2023 (8) TMI 680 - HC - Income Tax

Court upholds Tribunal decision on income concealment penalty lacking specificity under Income Tax Act

Commissioner Of Income Tax (Exemptions) Delhi Versus Jamnalal Bajaj Foundation

The High Court upheld the Tribunal's decision, ruling that there was no concealment of income by the respondent/assessee and the penalty notice lacked ... Penalty u/s 271(1)(c) - Concealment of income or not? - validity of notice - non specification of clear charge - ITAT deleted penalty levy - HELD THAT:- Tribunal is correct, both with regard to the fact there had been no concealment, as also concerning the view taken by it that the penalty proceedings did not indicate the limb under which the penalty was sought to be levied on the respondent/assessee. In the instant matter, the Tribunal had taken into account the earlier judgments of this Court, as well as the judgments of the Karnataka High Court. In Pr Commissioner of Income Tax-3 v Ms Minu Bakshi [2022 (7) TMI 1307 - DELHI HIGH COURT] the issue concerning the penalty notice not indicating the precise limb of Section 271(1)(c) under which the assessee was proceeded came up for consideration wherein held that the notice issued by the AO u/s 274 r.w.s.271(1)( c) 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. Decided in favour of assessee. Issues involved:The appeal concerns Assessment Year (AY) 2009-10. The main issue is the imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 on the respondent/assessee.Details of the Judgment:Assessment and Revised Return:The respondent/assessee, registered under Section 12A of the Act, initially filed a return declaring 'nil' income for AY 2009-10. Subsequently, during scrutiny assessment, a revised return was filed declaring an income of Rs. 18,87,107. The taxes on the revised income were duly paid by the respondent/assessee.Accumulated Surplus and Donations:The respondent/assessee had accumulated surplus of Rs. 20 crores as per Section 11(2) of the Act, which was utilized for donations to charitable trusts. This led to the assessment of the respondent/assessee's income at Rs. 19,02,18,230.Penalty Proceedings:Penalty proceedings under Section 271(1)(c) were initiated during the assessment. A show-cause notice was served on the assessee, who responded denying any concealment or furnishing of inaccurate particulars regarding income.Tribunal's Decision:The Tribunal reversed the CIT(A)'s order on two grounds. Firstly, it found no concealment of income as the respondent/assessee had disclosed the utilization of accumulated corpus donations in the revised return. Secondly, the penalty notice did not specify the exact limb of Section 271(1)(c) under which the penalty was imposed.Court's Decision:The High Court upheld the Tribunal's decision, stating that there was no concealment of income and the penalty notice lacked specificity regarding the grounds for penalty imposition. The Court also referenced previous judgments to support its decision, emphasizing the importance of specifying the exact grounds for penalty under Section 271(1)(c).Conclusion:Based on the above reasons and legal precedents, the Court declined to interfere with the Tribunal's order, finding no substantial question of law to consider. The appeal was closed, and pending applications were also closed accordingly.