Case Number: ITA 36/DEL/2021
Appellant: Legend Realtors Private Limited, New Delhi
Respondent: ITO WARD – 15(2), New Delhi
Assessment Year: 2009-10
Result: Penalty Upheld
Case Filed on: 2021-01-19
Order Type: Final Tribunal Order
Date of Order: 2022-10-31
Pronounced on: 2022-10-31
The case involves Legend Realtors Private Limited, New Delhi, appealing against the order of the learned Commissioner of Income-tax (Appeals)-32, New Delhi, dated January 23, 2020, for the assessment year 2009-10. The primary issue is the upholding of a penalty order passed under Section 271(1)(c) of the Income-tax Act, 1961.
The assessee, Legend Realtors Pvt. Ltd., contested the penalty order issued by the Assessing Officer (AO) and upheld by the Commissioner of Income-tax (Appeals) [CIT(A)]. The grounds of appeal included:
For the assessment year in question, the AO assessed the income of the assessee under Section 148/143(3) of the Income-tax Act at Rs. 4,21,65,840/- and initiated penalty proceedings separately. Subsequently, the AO imposed a penalty of Rs. 84,33,170/- under Section 271(1)(c) of the Act on March 21, 2016. The assessee appealed against this decision before the CIT(A), who sustained the penalty. Consequently, the assessee appealed before the Income Tax Appellate Tribunal (ITAT).
The learned counsel for the assessee argued that the penalty imposed by the AO was bad in law due to improper penalty notices dated March 1, 2013, December 31, 2015, and February 5, 2016. The counsel cited the judgment of the Hon’ble Delhi High Court in the case of Sahara India Life Insurance Co. Ltd. (2019) and the Hon’ble Supreme Court in the case of SSA’S Emerald Meadows (73 Taxmann.com 248).
The learned DR opposed the submissions of the appellant and supported the orders of the authorities below. The DR referenced the judgment of the Hon’ble Madras High Court in the case of Sundaram Finance Ltd. vs. ACIT (2018) 93 taxmann.com 250.
The Tribunal found that the AO had failed to specify the charge under which the penalty was proposed, making the penalty notices invalid. The Tribunal cited the judgment of the Hon’ble Delhi High Court in Sahara India Life Insurance Co. Ltd., which held that the notice must specify the limb of Section 271(1)(c) under which the penalty proceedings were initiated.
The Tribunal also noted that the invalid penalty notices resulted in the penalty order being bad in law.
The Tribunal concluded that the penalty notice issued by the AO did not specify the charge, making it invalid. Consequently, the penalty levied by the AO and sustained by the CIT(A) was deleted. The appeal of the assessee was allowed.
Final Judgment: The Tribunal directed the AO to delete the penalty. The appeal of the assessee, Legend Realtors Pvt. Ltd., was allowed.
Order Pronounced in Open Court: October 31, 2022
Judges: NARENDRA KUMAR BILLAIYA (Accountant Member) and KUL BHARAT (Judicial Member)
Copy forwarded to:
Assistant Registrar: ITAT, New Delhi
Legend Realtors Private Limited vs. ITO Ward-15(2): Penalty Order Upheld – ITA No. 36/DEL/2021
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