TaxTMI 
TaxTMI 
2024 (4) TMI 456
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.... charge in the notice issued u/s 271(1)(c) of the Act the said notice is bad in law and consequently the penalty order is bad in law. Reliance was placed on the following decisions: - 1. PCIT Vs. Gopal Kumar Goyal 153 taxmann.com 534 (Del); 2. PCIT Vs. Sahara India Life Insurance Company Limited 432 ITR 84 (Del); 3. Mohd. Farhan A Shaikh Vs. DCIT 434 ITR 1 (Bom.). 3. On the other hand, the Ld. DR supported the orders of the authorities below. 4. Heard rival submissions. On perusal of the penalty notice issued u/s 274 r.w.s. 271(1)(c) of the Act we observe that the notice was issued mechanically stating that assessee has concealed the particulars of income or furnished inaccurate particulars of such income. The AO failed to specify the exact limb for which the notice was issued. In other words, the AO did not specify the specific charge for which the penalty proceedings were initiated i.e. either for concealment of particulars of income or for furnishing of inaccurate particulars of income. 5. We observe that an identical issue came up before the Hon'ble Bombay High Court (full bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT [434 ITR (1)] and the Hon'ble Hi....
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....e is caused to the concerned person by the procedure followed". Kaushalya doses the discussion by observing that the notice issuing "is an administrative device 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 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 in Dilip N. Shroff on the issue of non-application of mind when the irrelevant po....
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....If a statue contravenes the principles of natural justice, it may also be held ultra virus Article 14 of the Constitution. 191. As a result, we hold that Dilip N. Shroff treats omnibus show cause notices as betraying non-application of mind and disapproves of the practice, to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice. Conclusion: We have, thus, answered the reference as required by us; so we direct the Registry to place these two Tax Appeals before the Division Bench concerned for further adjudication." 6. As could be seen from the above the Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh v. ACIT [(2021) 434 ITR 1 (Bom)] while dealing with the issue of non strike off of the irrelevant part in the notice issued u/s 271(1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. 7. In the case of PCIT Vs. Sahara India Life Insurance Co. Ltd. (supra) the Hon'ble jurisdictional High Court held as under:- "The respondent had cha....
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....ion, Mr Kumar has relied upon the judgment of another coordinate bench of this Court in CIT v. ECS Ltd. [20101 194 Taxman 311/T20111 336 ITR 162. 15. Having heard Mr Kumar and perused the record, in our view, there cannot be any dispute, that the AO failed to clearly reflect his satisfaction in the penalty notice, as to which limb of the provisions of section 271(1)(c) of the Act was triggered vis-a-vis the respondent/assessee. 16. As indicated above, in a given case, both limbs may get attracted, but even in such situation the AO would need to set forth his prima facie, satisfaction in the penalty notice. The reason, perhaps, why the Legislature has provided for two circumstances in section 271(1)(c) of the Act, to our minds, emanates from the need to distinguish between the gravity and consequences which may accompany concealment of particulars of income, as against a case which involves furnishing inaccurate particulars. The quantum of penalty, that the AO may levy, would depend on which slot and/or limb of section 271(1)(c) of the Act, the assessee's infraction falls in. 17. Furthermore, having regard to the doctrine of stare decisis which impels courts not to disturb....