ORIENTAL RELAYS LLP (SUCCESSOR TO ORIENTAL RELAYS PVT. LTD.),KOLKATA V. A.C.I.T., CIRCLE - 8(2), KOLKATA, KOLKATA

ITA 1574/KOL/2024

AI Insights

The case involves Oriental Relays LLP appealing against the penalty confirmed by the National Faceless Appeal Centre, Delhi, which was originally imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Year 2016-17. The penalty was based on an addition made to the Long-Term Capital Gain (LTCG) reported by the assessee, which was contested. The primary legal contention was the validity of the penalty notice issued under section 274 read with section 271(1)(c), which the assessee argued was issued in a standard format without specific details, thus lacking validity.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712878 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: KPC Medical College and Hospital v. PCIT, CIT vs. State Bank of India, PCIT vs. Unitech Reliable Projects (P.) Ltd., CIT Vs. SSA's Emerald Meadows, Balaji Metal and Sponge Pvt Ltd. v. ITO, Ganesh Prasad Khetan v. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR PATI
• Assessee Lawyers: SHREYA LOYALKA
• Keywords: Invalid notice
• Section: 143(3); 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1574/KOL/2024 (Assessment Year: 2016-17) Oriental Relays LLP PAN No. AAHFO5108L (Successor to Oriental Relays Pvt. ltd PAN No. AAACO3456H) 2nd Floor, S.B. Tower, 37 Shakespeare Sarani, Kolkata-700017, West Bengal Vs. ACIT, Circle 8(2), Aaykar Bhavan, P7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) Assessee by : Shri Shreya Loyalka, AR Revenue by : Shri Manoj Kumar Pati, DR Date of hearing: 17.07.2025 Date of pronouncement: 29.07.2025 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 27.05.2024 for the AY 2016-17. 02. The only issue pressed by the assessee is against the confirmation of penalty by the ld. CIT (A) as imposed by the ld. AO u/s 271(1)(c) of the Act, on the basis of invalid notice issued u/s 274 read with section 271(1)(c) of the Act. 03. The facts in brief are that the assessment u/s 143(3) of the Income- tax Act, 1961 (the Act) dated 27.12.2018, was passed by making an Printed from counselvise.com Page | 2 ITA No. 1574/KOL/2024 Oriental Relays LLP ; A.Y. 2016-17 addition of ₹84,70,915/- as Long-Term Capital Gain. The ld. AO has recomputed the LTCG shown by the assessee at ₹5,55,33,788/- instead of ₹2,23,96,148/-as shown by the assessee and addition of the differential amount was made, which was reduced by the ld. CIT (A) to ₹3,08,67,063/- and accordingly, addition was partly sustained to the extent of ₹84,70,915/-. The ld. AO imposed the penalty u/s 271(1)(c) of the Act, being 100% of the tax to be evaded amounting to ₹18,67,159/-, which was affirmed by the ld. CIT (A). 04. Now, the assessee has challenged the order of ld. CIT (A) on the ground that since the penalty order was passed in consequence to invalid notice u/s 271(1)(c) of the Act, therefore, all the consequential proceedings/ orders are invalid and may be quashed. The ld. AR referred to the notice issued u/s 274 read with section 271(1)(c) of the Act and submitted that the ld. AO has not struck off the irrelevant limb nor indicated the relevant limb in the penalty notice and therefore, notice itself is issued without application of mind and in standard format which rendered the said notice to be invalid in the eyes of the law. Consequently, the penalty order passed u/s 271(1)(c) of the Act is also invalid and deserved to be quashed. In defense of his argument, the ld. Counsel for the assessee following the decisions: - “1. KPC Medical College and Hospital v. PCIT [2025] 173 taxmann.com 581 (Cal HC) 2. CIT vs. State Bank of India [2024] 169 taxmann.com 305 (SC) 3. PCIT vs. Unitech Reliable Projects (P.) Ltd. [2024] 166 taxmann.com 135 (SC) 4. CIT Vs. SSA's Emerald Meadows [2016] 73 taxmann.com 248 (SC) 5. Balaji Metal and Sponge Pvt Ltd. v. ITO ITA No. 1486/Kol/2024 dated 29.11.2024 6. Ganesh Prasad Khetan v. DCIT (2025) 171 taxmann.com 647 (Raipur)” 05. The ld. DR heavily relied on the orders of the ld. lower authorities. Printed from counselvise.com Page | 3 ITA No. 1574/KOL/2024 Oriental Relays LLP ; A.Y. 2016-17 06. After hearing the rival contentions and perusing the materials available on record, we find from the perusal of the notice that the ld. AO has not struck off the irrelevant limb of the notice nor indicated the relevant limb, therefore, the notice has been issued in a mechanical manner and without application of mind which is invalid and goes to the root of the matter. Consequently, the order passed by the ld. AO u/s 271(1)(c) of the Act is also invalid and cannot be sustained. The case of the assessee is squarely covered by the decision of Hon'ble Kolkata High Court decision in the case of KPC Medical College and Hospital (supra), wherein the Hon'ble court has held that where in the penalty notice issued u/s 274 read with section 271 of the Act, none of the relevant column have been indicated nor the relevant limb been struck off, then the notice is not valid. In other words, the show cause notice issued u/s 274 read with section 271(1)(c) of the Act did not specify the charge against the assessee as to whether it was for concealment of income or furnishing of inaccurate particulars of income for which the penalty notice issued u/s 271(1)(c) of the Act is invalid. Same issue has been laid down in the various other decisions as noted above. Consequently, we are inclined to quash the penalty order passed by the ld. AO u/s 271(1)(c) of the Act being based on the invalid notice issued 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 29.07.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Printed from counselvise.com Page | 4 ITA No. 1574/KOL/2024 Oriental Relays LLP ; A.Y. 2016-17 Kolkata, Dated: 29.07.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata Printed from counselvise.com "