NITIN RAJ MARWAH, MUMBAI V. DY. COMMISSIONER OF INCOME TAX 10(2)(2), MUMBAI

ITA 2252/MUM/2023

AI Insights

The case involves Nitin Raj Marwah, the legal heir of Late Shri Krishnalal Marwah, who appealed against the penalty levied by the Deputy Commissioner of Income Tax under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2014-15. The penalty of Rs.14,87,062 was imposed following the disallowance of a deduction claimed under section 35(1)(iii) of the Act, which pertained to donations made to trusts/institutions. The primary legal contention in the appeal was the ambiguity in the penalty notice regarding the specific nature of the penalty - whether for concealment of income or furnishing inaccurate particulars. The Tribunal, referencing a decision by the Bombay High Court, found the notice defective and quashed the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125120 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 20-06-2023
• Other Referred Cases: Mohd. Farhan A. Shaikh v/s CIT, [2021] 434 ITR 1 (Bom.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: POOJA PITALE
• Section: 271(1)(c); 143(3); 142(1); 250; 274; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.2252/Mum./2023 (Assessment Year : 2014–15) Nitin Raj Marwah, Legal heir of Late Shri Krishnalal Marwah 8 th Floor, Marwah Centre Krishnalal Marwah Marg Andheri (East), Mumbai 400 072 ................ Appellant v/s Dy. Commissioner of Income Tax Circle–10(2)(2), Mumbai ................ Respondent Assessee by : Ms. Pooja Pitale Revenue by : Shri Ashok Kumar Ambastha Date of Hearing – 26/09/2023 Date of Order – 27/09/2023 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the Legal Heir of the assessee challenging the impugned order dated 19/05/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], which in turn arose from the penalty order dated 27/04/2017 passed under section 271(1)(c) of the Act, for the assessment year 2014-15. 2. The only dispute raised by the assessee, in the present appeal, is against the levy of penalty of Rs.14,87,062, under section 271(1)(c) of the Act. Nitin Raj Marwah ITA no.2252/Mum./2023 Page | 2 3. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and his main source of income was salary from M/s.Marwah Steels Private Limited, in the capacity as Director. Besides, the assessee declared income from house property and income from other sources. For the year under consideration, the assessee filed its return of income on 29/07/2014, declaring a total income of Rs.84,31,240. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it was observed that the assessee has claimed deduction under section 35(1)(iii) of the Act amounting to Rs.43,75,000, on account of donations given to the trusts/institutions. During the assessment proceedings, the assessee filed revised computation of total income withdrawing the weighted deduction claimed under section 35(1)(iii) of the Act aggregating to Rs.43,75,000, on account of donations given to trusts/institutions. Accordingly, the Assessing Officer (“AO”) vide order dated 31/10/2016, passed under section 143(3) of the Act, inter-alia, disallowed the deduction of Rs.43,75,000, claimed under section 35(1)(iii) of the Act and added the same to the total income of the assessee. 4. Subsequently, the penalty order dated 27/04/2017, was passed by the AO under section 271(1)(c) of the Act wherein a penalty of Rs.14,87,062, was levied. In the further appeal against the penalty order, the learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld Nitin Raj Marwah ITA no.2252/Mum./2023 Page | 3 the levy of penalty under section 271(1)(c) of the Act. Being aggrieved, the assessee is in appeal before us. 5. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the penalty in the present case has been levied without specifying the head under which the same has been levied. The learned AR by referring to the penalty notice dated 31/10/2016, issued under section 274 r/w section 271(1)(c) of the Act submitted that the AO has not specified whether the penalty has been levied for concealment of particulars of income or for furnishing inaccurate particulars of income. 6. On the other hand, the learned Departmental Representative (“learned DR”) vehemently relied upon the order passed by the lower authorities. 7. We have considered the rival submissions and perused the material available on record. In the present case, the AO initiated penalty proceedings under section 271(1)(c) of the Act and levied a penalty of Rs.14,87,062. From the perusal of the notice dated 31/10/2016, issued under section 274 r/w section 271(1)(c) of the Act, we find that the AO did not strike–off any of the twin charges i.e., concealment of particulars of income or furnishing of inaccurate particulars of income. The case of the assessee is squarely covered by the decision of the Hon'ble Jurisdictional High Court in Mohd. Farhan A. Shaikh v/s CIT, [2021] 434 ITR 1 (Bom.), wherein the Larger Bench of the Hon’ble Court has held that the defect in notice by not striking off the irrelevant matter would vitiate the penalty proceedings. Accordingly, respectfully following the aforesaid decision of the Hon'ble Jurisdictional High Nitin Raj Marwah ITA no.2252/Mum./2023 Page | 4 Court, the penalty order passed under section 271(1)(c) of the Act is quashed. 8. In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 27/09/2023 Sd/- PRASHANT MAHARISHI ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 27/09/2023 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai