Penalty to be classified as concealed income or for furnishing inaccurate particulars: ITAT

Case Details: ACIL Ltd. v. ACIT - [2022] 137 taxmann.com 339 (Delhi - Trib.)

Judiciary and Counsel Details

• • G.S. Pannu, President and K. Narasimha Chary, Judicial Member
  • Mrs. Kirti Sankratyayan, Sr. DR for the Respondent.

Facts of the Case

Assessee-company was engaged in the business of manufacturing automotive components. It filed its return of income for the relevant year and subsequently filed a return of income for the same amount pursuant to proceedings under section 153A.

The assessment was completed by making certain additions which included an addition on account of bogus purchases. The Assessing Officer (AO) issued a notice calling upon assessee to explain why penalty under section 271(1)(c) shall not be levied. The assessee submitted that the levy of penalty on basis of notice was vague and illegal and not justified as it did not specify whether penalty was for furnishing inaccurate particulars or concealed income.

ITAT Held

The Tribunal held that to assume jurisdiction to levy a penalty, proper notice is required. Accordingly, a defect in the notice under section 274 vitiates the assumption of jurisdiction by AO to levy any penalty.

In the instant case, the facts clearly established that the notice issued under section 274 read with section 271 was defective. Thus, it could not be held that AO rightly assumed jurisdiction to pass an order levying the penalty. Thus, AO was to be directed to delete the penalty in question.

Case Review

• • Pr. CIT v. Sahara India Life Insurance Company Ltd. [2019] 108 taxmann.com 597/[2020] 432 ITR 84 (Delhi) (para 9) followed.

List of Cases Referred to

• • CIT v. Smt. Kaushalya [1994] 75 Taxman 549/[1995] 216 ITR 660 (Bom.) (para 5)
  • Pr. CIT v. Sahara India Life Insurance Co. Ltd. [2019] 108 taxmann.com 597/[2021] 432 ITR 84 (Delhi) (para 9)
  • CIT v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Kar.) (para 9)
  • CIT v. SSA’s Emerald Meadows [2016] 73 taxmann.com 241 (Kar.) (para 10).