TMI Blog2020 (2) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... ason, so that the assessee, to whom such notice is given, can prepare himself regarding the defence, which he would like to take to support his case. This is even enshrined in the principles of natural justice and as has been upheld by Hon'ble Apex Court and other High Courts.See M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SC ORDER] and M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] Thus we arrive at the considered view that the show cause notice, which has not specified the charge and limb under which the penalty is proposed to be levied, is void ab initio and the consequent penalty imposed on the basis of such notice is, therefore, illegal and bad in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific, as to whether it is for concealment of income or for furnishing of inaccurate particulars of income. The ld. A.R. of the assessee vehemently argued that it is a settled position of law that if the notice under section 274 is not specific about the charge or limb under which penalty is being levied under section 271(1)(c) of the Act, any penalty levied on the basis of such a notice is bad in law and it is liable to be cancelled. 4. The ld. D.R., however, relying on the impugned order, has contended that the penalty has been rightly confirmed; that during the assessment, the books of account of the assessee were rejected since the assessee did not co-operate and the net profit @ 5.5% was applied against that of 4.9% shown by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or concealment of income, or for furnishing of inaccurate particulars of income, is not specific. The law mandates that the authority, who is proposing to impose penalty, shall be certain as to the basis on which the penalty is being levied and the notice must reflect that specific reason, so that the assessee, to whom such notice is given, can prepare himself regarding the defence, which he would like to take to support his case. This is even enshrined in the principles of natural justice and as has been upheld by Hon'ble Apex Court and other High Courts. 7. In CIT vs. SSA s Emerald Meadows , [2016] 73 Taxmann.com 248, the Hon'ble Apex Court looked into the facts before them that Tribunal relying on the decision of Division Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet specifically. Otherwise, the principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Penalty proceedings are distinct from assessment proceedings, though it emanates from the assessment proceedings; still it is separate and independent proceedings all together. 9. In Meherjee Cassinath Holdings Pvt. Ltd vs. ACIT (ITAT Mumbai) , ITA No. 2555/MUM/2012, order dated 28/04/2017, the observation of the Bench was that penalty proceedings under section 271(1)(c) of the Act are quasi-criminal proceedings and ought to comply with the principles of natural justice. The nonstriking of the irrelevant portion in the show-cause notice means that the Assessing Officer is not firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or non- applicability of Explanation-1 to section 271(1)(c), the issue is regarding the validity and legality of the notice. It is only when a valid notice is issued, that the question of considering the assessee s explanation/reply in the light of Explanation -1 would arise. 12. The settled legal position on the issue, as enshrined in the aforesaid cases, is apparent and we arrive at the considered view that the show cause notice, which has not specified the charge and limb under which the penalty is proposed to be levied, is void ab initio and the consequent penalty imposed on the basis of such notice is, therefore, illegal and bad in law and liable to be deleted. We, therefore, direct deletion of the penalty. 13. In the result, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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