Defective penalty notice cannot be cured on remand when the essential ingredients of the alleged contravention were never properly stated.

Where a penalty notice fails to set out the essential ingredients of the alleged contravention, the defect cannot be cured at the appellate stage by remanding the matter for a fresh notice and fresh penalty order. The revenue must frame a proper charge at the initiation of penalty proceedings, and it cannot improve an insufficient notice later. Since the first appellate authority had found that the notice was confined to non-deposit of security money and that the statutory ingredients for penalty were absent, the remand was unjustified and the matter was decided in favour of the assessee.

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Issues: Whether, after the first appellate authority found the penalty notice defective and held that the ingredients necessary for penalty under Section 54(1)(14) were missing, the matter could still be remanded for issuance of a fresh notice and fresh penalty order.

Analysis: The notice issued to the assessee was confined to non-deposit of security money and the first appellate authority recorded that such notice was not proper. Once the alleged violation itself was found not to be made out on the basis of the notice and the requisite ingredients for penalty were absent, the revenue could not be permitted to cure the defect by obtaining a remand for a fresh notice. The responsibility to frame a proper charge lay on the revenue at the stage of initiation of penalty proceedings, and there was no scope to improve the charge at the appellate stage.

Conclusion: The remand order was unjustified and the question was answered in the negative, in favour of the assessee.

Ratio Decidendi: Where a penalty notice is found deficient in the essential ingredients of the alleged contravention, the authority cannot be given a fresh opportunity at the appellate stage to issue a new notice and improve the charge.

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