KHUSHAAL CHANDRAHAS THACKERSEY,MUMBAI V. ACIT 17(2), MUMBAI

ITA 859/MUM/2025

AI Insights

The case involves Khushaal Chandrahas Thackersey, the appellant, who contested a penalty imposed by the Assessing Officer (AO) for alleged inaccuracies in his income tax returns for the assessment year 2010-11. The AO had denied a deduction claimed under section 54F and subsequently initiated penalty proceedings for furnishing inaccurate particulars of income. The primary legal contention raised by the appellant was the validity of the notices issued under section 274 read with section 271 of the Act, which were argued to be vague and non-specific, leading to the penalty being challenged. The Tribunal, referencing judgments from the Hon'ble Jurisdictional High Court, found in favor of the appellant, leading to the deletion of the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713062 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2010-2011
• Other Referred Cases: Md. Farhan A Shaikh Vs. DCIT (2021) 434 ITR 1 (Bom.) (HC) (FB), CIT Vs. Manjunatha Cotton & Green Factory (2013) 35 taxmann.com 250/2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI; LD.
• Assessee Lawyers: K. GOPAL; LD
• Section: 143(3); 271(1)(c); 54F

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “E”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.859/M/2025 Assessment Year: 2010-11 Khushaal Chandrahas Thackersey 151 Silver Arch, 66 Nepeansea Road, Near Petit Hall, Malabar Hill, Mumbai - 400006 PAN: AFHPT2561H Vs. ACIT-17(2), Mumbai Aayakar Bhavan, Mumbai - 400020 (Appellant) (Respondent) Present for: Assessee by : Shri K. Gopal, Ld. Adv Revenue by : Shri Hemanshu Joshi,Ld. Sr. D.R. Date of Hearing : 30.07.2025 Date of Pronouncement : 30.07.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 30.12.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2010-11. Printed from counselvise.com ITA No.859/M/2025 Khushaal Chandrahas Thackersey 2 2. In the instant case, the Assessing Officer (AO) vide assessment order dated 11.03.2013 u/s 143(3) of the Act, has made the addition of Rs.2,65,94,500/- on account of denial of deduction claimed u/s 54F of the Act. The AO simultaneously also initiated the penalty proceedings for furnishing of inaccurate particulars of income. Subsequently, the AO issued the notices dated 11.03.2013 and 23.09.2015 u/s 274 r.w.s. 271 of the Act for concealment of income OR for furnishing of inaccurate particulars of income and ultimately vide penalty order dated 31.03.2017 u/s 271(1)(c) of the Act, levied the penalty of Rs.1,18,48,981/- @ 100% of the tax sought to be evaded, for furnishing of inaccurate particulars of income AND concealment of income. 3. Thus, the Assessee has raised the legal ground qua validity of the notice issued u/s 274 r.w.s. 271 of the Act as well as penalty levied vide penalty order dated 31.03.2017 on the ground that the AO had initiated penalty proceedings u/s 271(1)(c) of the Act just for furnishing of inaccurate particulars of income and thereafter issued show cause notices dated 11.03.2013 & 23.09.2015 without specifying any charge or limb i.e. for concealment of particulars of income OR for furnishing of inaccurate particulars of income and ultimately levied the penalty for furnishing of inaccurate particulars of income AND concealment of income. As the AO has not specified the specific limb/charge in the notices issued u/s 274 of the Act, thus the same would vitiate the entire proceedings and entail the penalty order as nullity, in view of the judgment passed by the Hon'ble Jurisdictional High Court in the case of Md. Farhan A Shaikh Vs. DCIT (2021) 434 ITR 1 (Bom.) (HC) (FB). Printed from counselvise.com ITA No.859/M/2025 Khushaal Chandrahas Thackersey 3 4. On the contrary, though the Ld. D.R. refuted the claim of the Assessee and relied on the orders of the authorities below but not the contents of the notices, as pointed above. 5. We have heard the parties and perused the material available on record. As the issue/ground raised by the Assessee qua validity of notice u/s 274 of the Act, goes to the root of the case, hence for the sake of brevity, we are inclined to decide this ground first. 6. Admittedly, the AO in the notices u/s 274 r.w.s. 271(1)(c) of the Act (supra) issued, has not specified particular limb/charge of penalty and therefore the penalty levied is hit by various judgments including in the case of CIT Vs. Manjunatha Cotton & Green Factory (2013) 35 taxmann.com 250/2018 and Md. Farhan A Shaikh vs. DCIT (2021) 434 ITR 1 (Bom.) (HC) (FB) {decided by Jurisdictional High Court}, wherein it was held “ that defect in the notice – non striking of the irrelevant matter, shall vitiate the proceedings” and therefore respectfully following the dictum laid down in the judgments referred to above, we are inclined to the penalty under consideration. Thus, the penalty is deleted. 7. As we have deleted the penalty, hence deem it appropriate not to delve into the other aspects/issues/grounds raised by the Assessee, as the adjudication of the same would prove futile exercise. Printed from counselvise.com ITA No.859/M/2025 Khushaal Chandrahas Thackersey 4 8. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 30.07.2025. Sd/- Sd/- (PRABHASH SHANKAR) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. PS Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. Printed from counselvise.com "