ITAT Delhi quashed a penalty under Section 271AAB due to defective show-cause notices that failed to specify the exact statutory clause violated, violating principles of natural justice.
Vague Penalty Notices Render 271AAB Penalty Inoperative
ITAT Delhi deleted a penalty under Section 271AAB of the Income Tax Act, which pertains to failure to furnish information or documents, because the show-cause notice issued under Section 274 did not specify the particular clause under Section 271AAB(1A) that was breached. The tribunal held that such omission deprived the assessee of a fair opportunity to defend.
The decision was reiterated in multiple orders by ITAT Delhi and Chennai, emphasizing that generic references without pinpointing the violation clause are fatal.
“A notice must clearly specify the charge to enable effective representation”, the tribunal held, citing Supreme Court precedents on audi alteram partem.
This line of rulings establishes that procedural precision is mandatory in penalty proceedings. Practitioners should routinely scrutinize show-cause notices for specificity and challenge those lacking statutory clarity as violative of natural justice, even if substantively correct.
Citations
- Section 271AAB, Section 274, Income Tax Act, 1961
