KUNVARJI BHACHU SHAH,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 31(2), MUMBAI

ITA 1190/MUM/2025

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The case involves Kunvarji Bhachu Shah, the appellant, who contested a penalty imposed by the ACIT, Circle-31(2), Mumbai, which was confirmed by the CIT(A), NFAC, Delhi. The penalty was levied due to the disallowance of a portion of agricultural income claimed by the appellant, which was deemed to have been estimated and thus led to concealment of income. The appellant argued that the penalty notice was defective as it did not specify the exact nature of the penalty - whether for concealment or for furnishing inaccurate particulars of income. The Tribunal agreed with the appellant, citing a lack of clarity in the penalty notice and referencing a similar case to support its decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126306 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Other Referred Cases: Mohammed Farhan A Shaikh v/s DCIT 434 ITR 1
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT PAL SINGH
• Assessee Lawyers: SIDDHARTH SRIVASTHAV
• Keywords: Grounds of appeal; Dismissed; National Faceless Appeal; Commissioner; Hospital
• Section: 250; 271(1)(c); 274

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1190/MUM/2025 (निर्धारण वर्ा / Assessment Year :2012-13) Kunvarji Bhachu Shah Flat 301, Shivaratan Building, Hardevibai CHS, Caves Road, Near Kulkarni Hospital, Jogeshwari East S.O., Mumbai-400060 v/s. बिधम ACIT-31(2), Mumbai Kautilya Bhavan, Bandra Kurla Complex, Bandra East, Mumbai-400051 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AACPS2608A Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी निर्ााररती की ओर से /Assessee by: Shri Siddharth Srivasthav रधजस्व की ओर से /Revenue by: Shri Ajit Pal Singh सुिवधई की िधरीख / Date of Hearing 16.04.2025 घोर्णध की िधरीख/Date of Pronouncement 23.04.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 14.03.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2012-13. 2. The assessee has raised the following grounds of appeal: P a g e | 2 ITA No. 1190/Mum/2025 A.Y. 2012-13 Kunvarji Bhachu Shah “1. The Learned CIT (A), NFAC, Delhi has erred in confirming the penalty levied by the Learned ACIT, Circle- 31(2), Mumbai under section 271(1)(C) of the Income-tax Act, 1961('Act') since the notice issued under section 274 r.w.s. 271(1)(c) of the Act is not in accordance with law especially since he has grossly erred in not specifying the limb under which he intends to initiate penalty proceedings. 2. The Learned CIT (A), NFAC, Delhi erred in confirming the action taken by the Learned ACIT, Circle- 31(2). Mumbai charging penalty of Rs.5,59,910/- u/s 271(1) (C) of the Act without appreciating the fact that the Learned ACIT, Circle 31(2), Mumbai disallowed 1/3 of the agriculture income on ESTIMATE BASIS and thus the question of concealment of income or filing inaccurate particulars of income just does not arise. 3. The Learned CIT (A), NFAC, Delhi has erred in not considering the reply filed by the Appellant in response to Show cause notice under section 271(1) (C) of the Act dated 27.03.2015 and further erred in not considering the submissions filed before the Learned CIT (A)-42, Mumbai. 4. The ground of appeal is without prejudice to the other.” 3. Brief facts of the case are that penalty of Rs. 5,59,910/- was levied u/s 271(1)(c) of the Act vide order dated 29.09.2015, as the assessee’s claim of agricultural income of Rs. 54,35,000/- had been partly disallowed, and it was held that the assessee had furnished inaccurate particulars of income which led to concealment of income to the tune of Rs. 18,12,000/-. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A), who dismissed the appeal vide order dated 14.03.2024 after holding that the assessee had shown cash deposits as agricultural income deliberately with the intention of concealing particulars of income and therefore the penalty u/s 271(1)(c) on the amount disallowed was fully justified. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before the Tribunal. 5. Before us, Ld. AR has argued that the disallowance was made by Ld. AO on estimate basis and, therefore, there is no question of concealment of income P a g e | 3 ITA No. 1190/Mum/2025 A.Y. 2012-13 Kunvarji Bhachu Shah or furnishing inaccurate particulars of income. Moreover, the penalty notice issued by the Ld. AO was defective since he had not specified the limb under which the penalty proceedings were initiated i.e. whether it was for concealment of particulars of income or for furnishing inaccurate particulars of income. In support of his arguments, Ld. AR has furnished a copy of the show cause notice dated 27.03.2015, wherein it has not been stated as to whether the penalty has been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income. 6. Ld. DR, on the other hand, has strongly relied on the orders of lower authorities and argued that the assessee had furnished inaccurate particulars of income, thereby concealing his income and therefore the penalty deserves to be upheld. 7. We have heard the rival submissions and perused the material placed before us. It is seen from the notice dated 27.03.2015 that the specific limb of section 271(1)(c) has not been mentioned and therefore it is not clear as to whether the default of the assessee is being treated as concealment of particulars of income or furnishing of inaccurate particulars of income. This issue is squarely covered by the decision of the jurisdictional High Court in the case of Mohammed Farhan A Shaikh v/s DCIT 434 ITR 1 wherein it has been held that defect of not striking off the irrelevant matter in the notice would vitiate the penalty proceedings. P a g e | 4 ITA No. 1190/Mum/2025 A.Y. 2012-13 Kunvarji Bhachu Shah 8. In the present case also, the assessment order does not mention either of the grounds for initiation of the penalty and in the penalty notice issued by the Ld.AO, both the grounds viz. concealment of particulars of income and furnishing inaccurate particulars of income have been mentioned. In view of the above, the penalty proceedings are vitiated on account of the fact that the notice is vague and the issue is squarely covered by the order of the Hon’ble jurisdictional High Court cited hereinbefore. Accordingly, the order u/s 271(1)(c) imposing penalty of Rs. 5,59,910/- is hereby quashed. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 23.04.2025. Sd/- Sd/- KAVITHA RAJAGOPAL RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 23.04.2025 अननक ेत स ुंह र जपूत/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, P a g e | 5 ITA No. 1190/Mum/2025 A.Y. 2012-13 Kunvarji Bhachu Shah सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "