The Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘B+SMC’ delivered a significant judgment on January 20, 2020, in the case of Aditya Durobuild Pvt. Ltd. vs. ACIT, Central Circle-7, New Delhi, concerning the tax penalty imposed for the assessment year 2009-10. This case, identified by ITA No. 1233/DEL/2019, revolves around the contentious penalty of Rs. 7,05,585/- confirmed by CIT(A)-24, which was originally levied by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961.
Aditya Durobuild Pvt. Ltd. filed its return on September 29, 2009, declaring an income of Rs. 19,39,080/-. The case pivoted on the interpretation of income from fixed deposits, which the AO considered as income from other sources, thereby reducing the company’s claim under section 80IB of the Income Tax Act. This adjustment was pivotal as it led to a reduced deduction and subsequent increase in assessed income to Rs. 40,14,945/-.
The penalty under scrutiny was initially imposed by the AO for what was deemed as furnishing inaccurate particulars of income. The litigation focused on whether the penalty was justifiably imposed under section 271(1)(c) for the concealment of income or for providing inaccurate particulars. The core issue debated was the lack of specificity in the AO’s notice concerning the grounds for penalty initiation, which was a significant point of contention throughout the appellate proceedings.
During the hearing, significant emphasis was placed on judicial precedents and the proper initiation of penalty proceedings. The appellant’s representative argued that the notice issued under section 274 read with section 271(1)(c) was defective as it did not strike off the irrelevant grounds of penalty, thereby rendering the penalty invalid. This argument was bolstered by references to similar cases and supported by the tribunal’s decision, which eventually led to the conclusion that the penalty was unjustifiably levied.
The tribunal, while analyzing the merits of the case, acknowledged that the income in question was fully disclosed and that the deductions claimed were supported by requisite audit certificates. It was determined that there was no concealment or furnishing of inaccurate particulars by Aditya Durobuild Pvt. Ltd., and thus, the penalty imposed was not sustainable under the law.
The tribunal’s decision to overturn the penalty and side with the taxpayer underscores the importance of precise documentation and adherence to procedural norms by the tax authorities. The case highlights the critical nature of how penalties for concealment of income should be assessed and the necessary legal standards that need to be upheld to ensure fairness in tax proceedings.
The judgment not only provided relief to Aditya Durobuild Pvt. Ltd. but also set a precedent on the necessity of clarity in penalty notices, contributing to a fairer adjudication process in tax disputes.
The final order was pronounced in the open court on January 20, 2020, by Judicial Member Shri Sudhanshu Srivastava and Accountant Member Shri Prashant Maharishi, providing a detailed narrative and legal reasoning behind the tribunal’s decision.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform