M/S. H.S. Virdi, Chittaranjan, Burdwan (West) V. I.T.O., Ward - 2(1), Kolkata, Kolkata

ITA 126/KOL/2023

AI Insights

The case involves an appeal by M/s. H.S. Virdi against the penalty imposed by the Income Tax Officer, Ward-2(1), Asansol, under section 271(1)(c) read with section 274 of the Income Tax Act. The penalty was initiated following an assessment that significantly increased the assessee's declared income. The primary legal contention was the validity of the penalty notice, which was argued to be defective as it did not specify the exact nature of the alleged wrongdoing—whether it was for concealing income or for furnishing inaccurate particulars. The Tribunal referenced several precedents, including decisions from the Supreme Court and other High Courts, which supported the assessee's position that such a defect in the notice was fatal to the penalty proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128768 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 14-02-2023
• Other Referred Cases: Mak Data Pvt. Ltd. Vs. CIT, CIT Vs SSA's Emerald Meadows, CIT Vs Samson Perinchery
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 274

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री राज े श क ु मार, ल े खा सदस्य एवं श्री संजय शमा ा , न्याधयक सदस्य क े समक्ष Before SRI RAJESH KUMAR, ACCOUNTANT MEMBER & SONJOY SARMA, JUDICIAL MEMBER I.T.A. No.: 126/KOL/2023 Assessment Year: 2012-13 M/s. H.S. Virdi.........................................................Appellant [PAN: AADFH 5651 D] Vs. ITO, Ward-2(1), Asansol.........................................Respondent Appearances by: Sh. U. Dasgupta, Adv., appeared on behalf of the Assessee. Sh. P.P. Barman, Addl. CIT, Sr. D/R, appeared on behalf of the Revenue. Date of concluding the hearing : July 27 th , 2023 Date of pronouncing the order : August 21 st , 2023 ORDER Per Rajesh Kumar, Accountant Member: This appeal preferred by the assessee is against the order passed by Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] dated 20.12.2022 for the Assessment Year (in short ‘AY’) 2012-13. I.T.A. No.: 126/KOL/2023 Assessment Year: 2012-13 M/s. H.S. Virdi. Page 2 of 4 2. First of all, we would like to deal with and decide ground no. 2 raised by the assessee which is extracted below: “For that on facts of the case the initiation of penalty u/s 271(1)(c) of the Act vide notice u/s 274 of the Act dated 23.03.2015 is legally not valid and the penalty proceedings on the face of such defective notice may please be deleted.” 3. The facts in brief are that the assessment u/s 143(3) of the Act was framed vide order dated 23.03.2015 assessing the total income of the assessee at Rs. 47,60,580/- as against the returned income of Rs. 7,47,620/-. The penalty proceedings were initiated u/s 271(1)(c) r.w.s. 274 of the Act vide notice dated 23.03.2015 stating therein to show cause as to why the penalty should not be imposed for concealing the particulars of income or inaccurate particulars of such income. Finally, The Assessing Officer (in short ld. 'AO') levied penalty of Rs. 8,96,232/- vide order dated 31.03.2019 passed u/s 271(1)(c) of the Act. 4. The assessee challenged the validity of the said order before Ld. CIT(A). However, Ld. CIT(A) dismissed the appeal of the assessee by relying on the decision of Hon'ble Apex Court in the case of Mak Data Pvt. Ltd. Vs. CIT reported in 358 ITR 593 (SC) which provides that voluntary disclosure did not release the assessee from mischief of penal proceeding u/s 271(1)(c) of the Act. Ld. CIT(A) did not adjudicate the issue challenged by the assessee of non-striking off one of the two limbs on which the penalty was proposed to be levied. 5. After hearing rival contentions and perusing the material on record, we find that the penalty in this case was initiated vide I.T.A. No.: 126/KOL/2023 Assessment Year: 2012-13 M/s. H.S. Virdi. Page 3 of 4 notice dated 23.03.2015 issued u/s 274 of the Act r.w.s. 271(1)(c) of the Act wherein the assessee was called upon to show cause as to why the penalty should not be levied u/s 271(1)(c) of the Act for concealing the particulars of income or furnishing inaccurate particulars of income. Thus, the penalty notice has been issued in a standard format without application of mind as Ld. AO had failed to specify one of the two limbs under which the penalty was proposed to be levied thereby denying the assessee the legitimate opportunity to respond to the show cause notice. In our view, the said notice is not valid and suffers from incurable defect which goes to the root of the matter and hence, the penalty order passed based upon the said notice cannot be sustained. The case of the assessee finds support from the decision of CIT Vs SSA’s Emerald Meadows ITA No. 380 of 2015 (ITA No. 433/BAN/2014) wherein the Hon'ble Apex Court has held that the failure to specify in the penalty notice whether the penalty is proposed for inaccurate particulars of income or concealment of income makes the penalty proceedings liable for cancellation. In the case of CIT Vs Samson Perinchery ITA No. 1154, the Hon'ble Bombay High Court has held that failure by the AO to satisfy in notice issued u/s 274 of the Act, one of the two limbs on which the penalty was proposed to be levied i.e. furnishing of inaccurate particulars of income or for concealment of income is fatal and not curable and renders the levy of penalty invalid. 6. We, therefore, respectfully following the ratio laid down in the above decisions, set aside the order of Ld. CIT(A) and direct Ld. AO to delete the penalty levied u/s 271(1)(c) of the Act. I.T.A. No.: 126/KOL/2023 Assessment Year: 2012-13 M/s. H.S. Virdi. Page 4 of 4 7. In the result, the appeal filed by the assessee is allowed. Kolkata, the 21 st August, 2023. Sd/- Sd/- [Sonjoy Sarma] [Rajesh Kumar] Judicial Member Accountant Member Dated: 21.08.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. M/s. H.S. Virdi, Qr. No. 40/B, Street No. 66, P.O.- Chittaranjan, Burdwan-713 331. 2. ITO, Ward-2(1), Asansol. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata