Pawan Hans Helicopters Ltd, Noida V. ACIT Circle-19(2), New Delhi

ITA 1536/DEL/2020

AI Insights

The case involves Pawan Hans Helicopters Ltd, a government enterprise, appealing against a penalty of Rs.39,18,354 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. The penalty was based on additions made to the assessee's income regarding prior period expenses. The assessee contested the penalty on several grounds, including the lack of a reasonable opportunity to be heard and the vagueness of the penalty notice. The Tribunal, referencing judgments from the Karnataka and Delhi High Courts, found the notice to be insufficiently specific regarding the grounds for the penalty, leading to the decision to annul the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131829 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-12-2022
• Assessment Year: 2002-2003
• Appeal Filed On: 31-08-2020
• Other Referred Cases: CIT vs. Manjunatha Cotton and Ginning Factory, Mr. Mohd. Farhan A. Shaikh Vs ACIT, PCIT vs. Sahara India Life Insurance Co. Ltd., CIT vs. SSA'S Emerald Meadows
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 271(1)(c); 274; 73

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘F’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 1536/Del/2020: Asstt. Year: 2002-03 Pawan Hans Helicopters Ltd., C-14, Sector-1, Noida, Uttar Pradesh 201301 Vs. ACIT, Circle-19(1), New Delhi (APPELLANT) (RESPONDENT) PAN No.AAACP1561A Assessee by : Sh. Ved Jain, Adv. & Sh. Aman Garg, CA Revenue by : Sh. K. K. Mishra, Sr. DR Date of Hearing: 08.12.2022 Date of Pronouncement: 03.03.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A)-7, New Delhi dated 28.01.2020. 2. The assessee has raised the following ground of appeal: “1. On the facts and circumstances of the case, the order passed by the Learned CIT(A) is bad both in the eyes of law and on fact 2. On the facts and circumstances of the case the order passed by the learned CIT(A) is bad in law having been passed exparte without giving the assessee reasonable opportunity of being heard and in clear violation of the principles of natural justice. 3. On the facts and circumstance of the case, the Learned CIT(A) has erred both on facts and in laws in confirming the action of the AO levying penalty of Rs.39,18,354/- by invoking the provision of section 271(1)(c) of the Act. ITA No. 1536/Del/2020 Pawan Hans Helicopters Ltd 2 4. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the penalty levied on the addition of Rs 1,11,95,296/- on account of prior period expenses claimed by the assessee 5. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming penalty levied by the AO despite the fact that the above said additions itself are not tenable in law. 6. On the facts and circumstances of the case the learned CIT (A) has erred both on facts and in law in confirming the penalty levied by the AO ignoring the fact that assessee being a government of India Enterprise, no malafide intention can be alleged on the part of the assessee 7. On the facts and circumstances of the case the learned CIT (A) has erred both on facts and in law in confirming the penalty levied by the AO ignoring the contention of the assessee that the penalty proceedings are independent proceedings, as such mere addition does not lead to levy of penalty. 8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty levied by the AO despite the fact that the notice issued by AO u/s 274 read with section 271(1)(c) of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. 9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty levied by the AO despite the fact that issue on which penalty was levied was a debatable issue thus penalty under section 271(1)(c) cannot be levied. 10. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty levied by the AO despite the fact that there is neither concealment nor furnishing the inaccurate particulars by the assessee.” 3. Heard the arguments of both the parties and perused the material available on record. 4. We have also gone through the notice u/s 274 r.w.s. 271 of the Income Tax Act, 1961 issued by the Assessing Officer on ITA No. 1536/Del/2020 Pawan Hans Helicopters Ltd 3 30.06.2009. We find that the Assessing Officer has issued the penalty order stating that, you *have concealed the particulars of your income by furnishing inaccurate particulars of such income.” 5. On this issue, we are guided by the following judgments: 1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in ITA No. 475 of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180] ITA No. 1536/Del/2020 Pawan Hans Helicopters Ltd 4 6. Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated. 7. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 03/03/2023. SD/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 03/03/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR