JHUMA CHATTERJEE,KOLKATA V. I.T.O., WARD - 1(3), ASANSOL

ITA 2500/KOL/2024

AI Insights

The case involves Jhuma Chatterjee, the appellant, who contested a penalty imposed by the Income Tax Officer (ITO) for alleged concealment of income. The penalty was based on an addition made during the assessment year 2014-15, where a significant difference between the declared income and the market value of a property was noted. The primary legal contention was the vagueness of the notice issued under section 271(1)(c) read with section 274 of the Income Tax Act, which the appellant argued was standard and mechanical, lacking specific charges. The Tribunal, referencing a decision by the Calcutta High Court, agreed with the appellant, leading to the quashing of the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772365 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2014-2015
• Other Referred Cases: KPC Medical College and Hospital vs. PCIT [2025] 173 taxmann.com 581 (Calcutta), CIT v. SSA'S Emerald Meadows [2016] 73 taxmann.com 241 (Karnataka), Commissioner of Income-tax v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Karnataka), Pr. CIT v. Brijendra Kumar Poddar [ITAT No. 215 of 2018, dated 23-11-2021]
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDIP SARKAR
• Assessee Lawyers: SOMNATH GHOSH
• Keywords: Initiation of penalty proceedings
• Section: 143(3); 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.2500/KOL/2024 (Assessment Year:2014-15) Jhuma Chatterjee BF-151 Ground Floor, Sector-1, Salt Lake, Kolkata-700064 West Bengal Vs. ITO, Ward-1(3) Aaykar Bhavan, Opposite Ramakrishna School, PO Asansol, PIN-713305, West Bengal (Appellant) (Respondent) PAN NO. AJEPC3975K Assessee by : Shri Somnath Ghosh, AR Revenue by : Shri Sandip Sarkar, DR Date of hearing: 17.07.2025 Date of pronouncement: 26.08.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 12.08.2024 for the AY 2014-15. 02. At the time of hearing the learned counsel of the assessee pressed the second ground of appeal only, which is qua notice issued u/s271(1)(c) of the Act being vague without mentioning any specific charge and therefore, null and void ab initio and consequently, the entire proceedings need to be quashed and penalty imposed needs to be deleted in full. 03. The facts in brief are that the assessee filed the return of income on 10.01.2015, electronically by declaring income of ₹3,68,310/-. The assessment was framed u/s 143(3) of the Act vide order dated 25.10.2016 passed u/s 143(3) of the Act, wherein addition of ₹ 21,62,303/- was made in respect of difference between market value Printed from counselvise.com Page | 2 ITA No.2500/KOL/2024 Jhuma Chatterjee; A.Y. 2014-15 and value of the property. Accordingly, the penalty proceedings under Section 271(1)(c) read with section 274 of the Act, were initiated for concealment of income by issuing notice dated 25.10.2016. 04. In the appellate proceeding, the learned CIT (A) reduced the addition to the extent of ₹3,58,710/-. The ld. AO thereafter recorded a finding that obviously the assessee has concealed the income and had not offered the tax, the correct income in ITR. Finally, the penalty of ₹60,835 was imposed equal to 100% of tax sought to be evaded by passing an order u/s271(1)(c) of the Act dated 17-02-2022, which was also confirmed by Landed CIT (A). 05. After hearing the rival contentions and perusing the materials available on record, we find that the notice u/s 274(1) of the Act has been initiated on 25.10.2016, wherein the learned AO has not either struck off the irrelevant limb or specified the limb under which the penalty was proposed to be levied. In other words, the learned AO has stated both the limbs in the said notices. Therefore, we find merit in the contention of the assessee that the notice has been issued in standard format and in a mechanical manner without application of mind, with the result that assessee could not reply the correct charge under which the penalty was proposed to be levied. The case of the assessee is squarely covered by the decision of the Hon'ble Jurisdiction High Court in the case of KPC Medical College and Hospital vs. PCIT [2025] 173 taxmann.com 581 (Calcutta) dated 19-03-2025, wherein the similar issue has been decided in favour of the assessee by observing and holding as under: - “13. We have perused the notice and we find that none of the relevant columns have been indicated nor have the irrelevant columns been struck off. Identical issue came up for consideration wherein one of the questions which was considered was with regard to the validity of the notice issued under Section 274 read with 271 wherein the Court also took into consideration the effect of Section 271AAB read with 162 and Printed from counselvise.com Page | 3 ITA No.2500/KOL/2024 Jhuma Chatterjee; A.Y. 2014-15 answered the questions in favour of the assessee and against the revenue in the following terms : \"In CIT v. SSA'S Emerald Meadows [2016] 73 taxmann.com 241 (Karnataka) the High Court of Karnataka following the decision in Commissioner of Income-tax v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Karnataka) held that the imposition of penalty under section 271(1)(c) of the Act is bad in law and invalid for the reasons where the show cause notice under section 274 of the Act did 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. The said decision of the High Court of Karnataka was affirmed by the Hon'ble Supreme Court in the decision reported in Commissioner of Income- tax v. SSA'S Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180 (SC). On the same lines it is the decision of this court in Pr. CIT v. Brijendra Kumar Poddar in [ITAT No. 215 of 2018, dated 23-11-2021]. As pointed out earlier, the show cause notice issued under Section 274 read with Section 271 of the Act did not furnish any particulars and all the relevant columns have been left blank. Thus, by applying the legal position in the aforementioned decision, this court has no hesitation to hold that the show cause notice was bad in law consequently the initiation of penalty proceedings is vitiated.\" 14. Thus, for the above reasons, the appeals filed by the assessee are allowed and the substantial questions of law are answered in favour of the assessee.” 06. Therefore, respectively following the decisions of the Hon'ble Jurisdictional High Court we quash the penalty proceedings and also penalty order-imposed u/s 271(1)(c) of the Act. 07. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26.08.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:26.08.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 4 ITA No.2500/KOL/2024 Jhuma Chatterjee; A.Y. 2014-15 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "