2025 (3) TMI 229 - HC - Income Tax

Appeal Dismissed: Penalty Under Section 271(1)(c) Invalid Due to Ambiguity in Penalty Notice for AY 2010-2011.

Pr. Commissioner of Income Tax-16 Versus Times Global Broadcasting Ltd.

The Bombay HC dismissed the appeal concerning the Assessment year 2010-2011, upholding the order of the Ld. CIT(A) to delete the penalty under section ... Penalty imposed u/s 271(1)(c) - non specification of clear charge - defective notice - HELD THAT:- In this case, the notice issued to the Assessee did not clarify whether the penalty was proposed to be imposed on the grounds of concealment or furnishing inaccurate particulars. The necessary box containing the two options was not ticked. Thus, the Assessee had no clear notice about the case it was required to meet. Thus, we are satisfied that the questions now proposed, stand answered against the Revenue, inter alia by Mohd. Farhan [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] - Revenue Appeal is dismissed. The appeal before the Bombay High Court concerned the Assessment year 2010-2011 and involved the issue of upholding the order of the Ld. CIT(A) to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The primary questions of law proposed by the Appellant's Counsel were whether the ITAT was justified in upholding the deletion of the penalty based on the grounds that the penalty notice suffered from non-application of mind and lacked clarity regarding the specific grounds for penalty initiation.The Respondent's Senior Advocate referred to a Full Bench decision in the case of Mohd. Farhan A. Shaikh vs. Deputy Commissioner of Income Tax, Central Circle 1, Belgaum [2021] 125 taxmann.com 253 (Bombay) to support their position.Upon reviewing the impugned order, the Court noted that the notice issued to the Assessee did not specify whether the penalty was proposed for concealment or furnishing inaccurate particulars, as the relevant box was not ticked. This lack of clarity deprived the Assessee of a clear understanding of the case they were required to defend against.The Full Bench's observations highlighted the importance of a clear and specific notice in penalty proceedings. It emphasized that a defect in the notice, such as not striking off irrelevant matters, could vitiate the penalty proceedings. The Court stressed that the assessment proceedings and penalty proceedings are distinct and must stand on their own, with the Assessee being informed of the grounds for penalty through a statutory notice.In conclusion, the Court found that the questions raised by the Appellant were answered against the Revenue by the Full Bench decision in the Mohd. Farhan case. Therefore, the Court declined to admit the appeal on the proposed questions and dismissed the appeal without costs.