Under section 271(1)(c) of the Income Tax Act, 1961 Delhi High Court penalty is not possible merely when the furnishing of inaccurate particulars was proven. under Section 271(1)(c) of the Act a case where the person is required to show clearly as to which limb of the stated provision is drawn.
The order passed by the Income Tax Appellate Tribunal is been challenged by the appellant/revenue. The Tribunal, through the impugned order, had set aside the findings of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer (AO) to delete the penalty amounting to Rs. 7,99,90,570.
In setting aside the order of the CIT(A) the reason given by the Tribunal was that the AO at the time of initiating penalty proceedings under Section 271(1)(c) of the Act, must have indicated to the limb under which penalty is suggested to be charged.
AO must stipulate as to whether the penalty was asked to be charged on M/S Blackroak Securities Pvt Ltd, the respondent/taxpayer for concealment of particulars of its income, or providing the incorrect particulars.
In the impugned order, the Tribunal noted that “as the aforesaid additions were treated as concealment of income/providing the wrong particulars of income by the taxpayer, a notice under section 274 r.w.s. 271 (1)(c) of the Income Tax Act 1961 dated 28.12.2016 and 14.06.2017 were issued and duly served -upon the taxpayer’s company.
The AR of the taxpayer company filed its response to the notice vide letter on 23.06.2016. The penalty proceedings under section 271(1) (c) are decided established on the income tax provisions, pronouncements judicial, and the material available on record and the submission of the taxpayer.”
The Tribunal has permitted the appeal that the taxpayer filed holding the notice furnished via the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 ( ‘the Act’) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been started i.e., whether for concealment of facts of income or providing the wrong income particulars.
A case is made out under Section 271(1)(c) of the Act, he is required to show transparently as to which limb of the stated provision is drawn, observed by the division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia. The cause may be that beyond anything else the financial burden might be different as per the infraction(s) executed via respondent or taxpayer. The appeal was closed by the court.
| Case Title | CIT Vs Blackroak Securities Pvt Ltd |
| Case No | ITA 658/2023 & CM APPL. 60761/2023 |
| Date | 24.11.2023 |
| Counsel For Petitioner | Mr Sanjeev Menon |
| Counsel For Respondent | Mr Salil Kapoor, Mr Sumit Lalchandani and Mr Shivam Yadav |
| Delhi High Court | Read Order |