The Income Tax Appellate Tribunal (ITAT), Delhi Bench headed by Mr N.K. Billaiya, Accountant Member, and Mr N.K. Choudhry, Judicial Member, deleted the penalty levied under section 271(1)(c) as the notice under section 274 was unable to define concealment or provide the wrong particulars of income.
In the process of scrutiny assessment of the petitioner, Kalra Papers Pvt. Ltd., the Assessing Officer does not permit the claimed loss of Rs.1,50,00,00 on the loss of properties and Rs.3,33,893 on the basis of electricity expenses. The CIT(A) ensures the rejections and penalty of Rs.3,33,893 on the grounds of electricity expenses and Rs.11,08,598 out of Rs. 1.5 crores on the basis of property loss which the petitioner claimed.
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The AO formed penalty proceedings under section 271(1)(c) for concealment of particulars of income or filing the false details of this income and then levied a penalty of Rs.6,00,000/-. The disappointed petitioner an appeal to the CIT(A), which confirmed the levy of the penalty.
The disappointed petitioner pleads before the ITAT. The counsel for the petitioner submitted that the AO created a penalty under section 271(1)(c) of the Act for concealing the details of income or filing the wrong details of Income without identifying any respective limb of the penalty in the notice under section 274.
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The counsel for the petitioner put trust in the decision of the Supreme Court in M/s. SSA’s Emerald Meadows. The Supreme court ruled that “the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 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 initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income”.
The Tribunal, deleting the levying of penalty notice under income tax section 274 read with section 271(1)(c) of the Act without defining the limb beneath which the penalty proceedings have been commenced and proceeded, demonstrates that the notice is allocated in a stereotyped manner excluding using the mind which is bad in law, thus cannot be acknowledged a valid notice enough to levy the penalty u/s 271(1)(c).
Mr Anil Jain and Mr Anuj Garg appeared on the grounds of the appellant and respondent respectively.
