TaxTMI 
TaxTMI 
2025 (11) TMI 892
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....as treated as speculation loss and which was not allowed to set off with any other income and addition u/s 68 of the Act related to acceptance of share capital amount to Rs. 9.27 crores. The assessee filed appeal before the 1st appellate authority and the assessment order was confirmed. The aggrieved assessee filed an appeal before the ITAT-Mumbai Bench. The ITAT upheld the addition u/s 68 of the Act amount to Rs. 9.27 crores only and rest addition was deleted. The Ld.AO initiated the penalty proceedings u/s 271(1)(c) / 274 of the Act and income of which the tax sought to be evaded amount to Rs. 9.27 crores on which the tax sought to be evaded amount to Rs. 3,00,76,515/-. Accordingly minimum penalty was levied @100% of tax which comes to Rs. 3,00,76,515/- u/s 271(1)(c) of the Act. Being aggrieved, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) upheld the penalty. Being aggrieved, the assessee preferred appeal before us. 3. The Ld.AR argued and filed a written submission, containing pages 1 to 108, which is kept on record. The Ld.AR first argued the legal issue related to jurisdiction for issuance of notice by the Ld.AO u/s 274 without specifying the limb under ....
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.... 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 [2007] 27 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, 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 Case (supro) treats omnibus show-cause notices as betraying non-application of mind and disapproves of the practice, to be p....
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....is not the reasons for rejecting impugned penalty order. He invited our attention in appeal order paras 6.1.4 to 6.1.6, which are extracted below:- "6.1.4 The appellant's submission itself states that Para 4 of the assessment order mentioned initiation of penalty proceedings for concealment of income and/ or furnishing of inaccurate particulars of income". The notice u/s 274 r.w.s. 271(1)(c) dated March 25, 2015, a copy of which is usually appended to the assessment order or served along with it, did contain the standard printed language ""Have concealed the particulars of your income or furnished inaccurate particulars of such income" However, the satisfaction for initiating penalty is primarily recorded in the assessment order itself. The AO in the penalty order has clarified that the assessment order used the word "and" between the two charges. The penalty order also, in Para 7, clearly records the AO's satisfaction that the assessee has concealed the income and has furnished inaccurate particulars of income to the tune of Rs 9,27,00,000/- 6.1.5 The principles of natural justice require that the assessee must be aware of the specific charges against it.....
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..../2023 reveals that the Ld. AO has mechanically referred to "concealing of income and/or furnishing of inaccurate particulars of income" without striking off the irrelevant portion. This ambiguity clearly violates the mandatory requirement of law and the principles of natural justice. We are therefore unable to accept the contention of the revenue that such defect is a mere technicality, particularly when penalty provisions under section 271(1)(c) of the Act carry severe and penal consequences. On merits also, we find that the quantum addition of Rs. 9.27 crores under section 68 of the Act, relating to share capital and share premium, has been upheld by the coordinate Bench of the Tribunal. However, the confirmation of the addition in quantum proceedings does not automatically warrant levy of penalty, unless the statutory conditions are duly complied with. In the absence of a valid notice specifying the exact charge, the penalty proceedings themselves are rendered void ab initio. The Ld. DR was unable to controvert the arguments advanced by the Ld. AR by placing on record any contrary judicial precedent. Respectfully following the ratio laid down in the above judicial precedents,....