The case ITA 811/DEL/2019 involves the appellant DCIT, Central Circle-II, Faridabad, and the respondent A2Z Maintenance and Engineering Services Ltd., Gurgaon, concerning the assessment year 2011-12. This case primarily deals with the imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961, which was contested and ultimately disallowed by the Income Tax Appellate Tribunal (ITAT) on March 28, 2023.
The appellant, DCIT, filed the case against A2Z Maintenance and Engineering Services Ltd. on February 4, 2019. The central issue pertains to the imposition of penalty under Section 271(1)(c) of the Income Tax Act for the assessment year 2011-12. The penalty was initially imposed due to the alleged concealment of income or furnishing of inaccurate particulars of income by the respondent.
The ITAT Delhi Bench ‘A’ heard the case, which included multiple cross-appeals filed by both the assessee and the Revenue against separate orders of the Commissioner of Income Tax (Appeals)-III, Gurgaon. The orders in question arose from various penalty orders passed by the Assessing Officer under Section 271(1)(c) of the Act for the assessment years 2008-09 to 2013-14.
The tribunal carefully examined the facts and contentions presented by both parties. One of the key arguments by the respondent was the absence of clear and specific allegations regarding the nature of the default in both the assessment and penalty proceedings.
The tribunal referred to several judicial pronouncements that reinforced the necessity of clear and specific satisfaction by the AO before initiating penalty proceedings. Notable cases included:
The ITAT concluded that the imposition of penalty under Section 271(1)(c) in the case of A2Z Maintenance and Engineering Services Ltd. was not justified due to the absence of clear and specific satisfaction by the AO and the vague nature of the penalty notices. Consequently, the penalties were quashed and set aside.
This case underscores the importance of precise and clear documentation by tax authorities when initiating penalty proceedings. The decision reinforces the need for tax authorities to adhere strictly to the requirements of the law and ensures that penalties are imposed only when justified by clear evidence of default.
Overall, the case ITA 811/DEL/2019 highlights significant aspects of tax law, particularly regarding the imposition of penalties under Section 271(1)(c), and serves as a crucial reference for similar cases in the future.
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