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TMI Blog2022 (1) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,61,680/- as it was originally filed. During the course of search it was detected that the assessee was operating and managing two concern namely Abhayraj Gems Pvt Ltd and M/s. Rishabhimpex in which the assessee in is a director along with his son Adesh Jain. There concerns were found to be engaged in hawala transactions and therefore the AO held that there were Benami concerns of the assessee. The assessee had submit led that he was importing goods on behalf of the real importers and that the import consignment was handed over to them after receipt of material against cash and used to derive commission income from the same. Therefore, In clue consideration to the facts of the case, the assessment was completed u/s. 143(3) r.w.s. 153A on 31.03.2016 wherein addition of Rs. 31,60,847/- was made in the hands of assessee as unexplained commission income on the above transaction by the assessee. The said addition was confirmed by the Ld. CIT(A), on account of commission earned and he also enhanced the income from commission on sales by allowing deduction of expenses to the extent only 25%. Finally, he confirmed an addition of Rs. 68,21,102/- to the net income, Subsequently the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings by not specifying in the notice as to whether the penalty was of concealment of income or furnishing of inaccurate particulars of income. Therefore, the penalty imposed was void ab-initio." 6. Since the above is a legal ground, the same is admitted on the touchstone of Hon'ble Supreme Court decision in NTPC Ltd. Vs. CIT [229 ITR 383]. We find that this issue has been dealt with by the full bench of the Hon'ble Bombay High Court in the case of Farhan A. Shaikh Vs. PCIT ( 125 taxamnn.com 253) vide order dt. 11.3.2021. 7. Now we refer to Hon'ble Bombay High Court exposition in Mohammed Farhan A. Shaikh (supra) as under:- We have already discussed what constitutes the ratio decidendi or case holding and what it takes to be a precedent. Now, we will see what makes a precedent conflict with another. The Precedential Conflict: 164. To cut the discussion short, we will take aid of the latest Supreme Court judgment on this point. In Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax ("Mavilayi"), the question concerns the deductions a primary agricultural credit society can claim under section 80P(2)(a)(i) of the IT Act, after the introducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision for it determines finally their rights and liabilities in relation to the subject-matter of the action. It is the judgment that estops the parties from reopening the dispute. However, for the purpose of the doctrine of precedents, ingredient (ii) is the vital element in the decision. This indeed is the ratio decidendi. 167. Then, Mavilayi applied the above principle and held that the ratio decidendi in Citizen Cooperative would not depend upon the conclusion arrived at on facts in that case. For the case is an authority for what it actually decides in law and not for what may seem to logically follow from it. Do Goa Dourado Promotions and Kaushalya conflict? 168. As we have seen Goa Dourado Promotions concludes the case based on the reasoning given in Tax Appeal No. 24/2019 (decided on 11-11-2019), Samson Perincherry, and New Era Sova Mine. 169. The Tax Appeal No. 24/2019, decided on 11-11-2019, relates to The Principal Commissioner of Income-tax (Central) v. Goa Coastal Resorts and Recreation Pvt. Ltd. In that one, the learned Division Bench has held: - "6. Besides, we note that the Division Bench of this Court in Samson(supra) as well as in New Era Sova Mine(supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion: Where should the assessee gather the required information from? 172. Goa Dourado Promotions and other cases have held that the information must be-gathered from the notice under section 271(1)(c) read with section 274 of the IT Act. No other source was in the Court's contemplation. In Kaushalya, both the proposition and the question were the same. But it has one extra input: the order in assessment proceedings. So it has held that the notice alone is not the sole source of information the assessment proceedings, too, may shed light on the issue and inform the assessee on the scope of penalty proceedings. Whether assessment proceedings can be a source of information and whether it can complement the notice have not been considered in Goa Dourado Promotions and other Cases. 173. We, however, accept that the Revenue, often, adopts a pernicious practice of sending an omnibus, catch-all, printed notice. It contains both relevant and irrelevant information. It assumes, perhaps unjustifiably, that whoever pays tax is or must be well-versed in the nuances of tax law. So it sends a notice without specifying what the assessee, facing penalty proceedings, must meet. In justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginate from the assessment proceedings, but they are independent; they do not depend on the assessment proceeding for their outcome. Assessment proceedings hardly influence the penalty proceedings, for assessment does not automatically lead to a penalty. 176. Second, not always do we find the assessment proceedings revealing the grounds of penalty proceedings. Assessment order need not contain a specific, explicit of whether the conditions mentioned in section 271(1)(c) exist in the case. It is because Explanation 1(A) and 1(B), as the deeming provisions, create a legal fiction as to the grounds for penalty proceedings. Indeed, the Apex Court in CIT v. Atu Mohan Binda [ 2009 ] 317 ITR 1 (SC) has explained the-scope of section 271(1)(c) thus: "Explanation 1, appended to section 27(1) provides that if that person fails to offer an explanation or the explanation offered by such person is found to be false, or the explanation offered by him is not substantiated, and he fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, for the purposes of section 271(1)(c), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does a mere defect in the notice--not striking off the irrelevant matter--vitiate the penalty proceedings? 181. 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 proceeding to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of, vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee's favour. 183. Therefore, we answer the first question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done". Then, Dilip N. Shroff, on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. 188. We may, in this context, respectfully observe that a contravention of a mandatory condition or requirement for a communication to be valid communication is fatal, 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 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. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that "where proced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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