2025 (2) TMI 604 - AT - Income Tax

Appeals Allowed: Penalty Under Section 271(1)(c) Invalid Due to Defective, Ambiguous Notice by Assessing Officer.

Late Mr. Davinder Kumar, (Through Geeta Kumar) Versus Deputy Commissioner of Income Tax, Central Circle-15, New Delhi

Late Mr. Davinder Kumar, (Through Geeta Kumar) Versus Deputy Commissioner of Income Tax, Central Circle-15, New Delhi - TMI The issues presented and considered in the judgment are as follows:1. Whether the penalty under section 271(1)(c) of the Income Tax Act, 1961 was validly imposed on the assessee for the assessment years 2008-09 to 2011-12.2. Whether the notice issued by the Assessing Officer under section 274 r.w.s. 271 of the Act was defective and rendered the penalty proceedings vitiated.Issue-wise detailed analysis:Issue 1: Validity of penalty under section 271(1)(c) of the Income Tax Act- Relevant legal framework and precedents: Section 271(1)(c) of the Income Tax Act provides for the imposition of penalty for concealment of income or furnishing inaccurate particulars of income.- Court's interpretation and reasoning: The court found that the notice issued by the Assessing Officer was vague and defective as it did not clearly specify the charge for which the penalty was imposed. The ambiguity in the notice and the failure to mention the charge in the assessment order rendered the penalty liable to be deleted.- Key evidence and findings: The notice issued was an omnibus notice in a preprinted format, lacking clarity on the specific charge for the penalty.- Application of law to facts: The court applied the legal principle that penalties cannot be imposed based on defective notices and ambiguity in recording satisfaction for levy of penalties.- Conclusions: The court held that the penalty imposed under section 271(1)(c) of the Act was invalid due to the defective notice and ambiguity in recording satisfaction. Consequently, the impugned order was set aside, and the appeal was allowed.Issue 2: Defectiveness of the notice issued under section 274 r.w.s. 271 of the Act- Relevant legal framework and precedents: The court referred to the Full Bench of the Hon'ble Bombay High Court in the case of Mohd. Farhan A. Shaikh vs. DCIT, which held that defective notices where irrelevant matter has not been struck off render the penalty proceedings vitiated.- Court's interpretation and reasoning: The court found that the notice issued by the Assessing Officer was defective as irrelevant matter was not struck off, making it ambiguous and inadequate to levy penalties.- Key evidence and findings: The court highlighted the failure of the Assessing Officer to specify the charge for the penalty in the notice and the assessment order.- Application of law to facts: The court applied the legal principle that defective notices cannot form the basis for imposing penalties under the Income Tax Act.- Conclusions: The court concluded that the defective notice issued under section 274 r.w.s. 271 of the Act rendered the penalty proceedings vitiated. As a result, the impugned order was set aside, and the appeal was allowed.Significant holdings:- The court held that penalties cannot be imposed based on defective notices and ambiguity in recording satisfaction for the levy of penalties.- The court established the principle that notices must clearly specify the charge for which penalties are imposed to ensure the validity of penalty proceedings.- Final determinations on each issue: The court set aside the impugned order and allowed the appeals for the assessment years 2008-09 to 2011-12.In conclusion, the judgment focused on the validity of the penalty imposed under section 271(1)(c) of the Income Tax Act and the defectiveness of the notice issued by the Assessing Officer. The court found that the penalty proceedings were vitiated due to the defective notice and ambiguity in recording satisfaction, leading to the setting aside of the impugned order and allowing the appeals for all the assessment years in question.