TaxTMI 
TaxTMI 
2026 (2) TMI 1449
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....ed the satisfaction in the assessment order for initiation of penalty proceedings under Section 271(1)(c) of the Act for furnishing of inaccurate particulars of income and thereby, canceling the said income. The AO simultaneously also issued a notice dated 28.03.2013 under Section 274 of the Act, with the following limb: "Concealing particulars of income OR furnishing inaccurate particulars of such income". 3. The AO vide penalty order dated 25.02.2019 under Section 271(1)(c) r.w.s. 274 of the Act, ultimately levied the penalty of Rs. 18,21,588/- @ 100% being amount of tax evaded on the income of Rs. 54,64,764/- for concealing particulars of income OR furnishing inaccurate particulars of income by considering the peculiar facts and circumstances that the Hon'ble Tribunal ultimately, affirmed the addition of Rs. 5,35,91,882/- to the extent of Rs. 53,59,188/- only, being 10% of such impugned purchase, while partly allowing the appeal of the Assessee. 4. The Assessee being aggrieved challenged the said decision of the AO in levying the penalty, by filing the first appeal before the Ld. Commissioner and also raised a technical/legal issue qua not specifying the charge or....
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....by without specifying any specific charge/limb. The AO further vide penalty order, ultimately levied the penalty under consideration for concealment of income OR furnishing inaccurate particulars of income, which goes to show that the AO while levying penalty was also confused and/or unclear qua limb/charge of penalty levied. Thus, the decision of the AO in levying the penalty is hit by the judgment of the Jurisdictional High Court in the case of Md. Farhan A Shaikh (supra). 8. We further observe that the validity/legality of such kind of notice as involved in this case, has also been examined by the Hon'ble Coordinate Bench of the Tribunal recently in the case of Chiragkumar Rajendrabhai Shah Vs ITO, Ward 30(1)(2), [now] ITO Ward 41(3)(1) {ITA Nos.7130,7131 & 7132/M/2025 decided on 05.02.2026 and ultimately deleted the identical penalty levied, on the basis of similar kind of notice u/s 274 r.w.s. 271(i)(c) of the Act, by observing and holding as under: "7. We have heard the parties and perused the material available on record. As observed above, the Assessing Officer, vide assessment order dated 30.03.2014, made an addition of Rs. 8,23,49,198/-, which was sustaine....
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....e impugned order that though the Ld. Commissioner has also considered the aspect qua non-specification of the limb/charge for initiating penalty proceedings by issuing a notice dated 30.03.2014 under section 274 read with section 271(1)(c) of the Act, by relying on various judgments, however, it is a fact that the Ld. Commissioner has not considered the judgment of the Hon'ble Jurisdictional High Court in the case of Md. Farhan A Shaikh vs. DCIT (2021) 434 ITR 1 (Bom.) (HC) (FB) and various other judgments of the jurisdictional Benches of the Tribunal, including in the case of Korbusier Kinema Private Limited, Juhu vs. NFAC ACIT, Circle-15(1)(2), ITA No. 1016/M/2025, decided on 01.05.2025 wherein, the Hon'ble Coordinate Bench of the Tribunal not only considered the judgment of the Hon'ble Jurisdictional High Court in the case of Md. Farhan A Shaikh (supra), but also in the case of Veena Estate (P) Ltd. vs. CIT (2024) 461 ITR 483 (Bom.), which was delivered in favour of the Revenue, and held as under : 5. Thereafter, the AO issued a show cause notice dated 27.12.2008 for concealment of the particular of income or/and furnishing of inaccurate particulars of such income and u....
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....following the dictum laid down by the Hon'ble Jurisdictional High Court, in our considered view, the penalty under consideration is liable to be deleted. 11. Coming to the judgment relied on by the Ld. D.R. in the case of Veena Estate (P.) Ltd. (supra), we observe that in that particular case the notice u/s 274 of the Act was challenged after 23 years for the first time before the Hon'ble High Court by raising additional ground, which was not admitted and rejected by the Hon'ble High Court by interim order. Here it is not the case so, as in the instant case the Assessee has challenged the notice u/s 274 r.w.s. 271 of the Act before the second appellate authority and within a reasonable time and therefore the judgment referred to by the Ld. D.R. is factually dissimilar. 12. Even otherwise, the Hon'ble Jurisdictional High Court in the Full Bench case in the case of Md. Farhan A Shaikh (supra) has elaborately dealt with the issue and the relevant judgments and therefore respectfully following the said judgment, we are inclined to delete the penalty imposed by the AO and affirmed by the Ld. Commissioner. Thus, the penalty is deleted. 13. We fu....
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....f the irrelevant clause would lead to an inference of non application of mind by the Assessing Officer and levy of penalty would suffers from non-application of mind. 16. The Hon'ble High Court of Delhi in the case of M/s. Sahara India Life Insurance Company Ltd. 432 ITR 84 (Del.) while following the above judgement in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar), held as under: "21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for hesitation to delete the penalty levied by the AO and affirmed by the Ld. Commissioner. 17. Thus, on the aforesaid analyzations, we are unable to sustain the penalty levied under section 271(1)(c) of the Act. Hence, the same is deleted. 9. Thus, respectfully following the aforesai....