TMI Blog1996 (6) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... the first notice and in response to the second notice, the authorised representative did not file any written submission. He was, therefore, of the opinion that the assessee-company has nothing to say for non-payment of Advance-tax. He thus imposed penalty of Rs. 64,778 under section 273(1)(a) of the Act [Emphasis supplied]. 4. Aggrieved by the said order, the assessee has taken up the matter to the CIT(A) wherein it was contended (i) that full effect of the TDS was not given credit and hence, the calculation of penalty is not in accordance with law; (ii) the assessee was not given proper opportunity of being heard, inasmuch as, the second notice dated 29-10-1990 was served on the assessee barely two days before the date fixed for heating and hence the assessee could not file any written explanation. However, the oral explanation submitted by the authorised representative was not considered by the Assessing Officer; (iii) penalty proceedings were initiated in terms of section 273(1)(b) but the Assessing Officer could not ultimately levy penalty in terms of section 273(1)(b) and hence the penalty was levied under section 273(1)(a). As such, the assessee had no opportunity to expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat invariably an estimate involves an element of guess work and so it cannot be accurate. It is contended that penalty proceedings are quasicriminal proceedings and the rules of evidence for the purpose of making an estimate would not apply for the purpose of levy of penalty. He has also submitted that merely because there is an yawning gap between the income returned and the revised estimate filed, the Assessing Officer or the first appellate authority cannot come to an automatic conclusion that the assessee has committed an offence in filing the alleged untrue statement of advance tax. He has relied upon the following decisions in this regard : (a) CIT v. Orissa Flower Mills (P.) Ltd. [1993] 203 ITR 691 at 695 (Ori.) (b) Hind Products (P.) Ltd. v. CIT [1980] 121 ITR 903 (Bom.) (c) CIT v. Birla Cotton Spg. Wvg. Mills Ltd. [1985] 155 ITR 448/22 Taxman 407 (Cal.) (d) CIT v. Off Shore India Ltd. [1994] 209 ITR 473 (Cal.) (e) P.V. Kurian v. ITO [1961] 43 ITR 432 (Ker.) (f) United Asian Traders Ltd. v. CIT [1970] 77 ITR 711 (Cal.) (g) Jaipur Metals Electricals Ltd. v. CIT [1974] 97 ITR 721 (Raj.) 10. He has further highlighted that the penalty proceedings are ab in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how-cause notice was issued has no legs to stand as the assessee was later on found to be not guilty of the said charge. Thus, the very basis for initiation of the penalty proceedings, i.e., issuance of notice under section 274 of the Act, which is a mandatory proceeding for the purpose of imposing penalty, is wrong. Hence, the penalty notice issued is liable to be ignored. However, the penalty was ultimately levied under section 273(1)(a) of the Act, whereas no consequent notice was issued on that account. Section 274 clearly imposes a duty on the Assessing Officer to give the assessee a reasonable opportunity of being heard as the section opens with the words "No order imposing a penalty under this Chapter shall be made unless the assessee has been heard". Penalty proceedings being quasi-criminal in nature, the Legislature has guardedly provided in section 274 of the Act that penalty cannot be imposed without giving an opportunity of being heard. In order to assume jurisdiction for imposing penalty, a notice clearly depicting the charge, on which the penalty is sought to be levied, is a pre-condition. However, as we have explained hereinbefore, though the notice for levy of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the provisions of section 274 of the Act, issuance of notice specifying the exact charge against the assessee is mandatory condition and the defect in the said notice cannot be considered as mere technicality as it touches the root of the matter and affects the jurisdiction of the Assessing Officer in imposing penalty. By respectfully following the judgment cited, we are of the opinion that section 292B of the Act has no application to the facts and circumstances of the case. We are, therefore, of the opinion that the penalty levied by the Assessing Officer is invalid. The CIT(A) having admitted that penalty cannot be levied under section 273(1)(a) out to have quashed the proceedings instead of directing the Assessing Officer to recompute the penalty under section 273(2)(aa) of the Act, inasmuch as, this would amount to levy of penalty on an altogether different sub-section without following the mandatory procedure of issuing notice under section 274 of the Act. 14. We may further point out that under section 251 of the Income-tax Act, the powers of the first appellate authority vis-a-vis disposal of the penalty appeal, is very limited. It will be useful to reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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