TaxTMI 
TaxTMI 
2023 (8) TMI 675
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....in sustaining the order of learned DCIT, Central Circle-8, New Delhi, imposing a penalty u/s 271(1)(c) of the Income Tax Act of Rs. 15,31,470/-. 2. That the learned CIT(A) has failed to appreciate that the proceeding u/s 271(1)(c) of the Act had been initiated on the ground, that the assessee had concealed the particulars of its income or had furnished inaccurate particulars of its income, as such since, as the notice issued was vague and mechanical, no penalty could have been levied on the basis of such a vague notice. 3. That even otherwise the learned CIT(A) has failed to appreciate that the assessee had neither concealed any income nor had furnished any inaccurate particulars of its income. The learned CIT(A) has misconceived the fa....
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....el 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 following decisions:- i) Mr. Mohd. Farhan A. Shaikh Vs. ACIT 125 taxmann.com 253 (Bom) (F; ii) PCIT Vs. Sahara India Life Insurance Co. Ltd. 432 ITR 84 (Del.); iii) CIT Vs. SSA's Emerald Meadows (2016) 73 taxmann.com 241 (Kar.); & 4. Referring to the above judgments, Ld. Counsel for the assessee submitted that since the notices issued u/s 274 read with section 271(1)(c) of the Act did not specify the limb for which or the charge for which it was issued the penalty order pass....
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....translates into action only through the statutory notice under section 271(1)(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 statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, mus....
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....ere 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 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 o....
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....dural 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 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 reason of acti....
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....ty imposed under section 271(1)(c) of the Act, which was accepted by the Income Tax Appellate Tribunal. It followed the decision of the Karnataka High Court in CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Karn.) and observed that the notice issued by the Assessing Officer would be bad in law if it did not specify in which limb of section 271(1)(c) the penalty proceedings had been initiated under, i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgement in the subsequent order in CIT Vs. SSA's Emerald Meadows (2016) 73 taxmann.com 241 (Karn.), the appeal against which was dismissed by the Supreme Court of India i....