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