PRAMOD SANGWAN,ROHTAK V. DCIT CC-16, NEW DELHI

ITA 6117/DEL/2024

AI Insights

The case involves appeals by Pramod Sangwan against the penalties imposed by the Deputy Commissioner of Income Tax, Central Circle-16, New Delhi, which were confirmed by the Commissioner of Income Tax (Appeals)-26, New Delhi. The penalties were levied under sections 271(1)(c) and 270A of the Income-tax Act, 1961, for the assessment years 2014-15, 2015-16, and 2017-18. The main legal issues revolved around the validity of the penalties in light of the deletion of quantum additions and the adequacy of the penalty notices issued. The Tribunal referenced several precedents, including the Full Bench Decision of the Hon'ble Bombay High Court in Mohd. Farhan A Shaikh vs DCIT, which emphasized the need for clarity and specificity in penalty notices.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712009 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2014-2015
• Other Referred Cases: Mohd. Farhan A Shaikh vs DCIT, PCIT vs Sahara India Life Insurance Co. Ltd, CIT vs Manjunatha Cotton & Ginning Factory, CIT vs SSA's Emerald Meadows, Rajesh Kumar v. CIT, State of Orissa v. Dr. Binapani Dei
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: MUKESH JAIN
• Keywords: Question of law; Principle of natural justice
• Section: 143(3); 271(1)(c); 153A

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA Nos. 6117, 6118 & 6119/Del/2024 (Assessment Years: 2014-15, 2015-16 & 2017-18) Pramod Sangwan, Panchwati Colony, Sonipat Road, Rohtak, Haryana Vs. DCIT, Central Circle-16, New Delhi (Appellant) (Respondent) PAN: BVPPS2256D Assessee by : Shri Mukesh Jain, Adv Shri Samyak Jain, Adv Revenue by: Shri Ajay Kumar Arora, Sr. DR Date of Hearing 21/07/2025 Date of pronouncement 23/07/2025 O R D E R PER M. BALAGANESH, A. M.: 1. These appeals in ITA Nos. 6117, 6118 & 6119/Del/2024 for AYs 2014-15, 2015-16 and 2017-18, arise out of the order of the Commissioner of Income Tax (Appeals)-26, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 18.10.2024 against the orders of assessment passed u/s 153A r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 24.09.2021 by the Assessing Officer, ACIT, Central Circle-16, New Delhi (hereinafter referred to as ‘ld. AO’). 2. The appeals filed by the assessee for AYs 2014-15, 2015-16 carry identical issue as to whether penalty u/s 271(1)(c) of the Act levied by Printed from counselvise.com Page | 2 the ld AO which had been confirmed by the ld CIT(A) is valid in the eyes of law. 3. We have heard the rival submissions and perused the material available on record. We find that at the time of passing of appellate order against the levy of penalty by the ld CIT(A), the quantum appeals were pending before the ld CIT(A). Subsequently, the quantum appeals were disposed of by the ld CIT(A) deleting the additions made by the ld AO. Since, the quantum is deleted, concealment penalty u/s 271(1)(c) of the Act would have no legs to stand. Accordingly, the grounds raised by the assessee for AY 2014-15 and 2015-16 are hereby allowed. ITA No. 6119/Del/2024 for AY 2017-18 4. The only issue to be decided in this appeal is as to whether the ld CIT(A) was justified in confirming the levy of penalty u/s 270A of the Act when the penalty notice had not struck off the inappropriate portion as to whether the assessee had under-reported his income or misreported his income. 5. We have heard the rival submissions and perused the material available on record. The ld AR placed on record the show cause notice issued u/s 270A of the Act on 24.09.2021 and 21.02.2022 wherein, it is very clear that the ld AO had not specifically mentioned the offence committed by the assessee by striking off the irrelevant portion i.e. whether the assessee had underreported his income or misreported his income. Now the short question that arises is whether non-striking off of the irrelevant portion in the penalty notice by not specifically mentioning the offence committed by the assessee, would become fatal to the penalty proceedings ? This issue is no longer res integra in view of the Full Bench Decision of Hon’ble Bombay High Court in the case of Mohd. Printed from counselvise.com Page | 3 Farhan A Shaikh vs DCIT reported in 434 ITR 1 (Bom)(FB) dated 11.3.2021. The relevant operative portion of the said judgement is reproduced hereunder:- Question No. 3: What is the effect of the Supreme Court's decision in Dilip N. Shroff Case (supra) on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off ? 187. In Dilip N. Shroff case (supra), for the Supreme Court, it is of \"some significance that in the standard Pro-forma used by the assessing officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done\". Then, Dilip N. Shroff case (supra), on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. 188. We may, in this context, respectfully observe that a contravention of a mandatory condition or requirement for a communication to be valid communication is fatal, with no further proof. That said, even if the notice contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for ambiguity. Therefore, Dilip N. Shroff Case (supra) disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays non- application of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that \"where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, \"except in the case of a mandatory provision of law which is conceived not only in individual interest but also in the public interest\". 190. Here, section 271(1)(c) is one such provision. With calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling with or dilution. For a further precedential prop, we may refer to Rajesh Kumar v. CIT [2007] 27 SCC 181, in which the Apex Court has quoted with approval its earlier judgment in State of Orissa v. Dr. Binapani Dei AIR 1967 SC 1269. According to it, when by reason of action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice must be followed. In such an event, although no express provision is laid down on this behalf, compliance with principles of natural justice would be implicit. If a statue contravenes the principles of natural justice, it may also be held ultra vires Article 14 of the Constitution. 191. As a result, we hold that Dilip N. Shroff Case (supra) treats omnibus show- cause notices as betraying non-application of mind and disapproves of the practice, Printed from counselvise.com Page | 4 to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice. Conclusion: We have, thus, answered the reference as required by us; so we direct the Registry to place these two Tax Appeals before the Division Bench concerned for further adjudication. 6. Similar view was taken by the Hon’ble Jurisdictional High Court in the case of PCIT vs Sahara India Life Insurance Co. Ltd reported in 432 ITR 84(Del) wherein it was held as under:- 21. The Respondent had challenged the upholding of the penalty imposed under section 271(1) (c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 and observed that the notice issued by the AO would be bad in law if it did not specify which limb of section 271(1)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in CIT v. SSA's Emerald Meadows [2016] 73 taxmann.com 241, the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016. 22. On this issue again this Court is unable to find any error having been committed by the ITAT. No substantial question of law arises. 23. The appeals are accordingly dismissed. 7. Though the aforesaid decisions were rendered in the context of penalty levied u/s 271(1)(c ) of the Act, the same analogy would apply to the penalty levied u/s 270A of the Act and the ld AO is duty bound to specifically mention the offence committed by the assessee in the show cause notice itself as the said section contains various limbs. The penalty rate also varies depending upon the offence committed by the assessee. Hence the ratio laid down in the aforesaid decision of Hon’ble Printed from counselvise.com Page | 5 High Courts squarely applies to the facts of the instant case before us. Hence we direct the ld. AO to delete the penalty levied u/s 270A of the Act. Accordingly, the Grounds raised by the assessee are allowed. 8. In the result, the appeal of the assessee is allowed. 9. To sum up, all the three appeals of the assessee are allowed. Order pronounced in the open court on 23/07/2025. -Sd/- -Sd/- (SUDHIR KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:23/07/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "