TMI Blog2023 (9) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... otice, in our view, would indicate non-application of mind and the notice would be not valid. See M/S. GANGA IRON STEEL TRADING CO., NAGPUR. case [ 2021 (12) TMI 1094 - BOMBAY HIGH COURT] - Decided in favour of assessee. - K.R. SHRIRAM DR. N.K. GOKHALE, JJ. For the Appellant : Mr. Suresh Kumar. For the Respondent : Mr. Madhur Agrawal i/b Mr. Atul K. Jasani. P.C. : 1. The following substantial questions of law are proposed : A. Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT was justified in deleting penalty of Rs. 3,11,37,351/- levied under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income and concealment of income by merely stating that l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-2007, which was processed under Section 143(1) of the Income Tax Act, 1961 ( the Act ) and subsequently, the case was selected for scrutiny. The Assessing Officer ( AO ) passed an order dated 30th December 2008. Assessee was also saddled with penalty by AO vide an order dated 30th June 2009 under Section 271(1)(c) of the Act. 3. Being aggrieved, assessee contested the penalty without any success before the Commissioner of Income Tax (Appeals) ( CIT(A) ). Assessee impugned the order of CIT(A) before the ITAT. Before the ITAT, the preliminary issue raised was that AO did not fulfil the jurisdictional requirement of arriving at a clear finding and satisfaction for the levy of penalty in the quantum order, because in the show-cause not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch with the answers mentioned below : Question No. 1 : If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(1)(c), does a mere defect in notice not striking off irrelevant matter would vitiate penalty proceedings ? Ans.: 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 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right of the assessee to a reasonable opportunity of being heard . It went on to 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 . No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate nonapplication of mind by the authority and/or ultimate prejudice to the right of opportunity of hearing contemplated un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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