KISHAN KUMAR GUPTA,GHAZIABAD V. ITO WARD 1(3), GHAZIABAD

ITA 4570/DEL/2025

AI Insights

The case involves Kishan Kumar Gupta, the appellant, who appealed against the penalty imposed by the Income Tax Officer (ITO) under section 271(1)(c) for the assessment year 2014-15. The penalty was initially challenged before the Commissioner of Income Tax (Appeals), which was dismissed, leading to the current appeal before the Income Tax Appellate Tribunal. The primary legal issue was the validity of the penalty notice, which failed to specify the exact nature of the penalty - whether for concealment of income or furnishing inaccurate particulars. The Tribunal, referencing precedents and legal provisions, found the notice to be invalid due to non-specificity, leading to the allowance of the appeal and deletion of the penalty.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 838285 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 25-07-2025
• Other Referred Cases: M/s. SSA's Emerald Meadows vs. CIT, CIT vs. Manjunatha Cotton and Ginning Factory
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: SAHIL SHARMA; SANJAY PARASHAR
• Keywords: Condonation of delay; Set aside; Reasonable cause; Question of law; Initiation of penalty proceedings
• Section: 143(3); 142(1); 271(1)(c)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “B” BENCH: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4570/Del/2025 [Assessment Year : 2014-15] Kishan Kumar Gupta H.No.599, Hanuman Mandir, Ambedkar Park, Jhandapur, I.E. Sahibadbad, Ghaziabad-201010 PAN-AYVPG6708N Vs ITO Ward-2(1)(3) Ghaziabad APPELLANT RESPONDENT Assessee by Shri Sahil Sharma, Adv. & Shri Sanjay Parashar, Adv. Revenue by Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 22.12.2025 Date of Pronouncement 20.02.2026 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by the assessee against the order dated 07.11.2023 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“ld. CIT(A)”] in Appeal No. CIT(A), Noida-1/10041/2019-20 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the penalty order passed u/s 271(1)(c) dated 15.03.2019 passed u/s 271(1)(c) of the Act pertaining to Assessment Year 2014-15. 2. The appeal is delayed by 55 days for which an application for condonation of delay alongwith affidavit was filed as per which the assessee was suffering from prolonged illness and was bed-ridden. In Printed from counselvise.com ITA No.4570/Del/2025 Page | 2 support, copy of the medial reports and the fitness certificate issued by the Government hospital are filed with condonation petition. It is thus, requested that delay may be condoned as the circumstances were beyond the control of the assessee as he was medically unfit during the period from 07.10.2023 to 23.07.2025. 3. On the other hand, Ld. Sr. DR for the Revenue submits that assessee though was confined to bed due to illness however, he can direct the Counsel through telephonic mode for filing the appeal on behalf of the assessee which was not done. Therefore, a prayer is made for not condoning the delay. 4. After considering the submissions made by assessee and from the perusal of the recorded produced before us, it is seen that assessee was getting medical treatment under Medical Officer of Government Hospital, Ghaziabad and concerned Doctor has issued fitness certificate to the assessee on 25.07.2025. Therefore, we find that assessee has sufficient and reasonable cause in filing the appeal delayed. Accordingly, delay is hereby, condoned and appeal of the assessee is admitted for adjudication. 5. Brief facts of the case are that assessee is engaged in the business of vegetables and e-filed his return of income on 18.07.2014, declaring total income of INR 3,92,730/-. The case was selected for ‘complete scrutiny’ through CASS on the reason that “cash deposit in saving bank account(s) is more than the turnover”. Subsequently, statutory notice issued u/s 143(2) dated 28.08.2015 Printed from counselvise.com ITA No.4570/Del/2025 Page | 3 was issued followed by notice u/s 142(1) of the Act alongwith detailed questionnaire. In response, assessee furnished written submission alongwith details and documents alongwith cash book which was not found genuine and acceptable. Thereafter the AO assessed income of the assessee at INR 84,17,900/- vide assessment order dated 30.11.2016 passed u/s 143(3) of the Act. 6. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 07.11.2023, dismissed the appeal of the assessee. 7. Aggrieved by the order of ld. CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:- 1. “That on the facts and circumstances of the case and in law, the impugned penalty order dated 15.03.2019 passed by the Ld. Assessing Officer (\"A.O.\") u/s 271(1)(c) of the Income Tax Act, 1961 (\"the Act\") imposing a penalty of Rs.31,65,780/- is arbitrary, bad in law and liable to be quashed. 2. That on the facts and circumstances of the case and in law, the show cause notice dated 30.11.2016 issued u/s 274 r.w.s 271 of the Act, does not specify whether the penalty is proposed for concealment of particulars of income or furnishing of inaccurate particulars of income, as required u/s 271(1)(c) of the Act. This fundamental defect renders penalty order legally invalid. 3. That on the facts and circumstances of the case and in law, the Ld. A.O. has failed to record a clear and specific satisfaction regarding charge u/s 271(1)(c) of the Act, resulting in invalid assumption of jurisdiction. 4. Without prejudice, that on the facts and circumstances of the case and in law, the quantum of penalty addition computed by the Ld. A.O. is erroneous and liable to be set aside. 5. The Appellant craves leave to add, delete, modify or vary any of the grounds of appeal at any time during the pendency of the appeal or at the time of hearing.” Printed from counselvise.com ITA No.4570/Del/2025 Page | 4 8. Before us, ld. AR for the assessee vide letter dated 22.12.2025 filed additional grounds of appeal and requested for the admission of the same under Rule 11 of the ITAT Rules. The additional ground of appeal raised by the assessee reads as under:- \"That on the facts and circumstances of the case and in law, the, the show-cause notice dated 30.11.2016 issued u/s 274 r.w.s 271 of the Income Tax Act, 1961 fails to specify whether the penalty is proposed for concealment of particulars of income or furnishing of inaccurate particulars of income, rendering the impugned penalty proceedings legally invalid\" 9. The additional ground of appeal taken by the assessee is purely legal in nature wherein assessee has challenged the validity of initiation of penalty proceedings u/s 271(1)(c) of the Act as in the notice issued limb under which penalty proceedings initiated was not specified. Since this fact is verifiable from the perusal of notice filed by the assessee at Page 1 of the Paper Book, therefore, we admit the same for adjudication. 10. Heard the contentions of both parties at length and perused the material available on record. From the perusal of the notice dated 30.11.2016 issued for initiation of penalty proceedings u/s 271(1)(c) of the Act, it is observed that AO has not specified whether penalty proceedings were initiated for concealment of income or for furnishing inaccurate particulars of income. The notice so issued and available at page 1 of the Paper Book is reproduced as under:- Printed from counselvise.com ITA No.4570/Del/2025 Page | 5 Printed from counselvise.com ITA No.4570/Del/2025 Page | 6 11. From the perusal of the same, it is observed that the AO has not strike off “OR” between the charge “concealed the particulars of your income” and “have furnished inaccurate particulars of income”. 12. As per Section 271(1)(c) of the Act, the AO should record his satisfaction that the assessee has either concealed the income or furnished inaccurate particulars of his income. As observed above, in the notice issued, AO has not specifically pointed out as to whether the assessee has concealed the particulars of income or furnished the inaccurate particulars of income. Therefore, the penalty proceedings initiated without recording the satisfaction is liable to be quashed. The Hon’ble Apex Court in case of M/s. SSA's Emerald Meadows, (2016) 73 taxmann.com 248 (SC) dismissed the Special Leave Petition filed by the Revenue against the judgment rendered by Hon'ble High Court of Karnataka whereby identical issue was decided in favour of the assessee. Operative part of the judgment in case of M/s. SSA's Emerald Meadows (supra) as decided by Hon'ble High Court of Karnataka is reproduced below:- \"2. This appeal has been filed raising the following substantial questions of law: (1) Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in. holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is had in law and. invalid in spite the amendment of Section 271(1 B) with retrospective Printed from counselvise.com ITA No.4570/Del/2025 Page | 7 effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same? (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued, under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e, whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the derision of the Division Bench of this Court rendered in the case of COMMISSIONER or INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court, the appeal is accordingly dismissed.\" 13. As observed above, the Assessing Officer initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act without specifying whether the assessee has concealed ''particulars of income\" or assessee has furnished \"inaccurate particulars of income\", so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case was issued in stereotyped manner without applying his mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act. Printed from counselvise.com ITA No.4570/Del/2025 Page | 8 14. The penalty provisions of section 271(1)(c) of the Act are attracted where the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well- accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it was imperative for the Assessing Officer to strike- off the irrelevant limb so as to make the assessee aware as to what is the charge made against him so that he can respond accordingly. The Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory reported in (2013) 359 ITR 565 observed that for the levy of penalty u/s 271(1)(c) it has to be made clear as to under which limb it is being levied. As per Hon'ble High Court, where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court held that the standard proforma of notice under section 274 of the Act without striking of the irrelevant clauses would lead to an inference of non- application of mind by the Assessing Officer. The Hon'ble Supreme Court in the case of Dilip N. Shroff vs. JCIT, 291 ITR 519(SC) has also noticed that where the Assessing Officer issues notice under section 274 of the Act in the standard proforma and the inappropriate words are not deleted, the same would postulate that the Assessing Officer was not sure as to whether he was to proceed on the basis that the assessee had concealed the particulars of his income or furnished inaccurate particulars of income. According to the Hon'ble Supreme Court, in such a situation, levy of penalty suffers from non- application of mind. In the background of the aforesaid legal position and having regard to the manner in which the Assessing Officer has Printed from counselvise.com ITA No.4570/Del/2025 Page | 9 issued notice under section 274 r.w.s. 271(1)(c) of the Act without striking off the irrelevant words, as reproduced above, the penalty proceedings show the non-application of mind by the Assessing Officer and is, thus, unsustainable. 15. In view of the facts and circumstances of the case, particularly looking to the fact that the AO has failed to record the satisfaction about any limb at the time of initiation of penalty proceedings u/s 271(1)(c) of the Act, therefore, the penalty levied u/s 271(1)(c) of the Act is hereby, deleted. 16. Since we allowed additional ground of appeal, the other Grounds of appeal became academic hence, not adjudicated. 17. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 20.02.2026. Sd/- Sd/- (YOGESH KUMAR U.S) JUDICIAL MEMBER Date:-20.02.2026 *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "