M/S KUMAON MANDAL VIKASH NIGAM LIMITED,NAINITAL V. ACIT, CIRCLE-3, NANITAL, NANITAL

ITA 35/DDN/2023

AI Insights

The case involves M/s. Kumaon Mandal Vikash Nigam Limited appealing against the penalty imposed by the Assessing Officer (AO) for alleged furnishing of inaccurate particulars of income. The AO had completed the assessment for the Assessment Year 2012-13 and levied a penalty of Rs.1,05,66,374. The assessee's appeal to the Commissioner of Income Tax (Appeals) was dismissed, leading to the current appeal before the Income Tax Appellate Tribunal. The primary legal contention was the vagueness of the penalty notice, which did not specify the exact nature of the penalty under section 271(1)(c) of the Income Tax Act, 1961.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23523 (ITAT-DEHRADUN)
• Duration Of Justice: 1 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2023
• Other Referred Cases: Mr. Mohd. Farhan A. Shaikh vs. ACIT 434 ITR 1 (Bom)(FB), PCIT vs. Sahara India Life Insurance Co. Ltd. 432 ITR 84 (Del.), Pr. CIT vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Delhi)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. S. RANA
• Assessee Lawyers: P AVAN KUMAR NATH
• Keywords: Set aside; Initiation of penalty proceedings
• Section: 271(1)(c); 153; 274

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH ‘DB’: DEHRADUN. BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.35/DDN/2023 (Assessment Year: 2012-13) M/s. Kumaon Mandal Vikash Nigam Limited, vs. ACIT, Circle 3, 01, Oak Park Campus, Mallital, Nanital. Nainital – 263 001 (Uttarakhand). (PAN : AABCK4290L) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Pavan Kumar Nath, Advocate REVENUE BY : Shri A.S. Rana, Sr. DR Date of Hearing : 10.09.2024 Date of Order : 22.10.2024 ORDER PER S.RIFAUR RAHMAN,AM: 1. The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals), Delhi /National Faceless Appeal Centre (NFAC) [“Ld. CIT(A)”, for short] dated 23.01.2023 for the Assessment Year 2012-13. 2. Brief facts of the case are, the Assessing Officer completed the assessment under section 143 (3) of the Income-tax Act, 1961 (for short 2 ITA No.35/DDN/2023 ‘the Act’) on 26.12.2016 at an income of Rs.6,98,72,190/-. Assessing Officer initiated the penalty proceedings by way of issuance of the notice u/s 271(1)(c) of the Act read with section 274. Disagreeing with the contentions raised by the assessee, AO reached at the conclusion that the assessee has furnished inaccurate particulars of income in order to decrease its tax liability and thereby levied a penalty of Rs.1,05,66,374/- @ 100% u/s 271(1)(c) of the Act. 3. Aggrieved with the above order, assessee preferred appeal before the ld. CIT (A) and before ld. CIT (A), assessee has made elaborate submissions. After considering the above submissions, ld. CIT (A) dismissed the appeal filed by the assessee. 4. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- “Ground No.1 : That the Ld. CIT – Appeals has erred in law as well as on facts in confirming the penalty of Rs.1,05,66,374/- levied u/s 271 (1)(c) of the Income Tax Act. Therefore, the penalty order as well as the appellate order is liable to be deleted. Ground No.2 : The Ld. CIT – Appeals erred in law in not appreciating the assessee contention that the Ld. Assessing Officer 3 ITA No.35/DDN/2023 did not adjudicate on the issue that whether the penalty levied is for concealment of income or for furnishing of inaccurate particulars of income. Therefore, the penalty order being illegal is liable to be quashed.” 5. At the outset, ld. Counsel for the assessee began with aforesaid ground no.2. Ld. Counsel of the assessee contended that the notice issued under section 274 read with section 271(1)(c)of the Act is a defective one. He submitted that the charge has not been specified in the notice, hence referring to various decisions including that of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT 434 ITR 1 (Bom)(FB) and Hon’ble Delhi High Court in PCIT vs. Sahara India Life Insurance Co. Ltd. 432 ITR 84 (Del.) & Pr. CIT vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Delhi), ld. Counsel for the assessee pleaded that the penalty order is liable to be quashed. 6. On the other hand, ld. DR for the Revenue objected to the above submissions and relied upon the orders of the authorities below. 7. Considered the rival submissions and perused the material placed on record. The Assessing Officer has not specified the relevant limb for 4 ITA No.35/DDN/2023 initiation of penalty proceedings in the notice issued u/s 274 of the Act. For the sake of clarity, the same is reproduced below :- 5 ITA No.35/DDN/2023 8. We note that assessee has duly raised issue against the assumption of jurisdiction for the levy of section 271(1)(c) that in the penalty notice, relevant limb was not specified whether the penalty proceedings were initiated for concealment of income or furnishing of inaccurate particulars of income. When the same was not so specified in the penalty notice it has been held in the case laws cited before us that mention of the same in the assessment order or penalty order cannot cure fatal short-coming. When the charge has not been specified in the notice, it is an omnibus notice. In such circumstances, Hon’ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. 432 ITR 84 (Del.) has held that the penalty order passed is liable to be quashed on account of this defect which is fatal. We further note that Full Bench of Hon’ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT (supra) has held that no specification of charge in the penalty notice leads to same become void and penalty on that count is to be deleted. Hon’ble Court held as under :- “Head Note only : S.271(1)(c) : Penalty – Concealment –Non-striking off of the irrelevant part while issuing notice under section 271(1)(c) of the Income-tax Act, - Order is bad in law – Assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.” 6 ITA No.35/DDN/2023 9. Accordingly, following the precedent and on the undisputed proposition that relevant limb of the penalty notice was not specified as to whether penalty was for concealment or furnishing of inaccurate particulars of income, we direct that the penalty in this case is liable to be deleted. Hence, we set aside the orders of the authorities below and decide the issue in favour of the assessee and accordingly directed to delete the penalty. 10. Since we have already quashed the penalty on the jurisdictional issue, the merits of the penalty levied are not being adjudicated at this stage being academic in nature. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 22nd day of October, 2024. Sd/- sd/- (VIMAL KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22.10.2024 TS 7 ITA No.35/DDN/2023 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "