PHI Seeds Pvt. Ltd., Telangana vs. ACIT, Special Range-7: Challenge to Penalty for 2003-04 Assessment Year

PHI Seeds Pvt. Ltd., Telangana vs. ACIT, Special Range-7: Challenge to Penalty for 2003-04 Assessment Year

Case Number: ITA 6016/DEL/2019

Appellant: PHI Seeds Pvt. Ltd., Telangana

Respondent: ACIT, Special Range-7, New Delhi

Assessment Year: 2003-04

Case Filed On: 12th July 2019

Order Type: Final Tribunal Order

Date of Order: 10th May 2023

Pronounced On: 10th May 2023

Background and Issue

The case involves an appeal by PHI Seeds Pvt. Ltd. against the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 by the Additional Commissioner of Income Tax, Special Range-7, New Delhi. The key issue was the lack of clarity in the penalty notice regarding whether the penalty was for concealment of income or for furnishing inaccurate particulars of income. This ambiguity was central to the appellant’s argument against the validity of the penalty.

Proceedings Overview

The appeal was heard by the Delhi Bench ‘F’ of the Income Tax Appellate Tribunal (ITAT), consisting of Shri Shamim Yahya, Accountant Member, and Shri Anubhav Sharma, Judicial Member. The tribunal considered the appeals for the years 2002-03, 2003-04, 2005-06, and 2010-11 together due to common issues, focusing specifically on the 2003-04 assessment year for detailed discussion.

Arguments and Tribunal’s Analysis

The appellant argued that the penalty notice was defective because it did not specify the exact nature of the non-compliance—whether it was concealment of income or furnishing of inaccurate particulars. This lack of specificity, they contended, rendered the notice and the subsequent penalty invalid under the law.

The tribunal reviewed the submissions and noticed that the notice indeed carried an omnibus charge, which did not clearly distinguish between the types of non-compliance. Reference was made to precedent cases where similar issues had been addressed, including decisions by the Bombay High Court and the Supreme Court that supported the necessity for specificity in penalty notices.

Decision

The tribunal concluded that the penalty notice was invalid due to its failure to clearly specify the charges against the assessee. Consequently, it set aside the orders of the lower authorities and allowed the appeals of PHI Seeds Pvt. Ltd., thereby cancelling the penalties for all the years in question, including the 2003-04 assessment year.

Impact and Conclusion

This ruling emphasizes the importance of clarity in the issuance of penalty notices under the Income Tax Act. The decision not only provided relief to PHI Seeds Pvt. Ltd. but also reaffirmed the principles of justice and proper legal procedure, ensuring that taxpayers are adequately informed of the charges against them in penalty proceedings.

Order Pronounced By: Shri Shamim Yahya, Accountant Member, and Shri Anubhav Sharma, Judicial Member

Final Order: Appeal Allowed, Penalty Imposed under Section 271(1)(c) Canceled

PHI Seeds Pvt. Ltd., Telangana vs. ACIT, Special Range-7: Challenge to Penalty for 2003-04 Assessment Year