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2023 (7) TMI 985 - AT - Income TaxPenalty u/s 271(1)(c) - Defective notice u/s 274 - non striking irrelevant matter/portion in notice - HELD THAT - As in the case of Mr. Mohd. Farhan A. Shaikh 2021 (3) TMI 608 - BOMBAY HIGH COURT while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s. 271(1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision squarely applies to the facts of the Assessee s case as the notice u/s. 274 r.w.s. 271(1)(c) of the Act was 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. Decided in favour of assessee.
Issues Involved:
1. Validity of penalty order u/s 271(1)(c). 2. Validity of assessment order for AY 2009-10. 3. Additions made u/s 68 based on bank statements. 4. Bona-fide explanation for credits in the bank account. 5. Pending quantum appeal before ITAT. 6. Consideration of replies during assessment and penalty proceedings. 7. Specific charge in penalty proceedings. 8. Violation of principles of natural justice. Summary: 1. Validity of penalty order u/s 271(1)(c): The Assessee contended that the penalty order u/s 271(1)(c) was baseless, void-ab-initio, and levied on arbitrary and unlawful reasons. The Tribunal noted that the penalty proceedings were initiated based on a defective notice issued u/s 274 r.w. Section 271(1)(c) of the Act, which did not specify the limb of the penalty. The Tribunal referenced the Hon'ble Bombay High Court's decision in Mr. Mohd. Farhan A. Shaikh vs. ACIT, which held that an omnibus notice suffers from vagueness and non-application of mind. Consequently, the penalty order was quashed. 2. Validity of assessment order for AY 2009-10: The Assessee argued that the assessment order for AY 2009-10 was invalid due to reasons recorded without application of mind and in a mechanical manner. The Tribunal did not specifically address this issue in the judgment. 3. Additions made u/s 68 based on bank statements: The Assessee claimed that the additions made u/s 68 based on bank statements were invalid as the Assessee did not maintain any bank account. The Tribunal did not specifically address this issue in the judgment. 4. Bona-fide explanation for credits in the bank account: The Assessee argued that it had offered a bona-fide explanation for the credits in the bank account during quantum/assessment proceedings, making the matter debatable and contentious. The Tribunal did not specifically address this issue in the judgment. 5. Pending quantum appeal before ITAT: The Assessee contended that the quantum appeal was still pending before the Hon'ble ITAT Delhi, and thus, the penalty should not have been levied. The Tribunal did not specifically address this issue in the judgment. 6. Consideration of replies during assessment and penalty proceedings: The Assessee argued that none of the replies furnished during the assessment and penalty proceedings were considered. The Tribunal did not specifically address this issue in the judgment. 7. Specific charge in penalty proceedings: The Assessee argued that the Assessing Officer failed to make a specific charge upon the Assessee, which violated principles of natural justice. The Tribunal noted that the penalty notice was stereotype and did not specify any limb or charge, thus quashing the penalty order. 8. Violation of principles of natural justice: The Assessee contended that the penalty order was prejudicial due to lack of natural justice, as no show-cause notice was issued before passing the penalty order. The Tribunal referenced the Hon'ble Bombay High Court's decision, emphasizing the necessity of precise and unambiguous notices, and quashed the penalty order. Conclusion: The Tribunal quashed the penalty order dated 23/12/2016 passed by the Assessing Officer for Assessment Year 2009-10 and allowed the appeal of the Assessee.
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