2025 (8) TMI 1616 - HC - Income Tax

Penalty notice under s.271(1)(c) invalid where printed form failed to specify concealment or inaccurate particulars, penalty quashed

Pr. Commissioner Of Income Tax Versus M/s. Corteva Agriscience Pvt. Ltd.

Pr. Commissioner Of Income Tax Versus M/s. Corteva Agriscience Pvt. Ltd. - 2025:DHC:7351 - DB ISSUES PRESENTED AND CONSIDERED 1. Whether the notice issued under Section 271(1)(c) of the Income Tax Act in a printed/form notice form is invalid if it does not specifically state which limb of Section 271(1)(c) is invoked (concealment of income vs. furnishing inaccurate particulars of income). 2. Whether the Income Tax Appellate Tribunal's decision to set aside the penalty imposed under Section 271(1)(c) on the ground indicated above is justifiable. 3. Whether any substantial question of law arises for consideration in appeals where the impugned penalty notice suffers from the alleged defect. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of a Section 271(1)(c) notice that does not specify the limb invoked Legal framework: Section 271(1)(c) contains two distinct limbs - (a) concealment of particulars of income; and (b) furnishing inaccurate/incorrect particulars of income. A notice initiating penalty proceedings must convey to the assessee the basis of the allegation so that the assessee can adequately meet the charge. Precedent treatment: This Court has, in a series of decisions, held that a general or printed notice which does not indicate which specific limb of Section 271(1)(c) is being invoked is vague and invalid. Those decisions were relied upon and followed by the Tribunal in the present matters. Interpretation and reasoning: The Court reasons that the two limbs in Section 271(1)(c) are materially distinct and carry different implications; therefore, fair notice requires the assessing authority to specify whether the proceedings are for concealment or for furnishing inaccurate particulars. A printed/form notice that omits this specificity deprives the assessee of the ability to know the exact allegation and to frame an effective response. The Court finds the Tribunal's reliance on the earlier rulings, which invalidated similar notices, to be correct and applicable on parity of reasoning. Ratio vs. Obiter: Ratio - A penalty notice under Section 271(1)(c) which fails to specify which limb of the provision is invoked is invalid as being vague. Obiter - Observations on related procedural aspects in prior cases that do not bear directly on the requirement of specificity. Conclusion: The impugned notice is invalid for failing to specify the particular limb of Section 271(1)(c) relied upon; consequently penalty proceedings founded on such notice cannot be sustained. Issue 2: Validity of the Tribunal's order setting aside the penalty and whether the Tribunal was justified Legal framework: Appellate bodies are bound to apply legal principles as settled by the Court when deciding the validity of statutory notices and penalties. Where precedent establishes a legal requirement for specificity in notices, the Tribunal may allow an appeal if that requirement is not met. Precedent treatment: The Tribunal's decision followed earlier decisions of this Court which held similar notices invalid. The appellate bench accepted those precedents and applied them to the facts before it. Interpretation and reasoning: Given that the assessing officer issued a printed/form notice without specifying whether the charge was concealment or inaccurate particulars, the Tribunal correctly concluded that the notice was legally defective. The Court finds no reason to distinguish the present facts from the precedents relied upon and therefore accepts the Tribunal's conclusion that penalty cannot be sustained on such a notice. Ratio vs. Obiter: Ratio - The Tribunal was justified in allowing the appeal and setting aside the penalty where the initiating notice was vague as to the limb invoked under Section 271(1)(c). Obiter - Any ancillary remarks by the Tribunal about other aspects of penalty law that were not essential to the decision. Conclusion: The Tribunal was justified in allowing the appeal; the penalty imposed under Section 271(1)(c) cannot stand because the initiating notice was invalid. Issue 3: Existence of a substantial question of law Legal framework: For appellate interference on questions of law, there must be a substantial question of law arising from the impugned order. Precedent treatment: Multiple prior judgments of this Court have addressed and settled the point that a non-specific Section 271(1)(c) notice is invalid. Interpretation and reasoning: Since the issue is squarely covered by binding precedent of this Court and the Tribunal applied that precedent, there is no new or differing legal question warranting further consideration. The Court therefore concludes that no substantial question of law arises out of these appeals. Ratio vs. Obiter: Ratio - Where settled precedent directly governs the issue, no substantial question of law arises. Obiter - Comments on the scope of future fact patterns that might raise different questions. Conclusion: No substantial question of law arises; the appeals are disposed of in favour of the assessee and against the revenue on the ground of invalidity of the notice. Collateral Procedural Point: Condonation of delay and consolidation Legal framework: Applications for condonation of delay are considered on their merits; where multiple appeals raise identical issues, they may be decided by a common order. Interpretation and reasoning: Delay in filing and re-filing the appeals was condoned based on the reasons presented. The four appeals involving identical issues across different assessment years were appropriately decided together for parity and judicial economy. Ratio vs. Obiter: Ratio - Delay condonation applications were allowed on the record presented; consolidation for identical issues is appropriate. Obiter - No extended principles on condonation criteria beyond the recorded reasoning. Conclusion: Condonation of the stated delays is granted; the appeals are decided by a common order and disposed of in favour of the assessee.