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Issues: (i) Whether the demand was barred by limitation on the ground that the later notice was a fresh show cause notice and not a mere corrigendum to the earlier notice; (ii) whether the penalty imposed was sustainable when neither the first nor the second notice mentioned penalty.
Issue (i): Whether the demand was barred by limitation on the ground that the later notice was a fresh show cause notice and not a mere corrigendum to the earlier notice.
Analysis: The amended notice dated 22-3-1990 was held to be a separate and distinct show cause notice rather than an amendment of the earlier notice. Since the allegation of suppression appeared only in the later notice, the invocation of the extended period under Section 11A could not be supported on the basis of the earlier notice. The demand, when tested against the later notice, was therefore out of time.
Conclusion: The demand was barred by limitation and this issue was decided in favour of the assessee.
Issue (ii): Whether the penalty imposed was sustainable when neither the first nor the second notice mentioned penalty.
Analysis: Penalty was not proposed in either show cause notice. In the absence of such notice, the levy of penalty could not be sustained.
Conclusion: The penalty was not sustainable and this issue was decided in favour of the assessee.
Final Conclusion: The appeal was allowed because the demand failed on limitation and the penalty could not be upheld.
Ratio Decidendi: A later notice that is in substance a fresh show cause notice cannot be treated as a mere corrigendum to extend limitation, and a penalty cannot be imposed unless it is proposed in the show cause notice.
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