TaxTMI 
TaxTMI 
2024 (5) TMI 1626
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....tax effect in Revenue appeal is below Rs.50 lakhs. and so is not maintainable. 3. Per contra, the Ld. DR submitted that even though, tax effect may be less than Rs.50 lakhs, however, since prosecution has been launched by the Department against the assessee, the assessee's case falls in the exemption clause (f) of CBDT Circular as enumerated in letter dated 20.08.2018. Therefore, according to the Ld. DR, the appeal filed by the Revenue is maintainable. In his rejoinder, the Ld.AR fairly admitted that prosecution has been launched against the assessee from/after reassessment order passed by the AO u/s.153A of the Act (after search) and not from the original assessment on the basis of which the impugned penalty has been levied. Be that as it may, we proceed to hear the appeal of Revenue also. 4. Coming to assessee's appeal, the main grievance of assessee is against the action of the Ld. CIT(A) not appreciating that the penalty imposed by the AO is bad in law, since the notice dated 30.03.2005 issued u/s.271 r.w.s.274 was invalid in law. Drawing our attention to the notice issued by the AO which is placed at Page No.17 of the Paper Book, he submitted that the AO has not struck d....
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....itiation of penalty proceeding, the manner in which the proceeding are to be conducted. In-short, the question that needs to be decided are- A. Whether a penalty proceeding u/s.271(1)(c) is initiated u/s.274 of the Act or u/s.271 of the Act? B. When does the initiation of penalty proceeding considered communicated to the assessee. C. Whether there is a legal obligation u/s.271 or u/s 274 of the Act to issue a notice? D. Even if it is held that a notice need to be served u/s 274, whether such notices can be considered as a 'Statutory notice'? wherein non-striking of non-relevant portions would vitiate the purpose of proper legal communication A. Whether a penalty proceeding u/s 271(1)(c) is initiated u/s 274 of the Act or u/s 271 of the Act? 1. Sub-section (1) of section 271 is read as follows: "If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- (a).... (b).... (c) has concealed the particulars of his income or furnished inaccurate particulars of such incom....
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.... is reproduced as under: "No order imposing penalty under this chapter shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard...." From the above usage of language, the law has not envisaged initiation of penalty proceedings under section 274 of the Act. Under section 274 of the Act, the law has envisaged only affording the assessee a reasonable opportunity of being heard. Neither section 271 nor section 274 of the Act mandates issuance of any notice. This language use, when in comparison with Section 142(1), which is reproduced as under: "For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return... .......... a notice requiring him, a date to be therein specified... Similarly, the language use in Section 143(2) which is reproduced as under: "Where a return has been furnished under Section 139, or in response to a notice under sub-section (1) of Section 142, the Assessing Officer shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Off....
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....n such opportunity. 5. The belief on the need to issue of a notice under the law as a pre-requisite requirement for initiation and levy of penalty has not been legally warranted by the law itself. The only requirement under the law is the Department has to demonstrate that the assessee been heard and reasonable opportunity of being heard has been provided. Such demonstration could be through order sheet noting, or through other circumstantial evidences or could even be through issuance of letter/notice in a pre-printed format. 6. Thus, even if the Assessing Officers had issued some notice in a pre-printed format, such notice cannot be under any stretch be treated as a statutory notice mandated to be issued under the Law. At the most, it can be treated as a communication of date fixed for hearing. 7. Wherever the law has mandated issuance of notice, even there, in many instances, the law itself has given liberty for the officers of the Department to frame the language of such notices in whatsoever manner in which they may deem fit. The examples for these are when notices are mentioned to be issued u/s 142(1) or u/s 143(2) or u/s 148 etc. 8. Howeve....
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....iss the appeal filed by the assessee. The Ld. DR also pointed out that the assessee's quantum assessment was challenged by the assessee before the Ld. CIT(A) who was pleased to confirm the additions and later, the Tribunal partly upheld the additions. Thereafter, only the AO had levied penalty of Rs.46,78,788/-. Drawing our attention to the Sec.271(1)(c) of the Act, he submitted that the condition for levying penalty is that the AO or Ld. CIT(A) in the course of proceedings before them need to be satisfied (i.e. during assessment proceedings or Appellate proceedings should be satisfied) that assessee has concealed the particulars of his income or furnished inaccurate particulars of such income, then they may direct that such assessee shall pay penalty stated therein u/s.271 of the Act. Here, in this case, according to the Ld.DR, the AO has clearly recorded his satisfaction that the assessee has concealed Rs.1,28,38,410/- while passing the assessment order on 30.03.2005 u/s.143(3) of the Act; and by doing that exercise, according to Ld. DR, he has rightly initiated penalty, inter alia, u/s.271(1)(c) of the Act which is valid, because, sec.274 of the Act, only mandates reasonable opp....
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....ear that assessee is not entitled to the claim of loss of Rs.11 lakhs in respect of "Kushi" Telugu movie. Thereafter, the assessee preferred an appeal before the Hon'ble High Court [against the order of the Tribunal dated 27.02.2016]; and the Hon'ble Madras High Court by order dated 25.01.2021 was pleased to allow two grounds by remitting it back to AO for fresh consideration i.e. ground regarding addition of Rs.30 lakhs added u/s.69 of the Act, confirmed by the Tribunal and (2) issue regarding Rs.34,13,386/- (claimed to be included by assessee in his revised statement of income). Meanwhile, the AO having passed the assessment order, initiated penalty u/s.271(1)(c) of the Act by issuing notice dated 30.03.2005, thereafter, noticing the Tribunal order passed in year 2016 and after considering assessee's reply dated 15.03.2017, levied penalty on 31.03.2017 u/s.271(1)(c) of the Act, wherein penalty of Rs.46,78,788/- was imposed upon the assessee. 9. Aggrieved by penalty order, the assessee preferred an appeal before the Ld. CIT(A) who taking note of the Hon'ble Madras High Court action/order of setting aside two issues (infra) back to the file of AO for fresh consideration, directe....
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....confusing and vague; and infirm for non-application of mind of the AO before issuing notice u/s.274 r.w.s.271(1)(1)(c) of the Act, as well as exposes the whimsical/arbitrary attitude of the AO who has scant regard for Rule of Law and therefore, bad in law; and such notice was held to be invalid and legally untenable; and we note that in such factual background, this Tribunal has consistently held such notices to be bad in law for not specifying the specific fault for which the assessee was being proceeded against for levy of penalty. And this action of the Tribunal has been upheld by several judgments of the various High Courts. We note that the Full bench of the Hon'ble Bombay High Court in the case of Mohd. Farhan A. Shaikh Vs. DCIT (2021) 434 ITR 1 (Bombay) dated 11.03.2021 held that the show cause notice issued prior to levy of penalty without specifying the fault/charge against which the assessee is being proceeded, would vitiate the penalty itself. And thus the Hon'ble High Court upheld the view of the division bench order in the case of PCIT Vs. Goa Dourado Promotions (P.) Ltd. (Tax Appeal No.18 of 2019, dated 26.11.2019) and held that the contrary view taken by another divi....
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....legal ? ii. Whether the proceedings initiated by the respondent/the Assessing Officer is legal and valid? iii. Whether the Appellate Tribunal is justified otherwise in rejecting the said technical ground of wrong initiation of the penalty proceedings under Section 271(1)(c) of the Act in misreading the show cause notice dated 30.3.2016 proving perversity in the findings of facts at para 6.5 of the impugned http://www.judis.nic.in order? " 13. The Hon'ble Madras High Court observed regarding defective show cause notice in that case as under: 8. A show cause notice was issued to the assessee proposing to initiate proceedings under Section 271(1)(c) of the Act vide notice dated 30.3.2016. A copy of the said notice dated 30.3.2016 has been furnished in the typed set of papers and we find that the said notice does not specifically state as to whether the assessee is guilty of concealing particulars of his income or has furnished inaccurate particulars of income. 14. And the Hon'ble Madras High Court observed further as under: 13. The first aspect to be considered is as to whether the notice issued under Section 271(1)(c) of the Act dated 30.3.20....
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.... And thereafter, the Hon'ble Madras High Court held that the notice initiating penalty proceedings was defective and invalid and allowed the appeal of the assessee and answered the question of law in favour of the assessee. 16. In light of the aforesaid decision of the Hon'ble Madras High Court in the case of Babuji Jacob (supra), we direct the deletion of the penalty levied in this case, since the notice issued by the AO is found to be invalid in the eyes of law. Before parting, we would like to deal with the argument of the Ld. DR that both the faults/limbs are attracted in the facts of this case i.e. the notice was issued for both the faults and it should be read as if assessee had not only concealed the particulars of his income but also inaccurate particulars of such income, such a contention cannot be countenanced for the simple reason that the notice does not say so. It is noted that in the impugned notice the conjunction 'or' has been used between two faults i.e. concealment of his income or furbishing of inaccurate particulars which is a disjunctive; if the contention of the Ld. DR has to be accepted, then penalty notice ought to have used the conjunction 'and' in plac....