The Delhi bench of Income Tax Appellate Tribunal (ITAT) quashed the proceedings under section 271(1) (c), because of the penalty notice issued without application of mind and in a stereotyped manner.
The brief fact of the case is that the assessee received the share capital of Rs.35, 00,000/- from Ankay Associates Pvt. Ltd., controlled and managed by one Shri Anil Agarwal, and he stated that this company provides the accommodation entries only.
The assessing officer on noticing, made the addition of Rs.35,00,000/- on account of bogus share capital by passing assessment order dated 30.03.2015 under section 153A/143(3) of the Income Tax Act 1961.
On the basis of said addition Rs.35,00,000/-, the assessing officer recorded his satisfaction for initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act 1961, for furnishing inaccurate particulars of income and imposed a penalty of Rs.10,81,500/- at 100% of the tax sought to be evaded vide penalty for furnishing inaccurate particulars of income.
Aggrieved assessee, preferred first appeal before the commissioner of Income Tax, who vide impugned order affirmed the penalty order on the premise that the assessee had not been able to prove the genuineness of share capital, either during the assessment proceedings or appellate proceedings or even in the course of penalty proceedings. Being aggrieved by the impugned order, the assessee filed an appeal before the Income Tax Appellate Tribunal.
The Counsel for the appellant, Ms. Sanjana Sachdev, claimed that the notice under section 274/271(1) (c) of the Income Tax Act 1961, for concealment of particulars of income/for furnishing inaccurate particulars of income, without specifying particular limb of penalty, has used slash (/) between both the limbs of penalty and in the penalty proceedings ultimately levied the penalty for furnishing of inaccurate particulars of income.
Mr. Mohd. Gayasuddin Ansari, the counsel for the department, contended that the penalty order emphasized that the assessee by filing its reply to the notice under section 274/271(1) (c) of the Income Tax Act 1961 has acknowledged the initiation of penalty proceedings for furnishing of inaccurate particulars of income, therefore, the penalty levied by the assessing officer and affirmed by the commissioner of Income Tax, does not require any interference.
The Coram comprising Anil Chaturvedi and the judicial member N.k. Choudhry observed that the notice in this case has been issued in a stereotyped manner without applying mind which is bad in law.
It cannot be considered a valid notice sufficient to impose penalty under section 271(1) (c) of the Income Tax Act 1961, and therefore the penalty is not leviable and held that “we have no hesitation to delete the penalty levied by the assessing officer and affirmed by commissioner”. The bench deleted the penalty and the appeal filed by the assessee got allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
