Penalty u/s 272B for non-quoting PAN deleted as notice u/s 274 did not specified default done

Penalty u/s 272B for non-quoting of PAN deleted as show cause notice u/s 274 did not specified default done by the assessee

In a recent judgment, ITAT has deleted Penalty u/s 272B for non-quoting PAN as show cause notice issued u/s 274 did not clearly specified default done by the assessee.

ABCAUS Case Law Citation:
ABCAUS 3883 (2024) (02) ITAT

In the instant case, the assessee had challenged the order passed by the Commissioner of Income-tax, Appeals, NFAC in upholding the impugned order imposing penalty passed u/s 272B of the Income Tax Act, 1961 (the Act).

The appellant assessee filed its return of income which was selected for scrutiny through CASS and order u/s 143(3) of the Act was passed by Assessing Officer (AO) making certain additions.

During the course of scrutiny proceeding it was noticed that the assessee had maintained accounts with two banks and deposited huge cash on different occasions in his accounts.

However, the AO found that as per the provision of sub-section 5 of section 139A of the Act, the assessee was required to quote his Pan at the time of depositing of cash of Rs. 50,000/- or more. However, assessee did not mention his PAN while depositing cash of Rs. 50,000/- or more. Although, he was having his PAN at that time of such deposits were made.

Accordingly, penalty notice u/s 272B was issued to the assessee. However, no one turned up in terms of notice issued to assessee therefore, the AO imposed penalty of Rs. 10,000/- upon the assessee.

Before the Tribunal, the assessee submitted that no notice was issued u/s 274 of the Act issued before passing the penalty order in the case of assessee and even on the notice issued u/s 272B does not reveal the specific default justifying the issuance thereof.

The assessee relied upon the case of CIT vs Manjunatha Cotton And Ginning Factory where show cause notice u/s 274 of the Act was held as defective notice as it did not spell out the grounds on which penalty was sought to be imposed and Hon’ble High Court declared such imposition of penalty was not proper in the hands of assessee by deleting the same.

The assessee prayed that applying the same proposition of law where show cause notice did not spell out the specific ground on which penalty was sought to be imposed, the notice was bad in law accordingly imposition of penalty upon the assessee was liable to be deleted.

The Bench noted the language used in the notice u/s 274 of the Act issued to the assessee as under:

The notice stated that, “As per provisions of section 139A of the I.T. Act, you were required to quote permanent account number in any document referred to in clause (c) od sub-sec (5) of Sec. 139A. On verification it reveals that you did not mention your PAN. So, penalty u/s 272B may be levied due to failure in mentioning PAN.”

After perusing the above notice issued by the AO, the Tribunal found that it did not clearly specify under specific default has been done by the assessee also did not satisfy the charges leveled against him.

The Tribunal opined that as the penalty proceeding initiated without specifying any particular default in the case of assessee followed by imposition of penalty therefore order passed u/s 272B of the Act was null & void.

Accordingly, the Tribunal held that penalty imposed u/s 272B of the Act was not sustainable and directed to delete the same.

Thus, the appeal was allowed in favour of the assessee.  

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