PR. COMMISSIONER OF INCOME TAX -CENTRAL -1 V. CHETAN GUPTA

ITA/741/2025

AI Insights

The case involves an appeal by the Commissioner of Income Tax against the decision of the Income Tax Appellate Tribunal (ITAT), which had allowed the appeals of the respondent, Chetan Gupta, for the Assessment Years 2002-03 to 2004-05. The primary legal issue was whether penalty proceedings under Section 271(1)(c) could be initiated without clearly specifying the grounds of concealment of income or furnishing inaccurate particulars. The ITAT found the penalty notice to be vague and thus invalid, leading to the obliteration of the penalty. The High Court of Delhi dismissed the appeal, agreeing with the ITAT's interpretation and application of the law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825551 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 15-12-2025
• Assessment Year: misc
• Other Referred Cases: CIT vs. Manjunatha Cotton and Ginning Factory, Mr. Mohd. Farhan A. Shaikh Vs ACIT, PCIT vs. Sahara India Life Insurance Co. Ltd., CIT vs. SSA'S Emerald Meadows
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VAIBHAV KULKARNI; AABGINA CHISTI
• Assessee Lawyers: RUCHIR BHATIA; ANANT MANN
• Keywords: Assessment Year 2004-05; Concealment of income; Inaccurate particulars; Income Tax; Penalty; Unsecured loans
• Section: 271(1)(c); 274; 260A

Judgement Text

" ITA 741/2025 Page 1 of 5 $~89 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision : 15.12.2025 + ITA 741/2025 & CM APPL. 78386/2025 (condn of delay of 1100 days in re-filing) PR. COMMISSIONER OF INCOME TAX -CENTRAL -1 .....Appellant Through: Mr Ruchir Bhatia, SSC and Mr Anant Mann, JSC. versus CHETAN GUPTA .....Respondent Through: Mr Vaibhav Kulkarni and Ms Aabgina Chisti, Advocates. CORAM: HON'BLE MR. JUSTICE V. KAMESWAR RAO HON'BLE MR. JUSTICE VINOD KUMAR V. KAMESWAR RAO , J. (ORAL) 1. This appeal filed under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 28.06.2022 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No.896/Del/2015 in respect of the Assessment Year (AY) 2004-05, whereby the ITAT has allowed three appeals filed by the respondent/Assessee in respect of AY 2002-03 to AY 2004-05. 2. The ITAT in paragraphs 3 to 8 has held as under:- “3. The Assessing Officer made addition of Rs.xxxx/- to the total income on account of the unsecured loans received during the F.Y. 2003-04. Consequent to the Printed from counselvise.com Signed By:PRADEEP SHARMA Signing Date:20.12.2025 10:46:48 Signature Not Verified ITA 741/2025 Page 2 of 5 addition, penalty u/s271(1)(c) has been levied by the AO. 4. We find that the page no. 10 below para 8.1, the Assessing Officer has also mentioned “that penalty proceedings u/s 271(1)(c)are being initiated separately.” 5. We find that the para no . 1 of the penalty order reads as under: “Penalty proceedings u/s 271(1)(c) of I .T . Act was initiated separately for concealment and failing to furnish true particulars o fits income. Show cause notice initiating penalty u/s 271(1)(c) of the Act was issued and send alongwith assessment order on 23.12.2011.” 6. We also find that the para no . 11 of the penalty order reads as under:“I hold the assessee in de fault in concealing the income of Rs.xxxxx.” 7. On this issue, we are guided by the following judgments: 1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing o f incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. .2) Bombay High Court: Mr . Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty- Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court Printed from counselvise.com Signed By:PRADEEP SHARMA Signing Date:20.12.2025 10:46:48 Signature Not Verified ITA 741/2025 Page 3 of 5 in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in ITA No.475 of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180] 8. Hence , respectfully following the order of the Hon’ble Jurisdictional High Court, the penalty levied is hereby obliterated.” 3. At the outset, Mr Ruchir Bhatia, learned SSC appearing for the appellant/Revenue states that this appeal is confined to the AY 2004-05 and he has no instructions with regard to the appeals pertaining to AY 2002-03 and AY 2003-04. 4. The issue which arose for the consideration of the ITAT was primarily, whether the penalty proceedings under Section 271 (1) (c) of the Act could be initiated without specifying clearly as to whether the same are being initiated for concealing the income by the assessee or furnishing inaccurate particulars of such income. 5. Mr Bhatia by drawing our attention to the page 40 of the paperbook submit that as there is specific finding of the Assessing Officer (AO) in paragraph 12 of the assessment order dated 23.12.2011, that the AO is satisfied that the respondent/Assessee has concealed his income with regard to the addition made, in that sense, it is apparent that the notice for penalty under Section 271 (1)(c) of the Act was issued primarily for that reason. Printed from counselvise.com Signed By:PRADEEP SHARMA Signing Date:20.12.2025 10:46:48 Signature Not Verified ITA 741/2025 Page 4 of 5 6. On the last date of hearing, Mr Bhatia sought time to place before this Court the copy of notice which was issued to the respondent/Assessee on 28.12.2011 under Section 271 (1) (c) of the Act. Today, he has produced the copy of notice dated 28.12.2011 and same reads as under:- “NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 U/S 271AAA/271(1)(C) Asstt. Commissioner of Income Tax Central Circle-2, New Delhi PAN AATPG9580E dated 28.12.2011 To, Shri Chetan Gupta, 113, Answal Bhawan, Kasturba Gandhi Bldg New Delhi-110001 Whereas in the course of proceedings before me for the assessment year 2004-05 and it appears to me that you:- *have without reasonable cause failed to comply with a notice under Section 142(1) /143(3) of the Income Tax Act, 1961 dated............ *have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1,2,3,4 and 6/Undisclosed income in the case of search. You are hereby requested to appear before me at 4.30AM/PM on ....... and show cause why an order imposing a penalty on you should not be made under Section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative, you may show cause in writing on or before the said date which will be considered before any such order is made under Section 271. Assessing Officer Asstt. Commissioner of Income Tax Printed from counselvise.com Signed By:PRADEEP SHARMA Signing Date:20.12.2025 10:46:48 Signature Not Verified ITA 741/2025 Page 5 of 5 Central Circle-2/New Delhi” 7. A perusal thereof would reveal that notice was not confined to the ground that the respondent/Assessee has concealed the income with respect to the addition made. It also incorporate ‘or furnished inaccurate particulars of such income”. In other words, the notice does not state the specific ground on which notice has been issued nor a tick (✓) has been put on the specific ground on which the notice was required to be issued. If that be so, the ITAT is justified in relying upon the judgments as referred to in paragraph 7 of the impugned order, which we have reproduced above. 8. Hence, we are of the view, as no substantial question of law arises for consideration in this appeal, the appeal need to be dismissed. It is ordered accordingly. 9. Additionally, we find this appeal is accompanied with an application seeking condonation of delay of 1100 days in re-filing. Upon going through the averments made in the application, no justifiable ground has been raised to condone the delay of 1100 days. The appeal is dismissed on this ground as well. V. KAMESWAR RAO, J VINOD KUMAR, J DECEMBER 15, 2025 M Printed from counselvise.com Signed By:PRADEEP SHARMA Signing Date:20.12.2025 10:46:48 Signature Not Verified "