Penalty Appeal Dismissed in the Case of Chiranjeev Kumar Vinayak vs ITO for AY 2014-15

Penalty Appeal Dismissed in the Case of Chiranjeev Kumar Vinayak vs ITO for AY 2014-15

The Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘SMC’ heard the case of Chiranjeev Kumar Vinayak, residing at House No. 75, 2nd Floor, Vigyan Lok, East Delhi, against the Income Tax Officer, Ward-47(5), New Delhi, concerning the assessment year 2014-15. The appeal was heard through video conferencing before the Judicial Member, Shri Kul Bharat, and the order was pronounced on 24th August 2022.

Background of the Case

The case originated from the assessment order passed under Section 143(3) of the Income-tax Act, 1961 (‘the Act’), on 30th December 2016. The Assessing Officer made an addition of Rs. 33,21,341/- under Section 68 and Rs. 1,60,062/- under Section 69C concerning bogus long-term capital gains and the commission thereon, respectively. Subsequently, penalty proceedings were initiated under Section 271(1)(c) of the Act, resulting in a penalty of Rs. 9,02,488/- imposed by the Assessing Officer on 28th December 2018.

Appeal to CIT(A) and ITAT

Aggrieved by the penalty order, the assessee appealed to the Commissioner of Income-tax (Appeals)-16, New Delhi, who dismissed the appeal on 30th May 2019. The assessee then moved to the ITAT, arguing that the penalty notice issued under Section 274 was illegal and bad in law as it did not specify the exact charge—whether it was for concealment of income or furnishing inaccurate particulars.

The case was taken up for hearing on 17th August 2022. However, there was no representation on behalf of the assessee, and the appeal was decided based on the material available on record.

Key Issues and Tribunal’s Findings

The primary contention raised by the assessee was that the penalty notice under Section 274 was vague, as it did not specify whether the penalty was for concealment of income or for furnishing inaccurate particulars. This, the assessee argued, violated the principles of natural justice as it did not provide a clear charge to defend against.

The Tribunal noted that the penalty was initiated and imposed based on the assessment order, which clearly indicated the concealment of income through bogus long-term capital gains. The Tribunal also considered several judicial precedents cited by the Departmental Representative (DR), which supported the view that minor defects in the penalty notice, such as not striking off the irrelevant charge, do not invalidate the penalty proceedings.

Conclusion

The Tribunal found that the assessee failed to substantiate the claim of the penalty notice being defective and did not provide any supporting material to challenge the penalty under Section 271(1)(c) of the Act. Consequently, the ITAT dismissed the appeal, upholding the penalty imposed by the Assessing Officer.

In conclusion, this case emphasizes the importance of clarity in penalty notices under Section 274 of the Income-tax Act. However, it also highlights that minor procedural defects in the notice do not necessarily invalidate the penalty proceedings if the substance of the charge is clear and supported by the assessment order.

The order was pronounced in open court on 24th August 2022, confirming the dismissal of the appeal.

Penalty Appeal Dismissed in the Case of Chiranjeev Kumar Vinayak vs ITO for AY 2014-15