TaxTMI 
TaxTMI 
2022 (1) TMI 285
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....der section 274 read with section 271(1)(c) dated 18.03.2015 is bad in law as it does not specify whether the penalty is levied for concealment of income or furnishing inaccurate particulars of income and hence the penalty of Rs.3,30,000/- may be deleted." 3. The facts in brief are that the assessment in the case of the assessee was completed under section 143(3) read with section 147 of the Act on 18th March, 2015. During the course of assessment proceedings, the Assessing Officer stated that the assessee had received a loan of Rs.10 lakhs from Growmore Investment and Developers Private Limited (GIPL) in which the assessee was shareholder having shareholding of 11.50%. Therefore, the advance given by the aforesaid company to the assessee was treated as deemed dividend under section 2(22)(e) of the Act and added to the total income of the assessee. The Assessing Officer has also initiated the penalty proceedings under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income. 4. The Assessing Officer has levied the penalty of Rs. 3,30,000/- vide order under section 271(1)(c) of the Act dated 30th March, 2018 for furnishing of inaccurate particulars of in....
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....1.03.2015 at 11.30 AM and show cause why an order imposing a penalty on you should not be made under section 271(1)(c) of the Income Tax Act, 1961. If no one attends his office on the said date of hearing, the case shall be decided on the basis of material available on records." 8. On perusal of the aforesaid notice it is clear that Assessing Officer has not specified whether the penalty is being levied on account of concealment of particulars of income or furnishing of inaccurate particulars of income. In this regard, we have gone through the case of Jurisdictional High court referred by learned counsel in the case of Mohd. Farhan A. Shaikh Vs. DCIT (2021) 125 taxmann.com 253 (Bombay), wherein the relevant Para of the head note is reproduced as under:- "Section 271(1)(c), read with section 274 of the Income-tax Act, 1961 - Penalty - For concealment of income (Recording of satisfaction) - Whether where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice-not striking off irrelevant matter would vitiate penalty proceedings - Held, yes - Whether since penalty proceedings....
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....ry scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee's favour. 183. Therefore, we answer the first question to the effect that Goa Dourado Promotions and other cases have adopted an approach more in consonance with the statutory scheme. That means we must hold that Kaushalya does not lay down the correct proposition of law. Question No. 2: Has Kaushalya failed to discuss the aspect of 'prejudice'? 184. Indeed, Smt. Kaushalya case (supra) did discuss the aspect of prejudice. As we have already noted, Kaushalya noted that the assessment orders already contained the reasons why penalty should be initiated. So, the assessee, stresses Kaushalya, "fully knew in detail the exact charge of the Revenue against him". For Kaushalya, the statutory notice suffered from neither non-application of mind nor any prejudic....
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....e contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for ambiguity. Therefore, Dilip N. Shroff Case (supra) disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays non- application of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that "where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, "except in the case of a mandatory provision of law which is conceived not only in individual interest but also in the public interest". 190. Here, section 271(1)(c) is one such provision. With calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling with or dilution. For a further precedential prop, we may refer ....