TaxTMI 
TaxTMI 
2026 (2) TMI 1448
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....he Assessee for the four days delay in filing the instant appeal as plausible and reasonable, the delay is condoned. 4. Coming to ITA No. 7130/M/2025, we observe that the Assessing Officer, vide assessment order dated 30.03.2014, ultimately made an addition of Rs.8,23,49,198/- as unexplained expenditure under section 69C of the Act and added the same to the total income of the Assessee. The Assessing Officer simultaneously also initiated penalty proceedings for concealment of particulars of income and issued notice dated 30.03.2014 under section 274 read with section 271(1)(c) of the Act for concealment of particulars of income or furnishing of inaccurate particulars of income. 5. Thereafter, the Assessing Officer also issued another notice dated 28.03.2018 under section 274 read with section 271(1)(c) of the Act, by which the Assessee was granted an opportunity to show cause "as to why an order imposing a penalty should not be made under section 271(1)(c) of the Act on or before 13.04.2018". However, the AO, on 30.03.2018 itself, passed the penalty order under section 271(1)(c) of the Act, levying a penalty of Rs.70,00,000/- for concealment of income. 6. Though the Assess....
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....ct for concealment of income. 12. Admittedly, in the notice dated 30.03.2014 issued under section 274 read with section 271(1)(c) of the Act, the Assessing Officer has not specified the specific limb / charge for initiating the penalty proceedings, so as to make the Assessee aware "as on what charge/limb penalty proceedings have been initiated and/or on what charge the Assessee has to defend the case. 13. Though the Ld. DR drew attention of this Court to the notice dated 28.03.2018 issued under section 274 read with section 271(1)(c) of the Act, whereby the specific charge of concealment of particulars of income was communicated to the Assessee and the Assessee was show-caused to appear on 13.04.2018, either personally or through a duly authorised representative, to reply as to why an order imposing a penalty should not be made under section 271(1)(c) of the Act. Therefore, it is a fact that, in such notice, the date for compliance was given as 13.04.2018. but the Assessing Officer, prior to the said date, passed the penalty order on 30.03.2018 itself, i.e., anti-date, as prescribed in the notice. Thus, such notice lost its sanctity and would be of no help to the Revenue. ....
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....oceedings but instead responds substantially to the allegations, such objections are barred at a later stage. 9. We have heard the parties and perused the material available on record. As the issue/ground raised by the Assessee qua notice u/s 274 of the Act, goes to the root of the case, hence for the sake of brevity, we are inclined to decide this ground first. Admittedly, the AO issued the penalty notice dated 27.12.2018 u/s 274 of the Act which is reproduced herein below: 10. From the notice, it clearly appears that the AO has used or/and in between both of the limbs, which goes to show that the AO was not sure under which limb the penalty proceedings have been initiated and to be carried out. Therefore, issue emerges "as to whether the defective notice and/or not mentioning the charge/limb specifically in the notice u/s 274 r.w.s. 271(1)(c) of the Act can justify the levy of penalty". The Hon'ble Jurisdictional High Court in the case of Md. Farhan A Shaikh (supra) has dealt with the identical issue and considered various judgments in this respect and ultimately held "mere defect in the notice non striking of the irrelevant matter - vitiate the proceedings"....
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....sions is to create an effective deterrent, which will restrain the assessee from adopting any practices detrimental to the fair and realistic assessment as the law would mandate. 16. The Hon'ble High Court has held that there cannot be two opinions that section 271(1)(c) of the Act is required to be strictly construed. Hence, in the absence of a clear position regarding concealment of particulars of income or furnishing of inaccurate particulars of income in the facts of the present case, penalty proceedings could not have been initiated. 17. The Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar), has also dealt with identical notice and held as under: 7.2. The Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar) observed that the levy of penalty has to be clear as to the limb under which it is being levied. As per Hon'ble High Court, where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court also held that the standard proforma of notice under section 274 of the Act without ....