Income Tax: ITAT Set Asides Penalty of 40.94 Cr for Vague Show Cause Notice:

ITAT cancelled the penalty because the assessing officer did not specify the limb in his penalty show cause notices issued to the assessee.

ITAT Cancels Penalty of 40.94 Cr for Unclear Show Cause Notice

Nidhi

Jul 1, 2025

Last update on Jul 1, 2025

Income Tax: ITAT Set Asides Penalty of 40.94 Cr for Vague Show Cause Notice The assessee, Delhi Building and Other Construction Workers Welfare Board, had claimed income tax exemptions under Sections 11(1) and 11(2) of the Income Tax Act. However, the Income Tax Department issued penalty show cause notices under Section 271(1)(c), claiming that the Board has furnished inaccurate details and concealed income, which led to penalties of Rs 14,84,51,810 and Rs 26,10,75,652.

ITAT Decision

The Income Tax Appellate Tribunal (ITAT) recited the cases PCIT Vs Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del.) and PCIT Vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Del.) and observed that the assessing officer has not specified the limb in his penalty show cause notices. Therefore, it allowed the appeal of the assessee and quashed the penalty as the Assessing Officer (AO) had sent show-cause notices without clearly specifying under which limb of Section 271(1)(c) the penalty was being considered.

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Nidhi

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Nidhi is a skilled content writer specializing in personal finance. She creates clear, engaging articles on mutual funds, investments, insurance, and wealth-building strategies. With a passion for simplifying complex financial topics, Nidhi helps readers make informed money decisions with confidence. She can be reached at [email protected]