THE INDIAN EXPRESS PRIVATE LIMITED,MUMBAI V. ASST. COMMISSIONER OF INCOME TAX, MUMBAI

ITA 4337/MUM/2025

AI Insights

The case involves The Indian Express Private Limited appealing against a penalty imposed by the Assistant Commissioner of Income Tax, which was confirmed by the CIT(A). The penalty was levied under section 271(1)(c) of the Income-tax Act, 1961, for concealing particulars of income or furnishing inaccurate particulars of income. The assessee challenged the legality of the notice under section 274, arguing that it did not specify the charge of concealing or furnishing inaccurate particulars. The Tribunal, referencing a decision by the Bombay High Court, found the notice to be vague and thus defective. On the substantive issue, the penalty was related to a claim of Rs. 7,19,96,655 as bad debts, which the Tribunal found to be a genuine claim arising from a failed property transaction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716484 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-06-2025
• Other Referred Cases: Mohd. Farhan A. Shaikh vs. Deputy Commissioner of Income Tax and Anor., Goetz India Ltd. vs. CIT, CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRABHADRA S. MAHAJAN; DR
• Assessee Lawyers: SUKHSAGAR SYAL; AR
• Keywords: Set aside; Bad and doubtful debts
• Section: 271(1)(c)

Judgement Text

" | आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI SANDEEP SINGH KARHAIL, HON’BLE JUDICIAL MEMBER I.T.A. No. 4337/Mum/2025 Assessment Year: 2010-11 The Indian Express Private Limited 7th Floor, Maftlal Centre Ramnath Goenka Marg, Nariman Point S.O. Mumbai Mumbai - 400021 [PAN: AACCT1148F] Vs Asst. Commissioner of Income Tax अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Sukhsagar Syal, A/R Revenue by : Mr. Virabhadra S. Mahajan, Sr. D/R सुनवाई की तारीख/Date of Hearing : 14/08/2025 घोषणा की तारीख /Date of Pronouncement : 22/08/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assesse is preferred against the order dated 08/05/2025 by NFAC, Delhi [hereinafter the “ld. CIT(A)”] pertaining to AY 2010-11. 2. The grievance of the assessee reads as under:- “1. On the facts and circumstances of the case and in law, the order passed by the learned CIT(A) confirming the penalty of Rs. 2,45,00,000 imposed under section 271(1)(c) of the Income-tax Act, 1961 (the Act') is bad in law. 2. The Id. CIT(A) erred in not quashing the penalty proceedings which were without jurisdiction inasmuch as a specific charge of concealing the particulars of income or furnishing of inaccurate particulars of income was not recorded, either in the notice u/s 274 of the Act or in the assessment order. 3. The Id. CIT (A) erred in not deleting the penalty on a legal claim made by the Appellant that was genuine and bona fide. 4. The Id. CIT(A) erred in upholding the penalty order despite the fact that due relief had been granted by the Tribunal in the quantum proceedings. Printed from counselvise.com I.T.A. No. 4337/Mum/2025 2 Each of the above grounds are mutually exclusive, independent and without prejudice to each other. The Appellant craves leave to add, alter, modify or amend any of the grounds) / sub- grounds) of the appeal.” 3. Vide Ground No. 2, the assessee has challenged the legality of the notice u/s 274 of the Act on the ground that it does not specify the charge of concealing particulars of income or furnishing of inaccurate particulars. 4. Heard the parties. The impugned notice is as under:- Printed from counselvise.com I.T.A. No. 4337/Mum/2025 3 Printed from counselvise.com I.T.A. No. 4337/Mum/2025 4 5. From the above it can be seen that the AO has not specified the limb under which he proposes to levy the penalty u/s 271(1)(c) of the Act. The Hon’ble High Court of Bombay in the case of Mohd. Farhan A. Shaikh vs. Deputy Commissioner of Income Tax and Anor. [2021] 434 ITR 1 (Bom[FB]), had the occasion to consider a similar challenge and interalia held as under:- “180. One course of action before us is curing a defect in the notice by referring to the assessment order, which may or may not contain reasons for the penalty proceedings. The other course of action is the prevention of defect in the notice-and that prevention takes just a tick mark. Prudence demands prevention is better than cure. Answers: Question No.1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(l)(c), does a mere defect in the notice-not striking off the irrelevant matter-vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee’s favour. 183. Therefore, we answer the first question to the effect that Goa Dourado Promotions and other cases have adopted an approach more in consonance with the statutory scheme. That means we must hold that Kaushalya does not lay down the correct proposition of law. Printed from counselvise.com I.T.A. No. 4337/Mum/2025 5 6. Finding parity of facts, respectfully following the decision of the Hon’ble High Court (supra), we set aside the impugned notice u/s 274 of the Act and quash the resultant penalty order. 7. Even on merits of the case, the penalty has been levied because the assessee claimed Rs. 7,19,96,655/- as bad debts with the reason that the company had entered into a memorandum of understanding in respect of a property at Lalbaug, Mumbai and accordingly, an agreement to sale was entered into with M/s. Uppal Housing Ltd., which was managed by Lalbaug Industrial Estate, Mumbai. The assessee could not fulfill the terms of the memorandum of understanding and the said party backed out from the MoU and subsequently the assessee could realize the sale consideration short by Rs. 7,19,96,655/- which he had claimed as bad debts u/s 36(1)(vii) of the Act. The quarrel travelled up to the Tribunal and the Co-ordinate Bench in ITA No. 5552/Mum/2017; AY 2010-11, order dated 18/02/2020, held as under:- “11. After hearing both the parties and perusing the material on record including the impugned order, we observe that the Ld. CIT(A) has rightly entertained the claim of the assessee and allowed the long term capital loss to be carried forward to the subsequent years. The Revenue has relied on the decision of Hon’ble Supreme Court in the case of Goetz India Ltd. vs. CIT 284 ITR 322, however, the Hon’ble Bombay High Court in the case of “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” (supra) has held that appellate authorities can entertain a claim of the assessee which is not made in the return of income after considering the decision of Hon’ble Supreme Court in the case of Goetz India Ltd. vs. CIT (supra). We, further, find that the loss has genuinely arisen due to fall in prices of property during the period when preemptive right by member of Lalbaug Industrial Estate Ltd. was excercised. Needless to mention that assessee has already returned the gain on this property resulting from the transfer of the property through MOU and part handing over the possession to the prospective buyer and thus are recognised the transaction of sale in the books of accounts. In our opinion, this is a genuine short fall in recovery of the sale consideration originally agreed to and recognized in the books of accounts by the assessee. Therefore, the action of Ld. CIT(A) in allowing the carried forward of the said loss is as per the provisions of Income Tax Act. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) and same is upheld by dismissing the ground raised by the revenue.” Printed from counselvise.com I.T.A. No. 4337/Mum/2025 6 8. In light of the above, since the foundation has been removed, the superstructure must fall. Even on merits of the case, the AO is directed to deleted the impugned penalty. 9. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 22nd August, 2025 at Mumbai. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 22/08/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0015ितिलिप अ\u001aेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u0015 थ / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai Printed from counselvise.com "