TMI Blog1995 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... were passed without giving the assessee a reasonable opportunity of being heard ? (3) Whether, on the facts and in the circumstances of the case, the orders of the Income-tax Officer imposing penalties for the assessment years 1968-69 and 1969-70 were without jurisdiction ? 1. The above three questions have been referred for the opinion of this court under section 256(1) of the Income-tax Act, 1961 ( the I.T. Act ), at the instance of the Commissioner of Income-tax, Vidarbha and Marathwada, Nagpur. 2. The assessee (deceased Sampatprasad Tiwari) declared his income from the business of supply of coal and sand and a share in a firm as under : Assessment year Date of return Amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. Rs. 1967-68 40,030 33,022 1968-69 38,248 19,355 1969-70 25,760 9,988 4. The Income-tax Officer even before making the order dated March 29, 1972, had referred the case to the Inspecting Assistant Commissioner for the assessment year 1967-68 in the view that the Inspecting Assistant Commissioner had jurisdiction over the case for that year and the Inspecting Assistant Commissioner had issued a show-cause notice dated March 28, 1972, under section 274(2). For the assessment years 1968-69 and 1969-70 different show-cause notices were issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment) Act, 1970, with effect from April 1, 1971, enlarging the jurisdiction of the Income-tax Officer to cases of concealment/inaccurate particulars up to rupees twenty-five thousand, could not apply. 6. We may reproduce for ready reference the material portion of the show-cause notice dated March 28, 1972 (assessment year 1967-68), and dated March 29, 1972 (assessment years 1968-69 and 1969-70) : 28-3-1972: you have concealed the particulars of your income or deliberately furnished inaccurate particulars of such income for the assessment year 1967-68. 29-3-1972 : you have concealed the Particulars of your income or furnished inaccurate particulars of such income. 7. The Tribunal, in all these cases, has gone merely o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the Principles 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. The issuance of notice 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. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not decisive of the matter. All depends upon whether the lapse, if any, demonstrates non-application of mind by the detaining authority and/or whether it prejudices or impairs the detenu's guaranteed right of representation against the said order. 11. The case of CIT v. Lakhdhir Lalji [1972] 85 ITR 77 (Guj) is the other decision upon which the Tribunal has placed reliance. In that case a notice under section 274 was issued on the footing of concealment of income by suppression of sales whereas the penalty was levied on the footing that there was furnishing of inaccurate particulars of income since the stock at the closing of the year was undervalued. The penalty was quashed upon a view that the very basis for the penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was issued even before the assessment order was made. The assessee had no knowledge of the exact charge of the Department against him. In the notice, not only there is use of the word or between the two groups of charges but there is use of the word deliberately . The word deliberately did not exist in section 271(1)(c) when the notice was issued. It is worthwhile recalling that the said word was omitted by the Finance Act, 1964, with effect from April 1, 1964, and the Explanation was added. The notice clearly demonstrated non-application of mind on the part of the Inspecting Assistant Commissioner. The vagueness and ambiguity in the notice had also prejudiced the right of reasonable opportunity of the assessee since he did not kno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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