TaxTMI 
TaxTMI 
2022 (3) TMI 344
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.... 1. "That the Ld. AO and CIT(A) have both erred in law and on facts in levy of illegal penalty of Rs. 3,55,594/-, the same be annulled, since penalty is levied in pursuance of a vague notice, issued without application of mind, without the specific offense, thereby depriving the assessee of reasonable opportunity of defending himself. 2. That the Ld. AO and CIT(A) have both erred in law and on facts in levy of illegal penalty, in pursuance of illegal addition made, without reference to any section, thereby depriving the assessee of safeguarding its interest. As per Article 265 of Constitution of India "No tax shall be levied or collected except by authority of law". Penalty levied on illegal assessment be annulled. 3. ....
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....ct submitted that the notice was issued mechanically stating that assessee has concealed particulars of income or furnished inaccurate particulars of such income. In other words, the notice was issued for both the limbs without strike off irrelevant limb and specifying the charge for which the notice was issued. Therefore, the Ld. Counsel for the assessee submits that since the notice was issued without specifying the charge for which notice was issued the penalty proceedings initiated were bad in law and consequently levy of penalty u/s 271(1)(c) cannot be sustained. Reliance was placed on the decision of Hon'ble Supreme Court in the case of Dilip N Shroff reported in 291 ITR 519: 5. Referring to the above judgment, Ld. Counsel for the ....
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....nue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(l)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through....
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....evice for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done ", 185. No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate non-application of mind by the authority and/or ultimate prejudice to the right of opportunity of hearing contemplated under section 274. So asserts Kaushalya. In fact, for one assessment year, it set aside the penalty proceedings on the grounds of non-application of mind and prejudice. 186. That said, regarding the other assessment year, it reasons that the assessment order, containing the reasons or justification, avoids prejudice to the assessee. That is where, we reckon, the reasoning suf....
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....datory procedure leading to penai 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(l)(c) is one such provision. With calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling with or dilution. F....