Gajender Singh Jadon, New Delhi vs. ACIT - (Income Tax Appellate Tribunal) (25 Jan 2023)

AO has to specify the default for which the penalty notice is issued so that the assessee is aware of the charge against him

MANU/ID/0128/2023

Direct Taxation

In facts of present case, the Department received information that, the assessee has deposited cash of Rs. 14,62,150 in his savings bank account with Delhi Nagrik Sahkari Bank Ltd. Enquiry letter sent to the assessee was not complied with. The Learned Assessing Officer ("AO"), after going through the legal formalities brought the said cash deposit to tax in his assessment order passed under Section 144/147 of the Income Tax Act, 1961 (IT Act). He initiated penalty proceedings under Section 271(1)(c) of the IT Act.

The Learned AO passed penalty order imposing penalty of Rs. 4,36,060 under Section 271(1)(c) of the IT Act against which the assessee filed appeal before the Learned CIT(A) who confirmed the said penalty observing that, the assessee has not controverted the findings of the Learned AO in appellate proceedings. Aggrieved, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.

It is now well settled that, the Learned AO has to specify the default for which the penalty notice is issued so that the assessee is aware of the charge against him. For this purpose, it is mandatory that the relevant limb of the notice be specified whether the notice for penalty is for concealment of income or furnishing of inaccurate particulars of income. The Bombay High Court in the case of Mohd. Farhan A. Shaikh vs. ACIT has held that, no specification of charge in the penalty notice leads to same becoming void and penalty on that count is to be deleted.

However, the parties have agreed that the matter may be sent to the AO to examine from the assessment records whether the penalty notice was properly ticked or not. Present Tribunal consider it just and fair to remit the issue to the file of the AO to ascertain from the records whether the charge was specified or not in the penalty notice issued to the assessee. If on verification it is found that the relevant charge was not ticked off and the notice was omnibus notice, the penalty levied will not be sustainable. Appeal allowed.

Tags : PENALTY LEVY LEGALITY