IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 1610/DEL/2025 [A.Y. 2016-17]

Khaitan and Partners Vs. The A.CI.T.

W-13, Greater Kailash-2 Circle – 61(1)

New Delhi Delhi PAN – AAJFK 0419 Q (Applicant) (Respondent)

Assessee By : Shri Sanjay Jain, CA Shri Saurabh Jain, Adv Department By : Shri Manish Gupta, Sr. DR Date of Hearing : 06.08.2025 Date of Pronouncement : 19.08.2025

ORDER

PER NAVEEN CHANDRA, A.M:-

This appeal by the assessee is preferred against the order of NFAC, Delhi dated 10.02.2025 for A.Y 2016-17.

2. The sum and substance of the grievance of the assessee is that the penalty of Rs. 3,73,655/-levied u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] is bad and imposed beyond the period prescribed u/s 275 of the Act.

3. Roots for levy of penalty lie in the assessment order dated

28.02.2015 framed u/s 143(3) of the Act.

4. Brief facts of the case are that the return of income was filed on 10.09.2016 declaring a loss of Rs 44,77,924/-. However, the Assessing Officer assessed the loss of the assessee at Rs. 23,41,600/- after making certain additions. Assessment was challenged before the ld. CIT(A) who confirmed the addition of 12,09,241/-.

5. The AO initiated the penalty proceedings u/s 271(1)(c) of the Act wherein he held that the assessee has committed default in respect of furnishing inaccurate particulars of income, and levied the minimum penalty of Rs. 3,73,655/- @

100% of the amount of tax payable, on the assessee.

6. The assessee carried the matter before the ld. CIT(A) but without any success.

7. The ld counsel of the assessee argued that the notice u/s 271(1)(c) has not specified the limb of section 271(1)(c) under which the AO proposed to levy the penalty and produced the copy of notice. Per contra, the ld DR submitted that no prejudice is caused to the assessee.

8. We have heard the rival submissions and have perused the relevant material on record. The submission of the assessee that the notice u/s 271(1)(c) does not specify the limb under which the penalty is to be levied was examined. We find that the notice u/s 274 r.w.s. 271(1)(c) of the Act which was issued and served upon the assessee is as under:

GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT CIRCLE 61(1), DELHI OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX To KHAITAN AND PARTNERS W-13 W-13, GREATER KAILASH-II 110048, Delhi India PAN: AAJFK0419Q Assessment Year: 2016-17 Date: 27/12/2018 Notice No.:ITBA/PNL/S/271(1)(c)/2018-

19/1014635661(1)

Notice under section 274 read with section 271(1)(c)

of the Income Tax Act, 1961 Sir/Madam, Whereas in the course of proceedings before me for the Assessment Year 2016-17, it appears to me that you have concealed the particulars of income and furnished inaccurate particulars of such income.

You are hereby requested to appear before me either personally or through a duly authorised representative at 01:39 PM on 28/01/2019 and show cause why an order imposing a penalty on you should not be made under section

271(1)(c) of the Income Tax Act, 1961.

If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271(1)(c) of the Income Tax Act, 1961 PAYEL-PRAKASH CIRCLE 61(1), DELHI

9. A perusal of the aforementioned notice clearly shows that the Assessing Officer did not specify under which limb of the provision he has initiated the proceedings. Where the penal proceedings are separate from assessment proceedings, while initiating penalty proceedings u/s 271(1)(c) of the Act, it is incumbent upon the Assessing Officer to demonstrate under which limb he is proposing to levy penalty.

10. On identical circumstances, the Hon'ble High Court of Delhi in the case of Sahara India Life Insurance Company Ltd ITA No