PARESH VALJI CHOPDA ,JAMKHAMBHALIA V. INCOME-TAX OFFICER, WARD 3(5) JAMNAGAR (CURRENTLY ITO WD 1 DWARKA), DWARKA

ITA 1181/RJT/2026

AI Insights

The case revolves around a penalty imposed on Paresh Chopda for unexplained cash deposits amounting to Rs. 11,45,000 in his savings account during the financial year 2009-10. The Income Tax Officer initiated penalty proceedings under section 271(1)(c) after re-opening the assessment under section 147. The penalty was contested on grounds of procedural impropriety and lack of specific charges in the notice. The Commissioner of Income-tax (Appeals) dismissed the initial appeal due to a delay in filing, which the assessee argued was due to sufficient cause. The Tribunal, after reviewing the submissions and legal precedents, concluded that the notice was vague and defective, leading to the deletion of the penalty.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 896588 (ITAT-RAJKOT)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-10-2026
• Assessment Year: 2010-2011
• Appeal Filed On: 09-09-2026
• Other Referred Cases: CIT v. Manjunatha Cotton & Ginning Factory, CIT v. SSA's Emerald Meadows, Mohd. Farhan A. Shaikh v. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH IYER; LD.
• Assessee Lawyers: MAHESH PAUN; LD
• Keywords: Principle of natural justice
• Section: 147; 148; 271(1)(c)

Judgement Text

" आयकरअपीलीयअिधकरण,राजकोट Ɋायपीठ,राजकोट। In The Income Tax Appellate Tribunal, “SMC” Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member आयकरअपीलसं./ITA No. 1181/RJT/2026 (Ǔनधा[रणवष[/Assessment Year: (2010-11) Assessee by : Shri Mahesh Paun, Ld. AR Respondent by : Shri Ganesh Iyer, Ld. Sr. DR Date of Hearing : 05/10/2026 Date of Pronouncement : 09/10/2026 ORDER Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2010-11, is directed against the order under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated 15.07.2026, which in turn arises out of a penalty order u/s 271(1)(c) of the Act, dated 28.06.2018. 2. Grounds of appeal raised by the assessee, are as follows: Paresh Chopda, Advocate chember Mahesh N Paun, Shreeji Chambers, 17- Nava Para, Near S.B.I. (ADB)-Jam-Khambhaliya - Gujarat- 361305 Vs. Income-Tax Officer, Ward 3(5) Jamnagar, Additional / Joint / Deputy /Assistant Commissioner of Income Tax/ Income-tax Officer, National Faceless Assessment Centre, Delhi ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AMEPC2943G (अपीलाथȸ/Assessee) (Ĥ×यथȸ/Respondent) Printed from counselvise.com Page 2 of 4 ITA No.1181/Rjt/2026 Paresh Chopda “1) The Learned Assessing Officer [\"Ld. AO\"] erred in law and on facts in initiating penalty proceedings and levying penalty of Rs. 2,56,007/- under section 271(1)(c) of the Income Tax Act, 1961. The assessment proceedings, the assessment order, the penalty proceedings, and the consequent penalty order are void ab initio, bad in law, and against the principles of natural justice, and therefore deserve to be quashed. 2) The Learned Commissioner of Income Tax (Appeals), NFAC [\"Ld. CIT(A)\"] erred in law and on facts in dismissing the appeal of your assessee solely on the ground of delay in filing the appeal, without condoning the said delay, despite sufficient cause having been shown by your assessee for the delay. The Ld. CIT(A) failed to appreciate the facts, submissions, and material available on record while doing so, and the order dismissing the appeal without adjudicating the matter on merits is bad in law, against the principles of natural justice and deserves to be quashed. 3) Assessee craves leave to add, amend, alter, modify or withdraw any ground of appeals.” 3. Brief facts of the case are that the assessee made cash deposits of Rs. 11,45,000/- in his savings bank account maintained with State bank of India during the financial year 2009-10 relevant to AY 2010-11. The case of the assessee was re-opened under section 147 of the Income tax Act, 1961, after obtaining approval from Principal CIT, Jamnagar and a notice under section 148 of the Act was issued on 28/03/2017, which was served upon to the assessee. The assessment was completed u/s. 147 on 19-12-2017 making additions Rs. 11,45,00/- on account of unexplained cash deposits in the savings bank account maintained with State bank of India during the financial year 2009-10 relevant to A Y 2010- 11. A show cause notice u/s 271(1)(c) r.w.s. 274 dated 19-12-2017 for levy of penalty was issued to the assessee. Thereafter, due to change of incumbent, another notice u/s 271(1)(c) r.w.s. 274 dated 30-05-2018 was issued to the assessee. Again there has been no compliance from the assessee. The reasonable opportunities have been given to the assessee but the assessee has not given any explanation that why penalty should not be levied. In this case, it is the fact that the assessee made cash deposits of Rs.11,45,000/- in the savings bank account maintained with State bank of India during the financial year 2009-10 relevant to A Y 2010- 11 but the assessee has not furnished such particulars of his income by way of filing a return of income nor furnished any details of sources Printed from counselvise.com Page 3 of 4 ITA No.1181/Rjt/2026 Paresh Chopda of such cash deposits nor even furnished any explanation/details in lieu of notice u/s 271(1)(c) r.w.s. 274 of the Income-tax Act, 1961. Therefore, considering the facts of the case and under the circumstances of the case, the assessing officer imposed penalty u/s 271(1)(c) r.w.s. 274 of the Income-tax Act, 1961. Therefore it is directed that the assessee shall pay a sum of Rs.2,56,007/- which is 100% of the tax sought to be evaded by way of penalty u/s 271(1)(c) r.w.s. 274 of the Income-tax Act, 1961. 4. Being aggrieved by the said order of the Assessing Officer, the assessee filed an appeal before the Ld.CIT(A), but remained unsuccessful. Therefore, assessee is left with no other alternative but to knock on the doors of the Tribunal with this appeal praying for justice. 5. I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel for the assessee, argued that notice issued by the assessing officer under section 271 (1)( C )of the Act is defective, therefore, penalty should not be imposed on the assessee. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which I have already noted in my earlier para and is not being repeated for the sake of brevity. 6. I have considered submissions of both the parties. The learned CIT(A) erred in sustaining the penalty without examining whether the statutory notice under section 274 read with section 271(1)(c) of the Act, specifically did not inform the assessee about the exact charge against the assessee. The section 271(1)(c) of the Act contains two distinct charges, viz: (i)concealment of particulars of income; and (ii) furnishing of inaccurate particulars of income. The assessee is entitled to know the precise charge which he is required to meet. If the notice contains both expressions: Printed from counselvise.com Page 4 of 4 ITA No.1181/Rjt/2026 Paresh Chopda \"concealed the particulars of your income\" and \"furnished inaccurate particulars of such income\", without striking off the inapplicable portion or otherwise specifying the applicable limb, the notice is vague and defective. The Hon'ble Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar.), held that the notice under section 274 should specify the particular ground/limb on which penalty proceedings are initiated. The decision in CIT v. SSA's Emerald Meadows followed the same principle and the Revenue's SLP was dismissed by the Hon'ble Supreme Court. The Full Bench decision of the Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh v. DCIT, 434 ITR 1 (Bom.), has also held that failure to strike off the irrelevant limb can vitiate penalty proceedings. Therefore, I am of the view that notice issued by the AO under section 271(1) (c ) of the Act is defective. The notice under section 271 (1) (c ) of the Act, should specifically state as to whether penalty is being imposed for concealment of income or for furnishing inaccurate particulars of income. There is no any specific charge on the assessee in the case under consideration, therefore the penalty imposed by the AO and confirmed by the ld CIT(A) needs to be deleted. Accordingly, I delete the penalty. 7. In the result, the appeal filed by the assessee, is allowed. Order is pronounced in the open Court Today on 09/10/2026. Sd/- [ Dr. Arjun Lal Saini ] Accountant Member राजकोट/Rajkot िदनांक/ Date: 09/10/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, RAJKOT 6. Guard File By order Private Secretary ITAT, Rajkot Printed from counselvise.com "