Penalty proceedings under Section 271(1)(c) of the Income Tax Act require the Assessing Officer to clearly specify the provision/limb under which penalty proceedings are triggered against the assessee.

JUDGMENT

[Physical Hearing/Hybrid Hearing (as per request)]

Rajiv Shakdher, J. (Oral)

1. These appeals concern the following Assessment Years (AYs): AY 2011-12 (in ITA 189/2023), AY 2008-09 (in ITA 190/2023), AY 2010-11 (in ITA 191/2023) and AY 2009-10 (in ITA 192/2023).

2. Via these appeals, a challenge has been laid to the common order dated 24.06.2021 passed by the Income Tax Appellate Tribunal.

3. Counsel for the appellant/revenue does not dispute that none of the penalty notices issued to the respondent/assessee for the aforementioned AYs advert to the specific limb of Section 271(1)(c) of the Income Tax Act, 1961 [in short, "the Act"] which is triggered against him.

4. In other words, it is not clear whether the Assessing Officer (AO) intended to levy a penalty on the respondent/assessee for concealment of particulars of his income, or furnishing inaccurate particulars. This issue is covered against the appellant/revenue in a catena of judgments, including the judgment rendered by the coordinate bench in the matter of Pr. Commissioner of Income Tax-3 v. Ms Minu Bakshi, 2022:DHC:2814-DB.

4.1. The relevant observations made in the said judgment are extracted hereafter:

"7. In our opinion, the conclusion reached by the Tribunal in the instant case that the notice for imposition of penalty under Section 271(1) (c) of the Act, did not specify which limb of the said provision the penalty was sought to be levied, is covered by the following decisions, which includes a decision rendered by a coordinate bench of this Court.

(i) CIT and Anr. v M/s SSA's Emerald Meadows, passed in ITA No. 380/2015, dated 23.11.2015.

(ii) Commissioner of Income Tax v Manjunatha Cotton and Ginning Factory, (2013) 359 ITR 565 (Kar.)

(iii) PCIT vs M/s Sahara India Life Insurance Company Ltd., passed in ITA No.475/2019, dated 02.08.2019.

7.1. To be noted, the Special Leave Petition filed against the judgement in SSA's Emerald (mentioned above) was dismissed via order dated 05.08.2016.

7.2. We are in agreement with the view taken by the Karnataka High Court in the above-mentioned judgements (in SSA's Emerald and Manjunatha Cotton) and, in any event, are bound by the view taken by the coordinate bench of this court in the Sahara India case."

5. This view has also been followed by this court in Pr. Commissioner of Income Tax, Delhi-7 v. Unitech Reliable Projects Pvt. Ltd., 2023:DHC:4258-DB.

5.1. The following observations made in the PCIT v. Unitech Reliable Projects Ltd. case, being relevant insofar as this case is concerned, are extracted hereafter:

"19. We may note, that even the assessment order dated 14.03.2015, whereby penalty proceedings were triggered, did not indicate as to which limb of Section 271(1)(c) was being triggered qua the petitioner. This is evident from the following observation made by the AO: "Penalty proceeding u/s 271(1)(c) is being initiated separately for concealment of income & for furnishing inaccurate particulars of income."

20. We may note, that another coordinate bench of this Court, of which one of us [i.e., Rajiv Shakdher, J.] was a party has reached the same conclusion in PCIT vs. Minu Bakshi 222 (7) TMI 1370-Delhi. 21. Penalty proceedings entail civil consequences for the assessee. The AO is required to apply his mind to the material particulars, and indicate clearly, as to what is being put against the respondent/assessee when triggering the penalty proceedings.

21. Penalty proceedings entail civil consequences for the assessee. The AO is required to apply his mind to the material particulars, and indicate clearly, as to what is being put against the respondent/assessee when triggering the penalty proceedings.

22. In case the AO concludes, that a case is made out under Section 271(1)(c) of the Act, he needs to indicate, clearly, as to which limb of the said provision is attracted. The reason we say so is, that apart from anything else, the pecuniary burden may vary, depending on the infraction(s) committed by the respondent/