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TMI Blog2021 (10) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in all these appeals, except variation in figures, relates to levy of penalty under section 271(1)(c) r/w Explanation 1(A) of the Act on addition of notional interest income accruing on alleged deposit of Rs. 2,34,64,398 with LGT Bank Liechtenstein in the name of Ambrunova Trust. 3. The assessee before is an individual. During the year under consideration, the assessee had earned salary income, share of profit from firms, capital gains and income from other sources. For the year under consideration, the assessee had electronically filed his return of income on 30th June, 2010, declaring total income of Rs.13,41,895/-. The return of the assessee was selected for scrutiny by the Assessing Officer. In response to notices, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lead year i.e., assessment year 2002-2003 in quantum proceedings is admitted by Hon'ble Jurisdictional High Court in Appeal No.755 of 2015, in January, 2018, hence it is apparent that the addition is debatable, hence penalty cannot be levied u/s. 271(1)(c), in the light of law laid down by Hon'ble Jurisdictional High Court in the case of CIT v/s Dhariwal Industries Ltd, Appeal No.1129, 1133 & 1136 of 2016 dated September. 2013 and CIT v/s M/s. Advaita Estate Development Pvt. Ltd. in Appeal No.1498 of 2014 dated 17th February, 2017. The learned Counsel while concluding submitted that the Notice dated 19'n March 2013, issued under section 274 of the Act did not specify the charges for which the penalty proceedings under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the specific offence committed by the assessee by stating as to whether the assessee has concealed his particulars of income or had furnished inaccurate particulars of income. 3.1. We find that this issue is no longer res-integra in view of the Full Bench decision of the Hon'ble Jurisdictional High Court in the case of Mohd. Farhan A Shaikh vs. DCIT reported in 434 ITR 1 (Bom). The relevant portion of the said order is reproduced hereunder:- "181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice. According to it, "the so-called ambiguous wording in the notice [has not] impaired or prejudiced the right of the assessee to a reasonable opportunity of being heard". It went onto observe that for sustaining the plea 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". Smt. Kaushalya case (supra) closes the discussion by observing that the notice issuing "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". 185. No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate non-applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition or requirement for a communication to be valid communication 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 proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id decision, we hold that the penalty levied by the ld. AO for both the assessment years is hereby directed to be deleted. 3.3. Since the relief is granted to the assessee on this aspect by adjudicating the ground No.1(e), the other grounds raised by the assessee for both the years on legality of levy penalty as well as on merits of the case are not adjudicated herein and the same are hereby left open." 9. Respectfully following the above decision, we also deemed it fit and appropriate to delete the penalty levied by the AO in assessment year 2005-06, 2010-11, 2011-12 & 2012-13. Accordingly, the appeals filed by the assessee are allowed. 10. In the result, the appeals filed by the assessee are allowed. Order pronounced in the open Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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