https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770686 https://www.taxtmi.com/caselaws?id=770686 Penalty proceedings initiated u/s 271(1)(c) - defective notice u/s 274 - as there was non-application of mind by the AO for non-striking of the irrelevant limb and whether the same violates the principles of natural justice - HELD THAT:- As decided in Mohammad Farhan Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] has held that not striking of the irrelevant limb in the notice is not a mere procedural defect but the same would vitiate the entire penalty proceeding. Hon'ble High Court also held that even if the assessment order contains the reason for the initiation of penalty, the same cannot be a justification to cure the defect in the penalty proceedings. It was held that non striking of the irrelevant limb is a mandatory condition which when contravened becomes fatal to the revenue. Thus, an omnibus show cause notice would tantamount to non-application of mind and resulting in prejudice caused to the assessee. It is held to be in violation of the principles of natural justice which is ultra virus to Article 14 of the Constitution. Here, in the present case, the revenue has not brought any contradictory facts to disprove that the impugned notice caused prejudice to the assessee. Pertinently, the assessment order is also silent as to the reason for the initiation of the penalty, though the final penalty order passed u/s. 271(1)(c) specifies that the same is for concealment of particulars of income and therefore the penalty proceeding shall be vitiated for the above said reasons. By respectfully following the decisions relied upon by the ld. AR, we hold that the penalty order passed u/s. 271(1)(c) of the Act is bad in law and not sustainable. Allow ground no. 1 raised by the assessee by directing the ld. AO to delete the penalty levied on the assessee Penalty on voluntary disclosure during search action - whether assessee offering additional income, post survey action vide revised return would result in levying of penalty for concealment of income or not? - HELD THAT:- As in the present case in hand, the assessee has offered additional income in all the 3 assessment years post survey and has also not brought anything on record to show that the additional income was not part of bogus transaction as alleged by the department. Further, there could be possibilities of error or discrepancy in the return of income filed by the assessee for one year but there cannot be presumption that in all the three impugned years there was error or mistake in the return of income filed by the assessee, that to not for any meager amount. We would like to place our reliance on the decision of MAK Data Pvt. Ltd. [2013 (11) TMI 14 - SUPREME COURT] which was extensively relied upon by the ld. DR, where it was held that surrender of income merely does not absolve the assessee from penalty proceeding unless the assessee has discharged the burden to establish that the concealment was unintentional and not malafide. The explanation 1 to Section 271(1) raises a presumption of concealment, where the assessee if fails to offer an explanation or the explanation offered by him is considered to be false or fails to substantiate that the explanation is bonafide, to the satisfaction of the ld. AO, then it is deemed that the said income has been concealed. In the present case in hand, we do not find any justification in holding that the concealment of additional income declared by the assessee in its revised return is unintentional or is merely an error or mistake crept in in the original return of income filed by the assessee. The assessee has also failed to substantiate the same. We are of the considered view that the penalty levied by the ld. AO and upheld by the ld. CIT(A) holds merit and does not require any interference. Appeal filed by the assessee is dismissed. Case-Laws Income Tax Wed, 30 Apr 2025 00:00:00 +0530