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TaxTMI 
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TaxTMI 
2025 (9) TMI 1376
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.... Rs. 1,50,000/- for not comply with provisions of sec 44AB of IT Act ignoring the fact that the above provisions are not applicable to the appellant. Hence, no penalty could be levied upon appellant." 3. The assessee was a non-filer and, as per the data available with the AO, the assessee had deposited cash to the tune of Rs. 3,78,06,400/- in his saving bank account maintained with the HDFC Bank Ltd., Rohini, New Delhi. The AO after recording his reasons, issued notice u/s 148 of the act, dated 31.03.2021. In response, the assessee filed his return of income on 14.09.2021 declaring total income of Rs. 61,950/-. During the assessment proceedings, the assessee submitted that the concern was engaged in the business of trading of metals and submitted that the said cash deposit was in his current account and not in the saving bank account. The AO completed the assessment by estimating the net profit @ 8% of the total turnover of Rs. 4,63,30,254/-. This turnover was declared by the assessee in his return of income filed on 14.09.2021, in response to the aforesaid notice u/s 148 of the Act. The assessee submitted that the turnover of Rs. 4,63,30,254/-, included the said cash deposit of....
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....the assessee filed its reply, but the AO stated that the response filed by the assessee was duly considered but was not found tenable as the assessee had not submitted any explanation or valid reasons for failing to get its book of account audited u/s 44AB of the Act for A.Y. 2013-14. Accordingly, the AO levied a penalty of Rs. 1,50,000/- as computed in para 6 of his order, as under: 1 Total gross receipts Rs. 4,63,30,250/- 2 1/2% of the total Commission received Rs. 2,31,651/- 3 Maximum penalty leviable u/s 271B Rs. 1,50,000/- 5. Aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A). 6. In the appellate proceedings, the assessee submitted that the provisions of section 44AB of the Act were not applicable in its case because the assessee had not maintained any books of accounts. It was further submitted that the penalty notice was vague as the AO had not spelt out what was the fault for which the assessee was being proceeded against the levy of penalty. Reliance was placed on various judicial precedents in this regard. He further submitted that the section u/s 271A and 271B operate independently of each other and that penal....
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....taka High Court decision of Commissioner Of Income Tax -Vs- Manjunatha Cotton & Ginning Factory (Supra). Recently, the jurisdictional Delhi High Court in the decision of Pr. CIT vs M/s Sahara India Life Insurance Company Ltd in ITA No.475, 426, 427, 429/2019 dt: 02.08.2019 has upheld the quashing of penalty order on the ground of non-specification of the particular limb of default covered by the penal provision of sec 271 (1) (c). The Benches of Tribunal in Parkinson Electrical Corp Vs ITO (supra) and North Eastern Constructions (supra) have taken a view that non-specification of the default resulting from non-striking of the irrelevant limb of the penal section of 271(1)(c) is also applicable on the penalties levied u/s 271B of IT Act. The Ld. CIT(A) dismissed the above ground assuming the fact the show cause notice was issued for both the defaults covered by section 271B of the Act(Ref para 5.1.17 page 17 of the Ld. CIT(A) Order) which assumption is repugnant to the physical fact available on record. 8.1 The Ld. DR supported the orders of the authorities below. 9. We have heard both the parties and considered the material available on record. The ....
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....ited its accounts and had not submitted the audit report as mandated u/s 44AB, and therefore the appellant's above contention will not come to the rescue to the appellant. 5.2.17. The above quoted decisions are not applicable to the instant case of the appellant because these decisions were rendered in the context of penalty u/s 271(1)(c). Penalty u/s 271(1)(c) is levied depending upon the merits of the quantum additions made in the assessment order with specific emphasis on whether there was any concealment of income or whether there was any furnishing of inaccurate particulars. Therefore, the courts have held that the specific limb as to whether the penalty notice was issued for concealment of income or whether it was issued for furnishing of inaccurate particulars needs to be ticked/struck off as the case may be. But, the issue under discussion in the instant case of the appellant is one of a procedural penalty u/s 271B. Penalties like procedural penalty u/s 271B are mandatorily leviable if there is a procedural lapse as stipulated by law. In the appellant's case, the appellant had lapsed on both the counts and committed the twin defaults of not getting the book....
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....initiating the penalty notice u/s 271B of the Act, whereas there is a semblance of clarity, found while initiating the penalty proceedings u/s 271B of the Act, in the assessment order where it was mentioned as further, penalty u/s 271B of the I.T. Act is hereby initiated for non-maintenance of account and get audited. The default of the assessee in not getting its account audited and its failure to furnish a report of such audit as required u/s 44AB of the Act, are two different and distinct defaults. The failure of the assessee is not getting its accounts audited indicates that the assessee had maintained its books of account which he did not get it audited whereas the failure to furnish a report of such audit as required u/s 44AB of the Act indicates that assessee failed to submit the Audit Report of such books of accounts maintained by the assessee, whereas the assessee did not maintain any books of accounts as admitted by the assessee in this case. 9.5 In this regard, the Hon'ble Delhi High Court in the case of Pr. CIT-04 vs M/s Gragerious Projects Pvt. Ltd. & Ors (2025) 303 Taxman 14 / 475 ITR 546 (Delhi HC) has agreed with the decision of Hon'ble Bombay High Court (Full Be....
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....ould 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 prejudice. According to it, "the so-called ambiguous wording in the notice [has not] impaired or prejudiced the right of the assessee to a reasonable opportunity of being heard". It went onto observe that for sustaining the plea of natural justice on the ground of absence of opportunity, "it has to be established that prejudice is caused to the concerned person by the procedure followed". Kaushalya closes 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 nonapplication 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-applic....
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....mercial, 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 [2006] 287 ITR 91 (SC); (2007) 2 SCC 181, in which the Apex Court has quoted with approval its earlier judgment in State of Orissa v. Dr. Binapani Dei, AIR 1967 SC 1269. According to it, when by reason of action on the part of a statutory authority, civil or evil consequences ensue, the principles of natural justice must be followed. In such an event, although no express provision is laid down on this behalf, compliance with principles of natural justice would be implicit. If a statue contravenes the principles of natural justice, it may also be held ultra vires Article 14 of the Constitution. 191. As a result, we hold that Dilip N. Shroff treats omnibus show cause notices as betraying nonapplication 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 D....