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2019 (6) TMI 1182 - HC - Income TaxPenalty u/s 271(1)(c) - defective show cause notice - notice issued in printed form without specifically mentioning whether the ground is 'concealment of income' or 'furnishing of inaccurate particulars' - impugned SCN is in a template and therefore, it is not clear as to whether the impugned SCN has been issued on the basis that the writ petitioner has 'concealed particulars of income' or 'furnished inaccurate particulars' of such income - HELD THAT - Whether the impugned SCN is predicated on 'concealment of income' or 'furnishing of inaccurate particulars' and then proceed, it was submitted that the Revenue cannot be now permitted to rectify the error. In this regard, Section 292B of IT Act, which has been adverted to and which has been relied on by the Revenue counsel comes to the aid of the Revenue . There is no dispute that the impugned SCN qualifies as a notice within the meaning of Section 292B. If that be so, it cannot be held to be invalid merely by reason of mistake or defect i.e., mistake or defect of issuing it in a template and not scoring of the relevant ground and leaving out the applicable ground. If it is not a defect of scoring of the inapplicable ground it is a case of using the conjunction 'and' by scoring of 'or', if it is predicated on both grounds. If aforesaid position is clarified and thereafter the impugned SCN is carried to its logical end, it will satisfy all parameters and ingredients of NJP. This Court is reminded of the observation in Mumbai International Airport Private Limited Vs. Golden Chariot Airport and another 2010 (9) TMI 1153 - SUPREME COURT where Hon'ble Supreme Court held that 'action of law is not a game of chess'' . Merely because the Revenue has made a move and there is an error in the move, there is nothing to show that no opportunity should be given to the Revenue to correct the error by issuing a corrigendum or addendum and then proceeding with the matter. After all it is not an irreversible move in a game of chess. This Court passes the following order a) the impugned SCN being SCN dated 23.12.2016 bearing reference No.PAN AAFCA0638J shall be kept in abeyance for a period of three weeks from the date of receipt of a copy of this order. b) within the aforesaid three weeks, second respondent shall issue a corrigendum/addendum/errata to the impugned SCN clearly setting out the ground/s on which impugned SCN w as issued i.e., as to whether it has been issued on the ground that particulars have been concealed or on the ground that inaccurate particulars of income have been furnished or both. c) aforesaid addendum/corrigendum/errata to impugned SCN shall be duly served on the writ petitioner with due acknowledgement within the aforesaid three weeks period and from the date of service, writ petitioner shall be given another three weeks time to respond to the impugned SCN read with addendum/corrigendum/errata. d) It is open to the writ petitioner to ask for the basis on which the impugned SCN is predicated and the basis on which the same has been issued and the same will be dealt with in a manner known to law. e) after receipt of response from the writ petitioner and in the event of writ petitioner choosing to opt for availing the opportunity of being heard in person, i.e., personal hearing, the same shall also be granted and the impugned SCN along with addendum/ corrigendum/ errata shall be carried to its logical end in accordance with law after adhering to all natural justice principles.
Issues Involved:
1. Validity of the Show Cause Notice (SCN) issued under Section 274 read with Section 271 of the Income Tax Act, 1961. 2. Grounds for penalty: "Concealment of income" vs. "Furnishing inaccurate particulars." 3. Applicability of Section 292B of the Income Tax Act. 4. Jurisdiction of the High Court to quash SCNs in writ jurisdiction. Issue-wise Detailed Analysis: 1. Validity of the SCN: The petitioner challenged the SCN dated 23.12.2016, issued under Section 274 read with Section 271 of the Income Tax Act, 1961, for the assessment year 2013-14. The petitioner argued that the SCN was vague as it did not specify whether the penalty was for "concealment of income" or "furnishing inaccurate particulars." The petitioner cited several judgments, including Commissioner of Income Tax Vs. SSA's Emerald Meadows and Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory, to support the claim that the SCN was invalid due to its lack of specificity. 2. Grounds for Penalty: The petitioner contended that "concealment of income" and "furnishing inaccurate particulars" are distinct grounds, and the SCN must clearly specify which ground is being invoked. The court acknowledged this distinction, referencing its own previous judgments and other case laws, including T.Ashok Pai Vs. Commissioner of Income Tax, to affirm that these two expressions fall under different realms and must be clearly stated in the SCN. 3. Applicability of Section 292B: The Revenue argued that the SCN should not be invalidated merely due to a mistake, defect, or omission, as per Section 292B of the Income Tax Act. The court agreed, stating that the error in the SCN was secretarial and could be rectified. The court held that the SCN qualifies as a notice under Section 292B and should not be deemed invalid due to the error of not specifying the ground for the penalty. 4. Jurisdiction of the High Court to Quash SCNs: The court discussed the discretionary nature of writ jurisdiction under Article 226 and cited the Supreme Court's judgment in Union of India Vs. Kunisetty Satyanarayana, which held that writ jurisdiction should not ordinarily be exercised to quash SCNs unless they fall under rare and exceptional cases, such as lack of jurisdiction, reopening a settled position of law, prejudging the issue, or being issued with malafides. The court found that the present case did not fall under any of these exceptions and thus did not warrant quashing the SCN. Conclusion and Order: The court directed the Revenue to issue a corrigendum/addendum to the impugned SCN within three weeks, clearly specifying whether the penalty is for "concealment of income" or "furnishing inaccurate particulars," or both. The petitioner was given another three weeks to respond to the corrected SCN. The court emphasized adherence to natural justice principles and allowed the petitioner to request a personal hearing if desired. The writ petition was disposed of with these directions, and no costs were awarded.
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