Innovators Facade Systems Pvt. Ltd. Vs. ACIT - (Income Tax Appellate Tribunal) (15 Dec 2023)

Defect in notice by not striking off the irrelevant matter vitiates the penalty proceedings

MANU/IU/1102/2023

Direct Taxation

The present appeal has been filed by the assessee challenging the impugned order passed under Section 250 of the Income Tax Act, 1961 (IT Act) by the learned Commissioner of Income Tax (Appeals), which in turn arose from the penalty order passed under Section 271(1)(c) of the IT Act, for the assessment year 2010-11.

In the present case, the AO initiated penalty proceedings under Section 271(1)(c) of the Act and levied a penalty of Rs. 4,48,381. From the perusal of the notice issued under Section 274 read with Section 271(1)(c) of the Act, furnished during the hearing, present Tribunal find that the AO did not strike-off any of the twin charges i.e., concealment of particulars of income or furnishing of inaccurate particulars of income.

The case of the assessee is squarely covered by the decision of the High Court in Mohd. Farhan A. Shaikh v/s CIT, wherein High Court has held that, the defect in notice by not striking off the irrelevant matter would vitiate the penalty proceedings. Accordingly, respectfully following the aforesaid decision of the High Court, the penalty order passed under Section 271(1)(c) of the Act is quashed. In the result, the appeal by the assessee is allowed.

Tags : PENALTY LEVY LEGALITY