TMI Blog2022 (10) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus penalty notice issued u/s. 271(l)(c) of the Act by the Assessing Officer is bad in law and accordingly the penalty order passed u/s. 271(l)(c) of the Act for Assessment Year 2008-09 is quashed. Even on merits penalty under section 271(1)(c ) of the Act is not leviable since the addition made by the Assessing Officer is on account of ad-hoc estimation of net profit @ 8% on the un-reconciled turnover as per books and as per Form 26AS and the addition is only of Rs.98,863/-. Additions made on ad-hoc basis on estimation does not attract penalty under section 271(1)(c) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. 4. The ld. AO and ld. CIT (A) erred in not appreciating the fact that instant case is of bonafide and inadvertent omission which does not mean that the Appellant is guilty of either furnishing inaccurate particulars or is attempting to conceal its income. 5. The Appellant suo-motu rectified the mistake by voluntarily offering the correct turnover and income for assessment before any show cause notice is issued to the Appellant. 3. In spite of issue of notice none appeared nor any adjournment was sought. We dispose off this appeal on hearing the ld. DR. 4. The assessee in its gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the assessee. But that translates into action only through the statutory notice under section 271(l)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be done , 185. No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate non-application of mind by the authority and/or ultimate prejudice to the right of opportunity of hearing contemplated under section 274. So asserts Kaushalya. In fact, for one assessment year, it set aside the penalty proceedings on the grounds of nonapplication of mind and prejudice. 186. That said, regarding the other assessment year, it reasons that the assessment order, containing the reasons or justification, avoids prejudice to the assessee. That is where, we reckon, the reasoning suffers. Kaushalya's insistence that the previous proceedings supply justification and cure the defect in penalty proceedings has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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(l)(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[74], in which the Apex Court has quoted with approval its earlier judgment in St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdictional High Court held as under:- The respondent had challenged the upholding of the penalty imposed under section 271(1)(c) of the Act, which was accepted by the Income Tax Appellate Tribunal. It followed the decision of the Karnataka High Court in CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Karn.) and observed that the notice issued by the Assessing Officer would be bad in law if it did not specify in which limb of section 271(1)(c) the penalty proceedings had been initiated under, i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgement in the subsequent order in CIT Vs. SSA s Emerald Meadows (2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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