Malook Nagar, New Delhi vs. Acit - (Income Tax Appellate Tribunal) (13 May 2022)

Notice under Section 274 of the IT Act should specifically state the grounds on which penalty was sought to be imposed

MANU/ID/0674/2022

Direct Taxation

The present appeals have been filed by the assessee against the orders of the learned CIT(A). The Assessing Officer made addition on account of agricultural income to the total income. Subsequently, the Tribunal determined agricultural income Rs.10,000 per acre. Consequent to the addition, penalty under Section 271(1)(c) of the Income Tax Act, 1961 (IT Act) has been levied by the AO.

In CIT vs. Manjunatha Cotton and Ginning Factory, High Court held that notice under section 274 of IT Act should specifically state the grounds mentioned in section 271(1)(c) of the IT Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in Section 271 of IT Act are mentioned would not satisfy requirement of law. The Hon'ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. reiterated that notice under Section 274 of the IT Act should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically.

In present case, since the AO has not been specified under Section 274 as to whether penalty is proposed for alleged 'concealment of income' OR 'furnishing of inaccurate particulars of such income', the penalty levied is obliterated. The appeals of the assessee are allowed.

Tags : PENALTY LEVY LEGALITY