Trading Profit Rate Capped at 15% and Penalty Notice Under Section 271(1)(c) Quashed Due to Procedural Defects

ITAT addressed two key issues in the appeal. On trading results, following precedent from AY 2000-01 to 2004-05, the Tribunal restricted gross profit rate to 15% and directed AO to recalculate trading addition accordingly. Regarding penalty under s.271(1)(c), the notice was found defective due to non-striking of irrelevant portions, making it impermissibly vague. Following Bombay HC precedent, ITAT held that penalty proceedings require specific grounds through proper statutory notice. The omnibus notice failed to inform appellant of precise charges. Consequently, both the AO's penalty order and CIT(A)'s confirmation were deemed erroneous. Appeal allowed in taxpayer's favor. .....

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