2024 (3) TMI 1097 - AT - Income Tax

Penalty u/sec. 270A - defective notice u/s 274 - non specifying the relevant limb at the time of initiation of penalty - HELD THAT - It has duly come on record in light of the AO s corresponding twin identical show cause notices that he had not specified the corresponding limb u/sec. 270A(8) read with sub-section(9) thereof as was held in various judicial pronouncements G.R. Infraprojects Ltd. 2024 (1) TMI 163 - RAJASTHAN HIGH COURT , Schneider Electric South East Asia (HQ) PTE Ltd. 2022 (3) TMI 1295 - DELHI HIGH COURT and Prem Brothers Infrastructure LLP vs. NFAC 2022 (6) TMI 130 - DELHI HIGH COURT We further wish to draw support from hon ble jurisdictional high court s decision in Mohd. Farhan A. Shaikh vs. DCIT 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) that such a failure on AO s part in not specifying the relevant limb at the time of initiation of penalty itself vitiates the entire proceedings being in the nature of an incurable defect. Faced with the situation, we delete the impugned penalties imposed - Decided in favour of assessee.

Summary

Issues involved:
The issues involved in this judgment are related to the correctness of penalties imposed by the Assessing Officer under section 270A of the Income Tax Act, 1961, for assessment years 2017-2018 and 2018-2019. The main contention is regarding the Assessing Officer's failure to specify the corresponding limb under sub-section 270A(9) of the Act in the show cause notices.

Assessment Year 2017-2018:
In the case for assessment year 2017-2018, the assessee challenged the penalties imposed by the Assessing Officer, amounting to Rs. 1,99,712. The assessee argued that the Assessing Officer did not specify the relevant limb under sub-section 270A(9) of the Act in the show cause notices. The Revenue contended that the omission was unintended and that the penalty orders correctly pinpointed the corresponding limb. However, the Tribunal found no merit in the Revenue's arguments. Citing judicial pronouncements, the Tribunal held that the failure to specify the relevant limb at the initiation of the penalty proceedings vitiates the entire process. Consequently, the penalties of Rs. 1,99,712 for assessment year 2017-2018 were deleted.

Assessment Year 2018-2019:
Similarly, for assessment year 2018-2019, the assessee contested the penalties of Rs. 3,05,952 imposed by the Assessing Officer. The assessee raised the same argument regarding the Assessing Officer's failure to specify the relevant limb under sub-section 270A(9) of the Act in the show cause notices. The Revenue maintained that the penalties were correctly imposed. However, the Tribunal, after considering the arguments and precedents, concluded that the penalties for assessment year 2018-2019 were also invalid due to the Assessing Officer's failure to specify the relevant limb. Therefore, the penalties of Rs. 3,05,952 for assessment year 2018-2019 were also deleted.

Condonation of Delay:
Additionally, the Tribunal condoned the delay of 8 days in filing the former appeal for assessment year 2017-2018 in the interest of justice and based on the information provided in the condonation affidavit.

Conclusion:
In conclusion, the Appellate Tribunal ITAT Pune allowed the twin appeals for assessment years 2017-2018 and 2018-2019, as the penalties imposed by the Assessing Officer under section 270A of the Income Tax Act were found to be invalid due to the failure to specify the relevant limb in the show cause notices. The penalties of Rs. 1,99,712 for assessment year 2017-2018 and Rs. 3,05,952 for assessment year 2018-2019 were deleted, respectively.