9911796707
TMI Blog2022 (1) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ar , Member ( J ) For the Appellant : Vimal Punmiya For the Respondents : R. M. Madhvi ORDER Per Shri Shamim Yahya , ( AM ) These Assessee's appeals are directed against respective orders of learned CIT(A) wherein, penalty u/s. 271(1)(c) for bogus purchase has been partly confirmed on the following addition, which were sustained by ITAT. 2. Since facts are identical, we are referring to facts and figures for AY 2012-13 is as under:- Assessment year Addition (Rs.) 2012-13 1,70,922 2013-14 9,45,220 2014-15 1,65,000 The assessee is an individual and is director in the company M/s. Abhayraj Gems Pvt. Ltd. which is engaged in the business of trading of diamonds, A search Seizure action u/s. 132(1) of the Act was carried out on the premises of the assessee company a on 03.10.2013. Subsequently, a notice u/s. 153A was issued, in response to notice the assessee filed Return of income on 20/08/2015 u/s. 153A at the same figure of ₹ 1,61,680/- as it was originally filed. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come by furnishing inaccurate particulars of income and committed default u/s. 271(1)(C) of the Act and this is a fit case for levy of penalty u/s. 271(1)(C), Therefore, it appears that the assessee had consciously concealed the particular of his income. Therefore, he is liable for penalty u/s. 271(1)(c) of the Act. In view of the above facts and the position of law as discussed above. I held that the assessee had no reasonable cause for the failure on his part to file correct particulars of income and fully disclose his income as required under the provisions of the income tax Act, 1961. Therefore, I hold him liable for penalty u/s. 271(1)(c) of the Act. Therefore, considering the overall facts of the case. The levy of penalty/s. 271(1)(c) is confirmed only on amount of addition of ₹ 1,70,922/-. The AO is directed to work our quantum of penalty accordingly. 4. Against the above order assessee is in appeal before us. We have heard both the parties and perused the records. 5. The Ld. Counsel of the assessee has raised further additional grounds as under:- On the facts and circumstances of the case and in law, the Ld. AO erred in initiating the penalty pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to Mavilayi. 166. In this context, Mavilayi holds that only the ratio decidendi of a judgment binds as a precedent. To elaborate on this proposition, Mavilayi refers to State of Orissa v. Sudhanshu Sekhar Misra [ (1968) 2 SCR 154], which holds that a decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein, nor what logically follows from the various observations made in it. Then, it quotes Dalbir Singh v. State of Punjab[1919) 3 SCR 1059]. Though it was from the dissenting judgment, Mavilayi points out, it remained uncontradicted by the majority: According to the well-settled theory of precedents every decision contains three basic ingredients: (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of (i) and (ii) above. For the purposes of the parties themselves and their privies, ingredient (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Mine and therefore, warrant no interference. 170. Samson Perinchery, too, has held that the notice issued under section 274 of the Act should strike off irrelevant clauses. And New Era Sova Mine has endorsed the Tribunal's view that the penalty notices in these cases were not issued for any specific charge, that is to say, for concealment of particulars of income or furnishing of inaccurate particulars . In fact, Samson Perincherry relies on Karnataka High Court's SSA's Emerald Meadows, which, as we have already seen, has followed Manjunatha. So, in a sense, it is a conflict between Kaushalya and Manjunatha if we take comity, rather than stare decisis, as the reckoning factor. 171. That said, as Mavilayi found distinguishing features in Citizen Cooperative; here, too, the fact situation as obtained in Kaushalya has been seen in none of these decisions: Goa Dourado Promotions, Goa Coastal Resorts and Recreation, Samson Perinchery, New Era Sova Mine--not even in Manjunatha pointed, in both sets of cases, the proposition is this: To an assessee facing penalty proceedings, the Revenue must supply complete, unambiguous information so that he may defend himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies who are entering similar situations and have not yet decided what to do, and whose choices may be influenced by the consequences the law says will follow from them. The first perspective also might be called static since it accepts the parties' positions as given and fixed; the second perspective is dynamic since it assumes their behaviour may change in response to what others do, including judges, (for a detailed discussion, see Ward Farnsworth's Legal Analyst: A Toolkit for Thinking about the Law). 175. Kaushalya has adopted an ex-post approach to the issue resolution; Goa Dourado Promotions, an ex-ante approach. Kaushafya saves one single case from further litigation. It asks the assessee to look back and gather answers from whatever source he may find, say, the assessment order. On the other hand, Goa Dourado Promotions saves every other case from litigation. It compels the Revenue to be clear and certain. To be more specific, we may note that if we adopt Kaushalya's approach to the issue, it requires the assessee to look for the precise charge in the penalty proceedings not only from the statutory note but from every other source of information, such as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue defends it by saying that the assessment order contains the precise charge. Thus, it becomes a matter of adjudication, opening litigious floodgates. The solution is a tick mark in the printed notice the Revenue is used to serving on the assessees. 179. Besides, the prima facie opinion in the assessment order need not always translate into actual penalty proceedings. These proceedings, in fact, commence with the statutory notice under section 271(1)(c) read with section 274. Again, whether this prima facie opinion is sufficient to inform the assessee about the precise charge for the penalty is a matter of inference and, thus, a matter of litigation and adjudication. The solution, again, is a tick mark; it avoids litigation arising out of uncertainty. 180. One course of action before us is curing a defect in the notice by referring to the assessment order, which may or may not contain reasons for the penalty proceedings. The other course of action is the prevention of defect in the notice--and that prevention takes just a tick mark. Prudence demands prevention is better than cure. Answers: Question No. 1: If the assessment order clearly records satisfact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loses 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 . 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 sector T274. So asserts Kaushalya. In fact, for one assessment year, it set aside the penalty proceedings on the grounds of non-application 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 not met our acceptance. Question No. 3: What is the effect of the Supreme Court's decision in Dilip N. Shroff on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off? 187 In Dili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e principles of natural justice, it may also be held ultra vires Article 14 of the Constitution. 191. As a result, we hold that Dilip N. Shroff treats omnibus show-cause notices as betraying non-application of mind and disapproves of the practice, to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice. 8. Examining the present case on the anvil of aforesaid case law, we find that the notice in this also is an omnibus show-cause notice as it does not strike off/delete the inappropriate/irrelevant/not applicable portion. Such a generic notice betrays a non-application of mind. Hence, the penalty levied pursuant to such a notice is not legally sustainable in law. Hence following the aforesaid precedent from the Full Bench of the Hon'ble Jurisdictional High Court we hold that the Assessing Officer was bereft of valid jurisdiction as the notice issued to assessee is unsustainable in law. 9. As regards, the merit of issues in penalty, we find that a very small amount of addition has been finally sustained by ITAT on an estimate basis. The Ld. CIT(A) has erred in holding that huge additions are t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
