TMI Blog2022 (3) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... ed together by taking ITA No. 196/Mum/2021 as the lead case and its finding will be applicable to the other two appeals. The assessee has filed the following grounds before us: The Commissioner of Income-tax (Appeals) - 49, Mumbai (hereinafter referred to as the CIT(A)) erred in upholding the action of the Joint Commissioner of Income-tax (OSD), Central Circle 7(1), Mumbai (hereinafter referred to as the Assessing Officer) in confirming the levy of penalty of ₹ 84,03,212 under section 271(l)(c) of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have confirmed the levy of the impugned penalty under section 271(1)(c). The appellants further, contend that there is total non-application of mind by the Assessing Officer inasmuch as he has initiated and levied the impugned penalty for both the limbs of section 271(l)(c) that is, for concealment of particulars of income and furnishing inaccurate particulars thereof; thus, the levy of the impugned penalty is without application of mind. The appellants further, contend that there is total non- application of mind by the Assessing Officer inasmuch a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary evidences to substantiate its claim that the loss shown by the assessee was genuine and by not offering the above amount of ₹ 24,04,09,176/-, the assessee has sought to eliminate its incidence of taxation by furnishing inaccurate particulars and has thereby concealed its actual income. Consequently, the assessing officer has levied penalty of ₹ 84,03,212/- being 100% tax sought to be evaded. 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 4. During the course of appellate proceedings before us at the outset the ld. Counsel contended that in the notice issued u/s 274 of the Act the assessing officer has not satisfied whether the penalty to be levied for concealment of income or furnishing inaccurate particulars of income. The ld. Counsel has placed reliance on the decision of jurisdictional High Court of Bombay in the case of Mohd. Farhan A. Shaikh Vs. DCIT (2021) 434 ITR 1 (Bom) wherein it is held that if there is a defect in not striking off the irrelevant matter the penalty cannot be levied. On the other hand the ld. Counsel has placed reliance on the decision of the lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271. 6. On perusal of the aforesaid notice it is clear that Assessing Officer has not specified whether the penalty is being levied on account of concealment of particulars of income or furnishing of inaccurate particulars of income. In this regard, we have gone through the case of Jurisdictional High court referred by learned counsel in the case of Mohd. Farhan A. Shaikh Vs. DCIT (2021) 125 taxmann.com 253 (Bombay), wherein the relevant Para of the head note is reproduced as under:- Section 271(1)(c), read with section 274 of the Income-tax Act, 1961 - Penal ty - For concealment of income (Recording of satisfaction) - Whether where assessment order clearly records satisfaction for imposing penal ty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice-not striking off irrelevant matter would vitiate penalty proceedings - Held, yes - Whether since penal ty proceedings culminate under a different stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings. Therefore, the 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, we answer the first question to the effect that Goa Dourado Promotions and other cases have adopted an approach more in consonance with the statutory scheme. That means we must hold that Kaushalya 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 suffered from neither non-application of mind nor any prejudice. According to it, the socalled ambiguous wording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 trifling with or dilution. For a further precedential prop, we may refer to Rajesh Kumar v. CIT [2007] 27 SCC 181, in which the Apex Court has quoted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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