TaxTMI 
TaxTMI 
2025 (3) TMI 2304
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....under: 2. The assessee is an individual carrying on business under proprietorship Firm M/s. Popular Metal at 2nd floor, R. No 94, Badrika Ashram Building, 1st Khetwadi lane, Mumbai 400004. The assessee is a trader in ferrous and nonferrous metal. For A. Y. 2009-10 the assessee filed his return of income of 04/07/2009 disclosing total income of Rs. 2,70,934/-. The said return was processed under section 143(1) of the Act. 2.1. An information received from DGIT Investigation Mumbai, by stating that assessees have taken bogus hawala/accommodation entries from certain parties to inflate their purchases and to reduce taxable profit that surfaced out as per the investigation made by Sales Tax Department Government Of Maharashtra. The said reasons also provided names of the persons who issued alleged accommodation bills. The Ld. AO observed that, the assessee received accommodation bills to the tune of Rs. 1,59,94,552/- during the year under cancerisation from eight parties. (Subsequently, the assessment was reopened by issuing of notice u/s. 148 r.w.s. 147 of the Act after recording reasons.) 2.2. During the reassessment proceedings, the Ld. AO called upon assessee to provide....
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....s been confirmed by this Tribunal. The Ld. CIT(A) also relied on various decisions of other Tribunal in order to support the view. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. 4.1. The main contention of the Ld. AR is that, the penalty was initiated by the Ld. AO for furnishing of inaccurate particulars of income u/s. 271(1)(c) of the Act and the levy was for concealment. He also submitted that, the notice issued u/s. 274 read with section 271(1)(c) of the Act dated 09/03/2015 did not specify the charge for which the penalty proceeding was initiated. He thus, submitted that the penalty order so passed is bad in law. 4.2. The Ld. AR placed reliance on the decision of the Hon'ble Bombay High Court in case of Nayan Builders and Developers reported in (2014) 368 ITR 722 wherein, Hon'ble Court held that, merely, because the quantum addition was confirmed and the question of law was admitted by Hon'ble High Court, penalty cannot be levied u/s. 271(1)(c) of the Act. 4.3. The Ld. AR placed reliance on a Full Court Bench decision of Hon'ble Bombay High Court at Goa in case of Mohd Farhan A. Shaikh V. DOT, Belgaum reported in (2021) 43....
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.... assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee's favour. 183. Therefore, the first question is answered to the effect that Pr. CIT v. Goa Dourado Promotions (P.) Ltd. [Tax Appeal No.18 of 2019, dated 26-11-2019] and other cases have adopted an approach more in consonance with the statutory scheme. That means it must be held that CIT v. Smt. Kaushalya [1994] 75 Taxman 549/[1995] 216 ITR 660 (Bom.) does not lay down the correct proposition of law." Question No. 2: Has Kaushalya failed to discuss the aspect of 'prejudice'? 184. Indeed, Smt. Kaushalya case (supra) did discuss the aspect of prejudice. As we have already noted, Kaushalya noted that the assessment orders already contained the reasons why penalty should be initiated. So, the assessee, stresses Kaushalya, "fully knew in detail the exact charge of the Revenue against him". For Kaushalya, the statutory notice s....
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....unication is fatal, with no further proof. That said, even if the notice contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for ambiguity. Therefore, Dilip N. Shroff Case (supra) disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays non- application of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that "where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders 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 tr....