the penalty was being initiated. The relevant notice dated 31/03/2023is annexed in APB page 6. 5. The Ld. AR invited our attention in impugned appellate order page 11 to 13. The relevant paragraphs are reproduced as below. “4.1. The appellant has contended that the notices issued by the Assessing Officer for imposing penalty u/s. 271(1)(c) of the Act has not specifically mentioned whether the penalty is proposed in respect of concealment of income or for furnishing inaccurate particulars of income. The appellant contended that in the absence of specific and particular mentioning of the reason for the penalty, the penalty notice itself is invalid and as a result the imposition of penalty u/s.271(1)(c), without specific finding, is illegal and liable to be cancelled. The appellant has also cited various judicial pronouncements to support his stand. Further, during the course of proceedings, the appellant has specifically relied upon the decision of the Hon'ble High Court of Kerala in the case of Principal Commissioner of Income Tax Vs. Ambadi Krishna Menon (163 taxmann.com 141)(Ker). In support of its claims, the AR of the appellant has filed a copy of the notice u/s.274 r.w.s. 271(1)(c) of the IT Act dated 31/03/2023, issued by the AO to the appellant. Printed from counselvise.com 4 ITA No. 597/Coch/2025 Rajkumari Shopping Mall LLP 5. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 6. In respectful obedience to the decision of the various Hon'ble High Courtscited by the appellant and also the judgement of the jurisdictional High Court in the case of Principal Commissioner of Income Tax Vs. Ambadi Krishna Menon ( I.T.A.NO.75 OF 2020)(supra), the ground raised by the appellant on the validity of the notice u/s.271(1)(c) is accepted. Accordingly, it is held that the proceedingsinitiated u/s.271(1)(c) are void abinitio and hence not sustainable.” 6. We have heard the rival submissions, perused the material placed on record, and carefully considered the judicial precedents relied upon. The primary contention of the assessee is that the notices issued under section 274 r.w.s. 271(1)(c) of the Act suffer from a fundamental defect inasmuch as the Assessing Officer failed to specify the particular limb—whether the penalty proceedings were initiated for “concealment of income” or for “furnishing inaccurate particulars of income.” It is well-settled by the Hon’ble High Court of Kerala inPCIT vs. Ambadi Krishna Menon (163 taxmann.com 141) (Ker) as well as by the Hon’ble Karnataka High Court in CIT vs. SSA’s Emerald Meadows(73 Taxmann.com 241) (Kar), affirmed by the Hon’ble Supreme Court, that such omnibus notices betray non-application of mind and vitiate the penalty proceedings. In the present case, a perusal of the assessment order as well as the penalty notices reveals that the Ld. AO has mechanically referred to Printed from counselvise.com 5 ITA No. 597/Coch/2025 Rajkumari Shopping Mall LLP “concealing of income and/or furnishing of inaccurate particulars of income” without striking off the irrelevant portion. This ambiguity clearly violates the mandatory requirement of law and the principles of natural justice. We are therefore unable to accept the contention of the revenue that such defect is a mere technicality, particularly when penalty provisions under section 271(1)(c) of the Act carry severe and penal consequences.In the absence of a valid notice specifying the exact charge, the penalty proceedings themselves are rendered void ab initio. The Ld. DR was unable to controvert the arguments advanced by the Ld. AR by placing on record any contrary judicial precedent. Respectfully following the ratio laid down in the above judicial precedents, we hold that the penalty order passed under section 271(1)(c) of the Act is not sustainable in law. Accordingly, we upheld the order of the appellate authority and direct the Ld. AO to delete the penalty of Rs. 2,67,23,487/-. In the result, the appeal of the revenue is dismissed. 7. In the result, the appeal filed by the revenue bearing ITA No. 597/Coch/2025 is dismissed. Order pronounced in the open court on 29th October, 2025. Sd/- Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (ANIKESH BANERJEE) JUDICIAL MEMBER Cochin, Dated: 29th October, 2025 n.p. Printed from counselvise.com 6 ITA No. 597/Coch/2025 Rajkumari Shopping Mall LLP Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin Printed from counselvise.com "