The Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that non-mentioning of relevant limb in the penalty notice is not a curable defect and the proceedings are liable to be quashed.
The Assessing Officer initiated the penalty proceedings against the assessee, M/s Ambuja Neotia Holdings Pvt. Ltd, under section 274 read with Section 271(1)(c ) of the Act and finally imposed penalty under section 271(1)(c ) of the Act of Rs. 70,55,520/-.
On first appeal, the CIT(A) deleted the penalty on the ground that the notice issued under section 274 read with Section 271(1)(c ) of the Act dated 13.08.2015 is suffering from substantive defect which is incorrect as the limb on which the penalty was proposed to be levied was not highlighted or indicated in the notice.
The department approached the Tribunal on appeal.
The Tribunal bench comprising Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member observed that the notice under section 274 read with Section 271(1)(c) dated 13.08.2015 has been issued in a mechanical manner and in standard format without mentioning one of the two limbs on which the penalty was proposed to be levied.
“In other words, the notice mentioned both the limbs i.e. considering of record as well as furnishing of income inaccurate manner which is not permissible under the Act. In view of these facts we do not find any infirmity in the order of Ld. CIT(A). Non-mentioning of relevant limb in the penalty notice in substantive defect and infirmity which is not curable. The case of the assessee is squarely covered by several decisions as discussed by the Ld. CIT(A) at length in the appellate order including the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. SSA’s Emerald Meadows and in the case of CIT vs. Manjunatha Cotton and Ginning Factory,” the Tribunal said.
Shri Biswanath Das appeared for the assessee.
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