TaxTMI 
TaxTMI 
2022 (11) TMI 11
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..... 274 and the order passed U/s. 271 (l)(c ) of the Act are illegal, bad in law and without jurisdiction. 2. That the penalty order passed U/s. 271 (l)(c ) is illegal, bad in law and without jurisdiction as same has been imposed by the assessing officer other than who has initiated penalty. That under the facts and circumstances, no penalty U/s. 271 (l)(c ) for Rs. ll,90,808/-should have been levied." 3. The brief facts of the case are that, the assessment order came to be passed on 01/02/2014 u/s 143(3) of the Act by disallowing Rs. 3,10,800/- being claimed as compensation paid to the labour on account of Mishap at site and further disallowed Rs. 33,67,081/- being payment to NCC at 5% on the amount of the VAT of Rs. 6,7....
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....cial pronouncements in support of his case. 9. Per contra, the Ld. DR submitted that the quantum appeal filed by the assessee has been dismissed by this Tribunal. The assessee has participated in the penalty proceedings and further submitted that mere non mentioning of specific charge in the notice issued u/s 274 of the Act will not vitiate the entire penalty proceedings. Therefore, submitted that, the appeal of the assessee deserves to be dismissed. 10. We have heard the parties, perused the material on record and gave our thoughtful consideration. The notice issued 274 read with Section 271 of the Income Tax Act has been produced along with the assessee's paper book, which is reproduced as under:- 11. On perusal of the notice iss....
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..... 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 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'sfavo....
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....nstrate 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 suffers. Kaushalya's insistence that the previous proceedings supply justification and cure the defect in penalty proceedings has not met our acceptance. Question No. 3: What is the effect of the Supreme Court's decision i....
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....e 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. For a further precedential prop, we may refer to Rajesh Kumar v. CIT[74], in which the Apex Court has quoted with approval its earlier judgment in State of Orissa v. Dr. Binapani Dei[ 75]. According to it, when by ....
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.....w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. 15. Thus, by following the above ratio, we are of the opinion that, the penalty order passed u/s 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous. Accordingly, the penalty order dated 01/03/2017 passed by the A.O for Assessment Year 2011-12 is hereby quashed. Accordingly, Assessee's Grounds of Appeal are allowed. 16. In the result, Appeal filed by the assessee is Allowed. Order pronounced in the Open Court on this 21st Day of October , 2022 ============= Document 1 ....