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TMI Blog2022 (7) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... e, at the outset, submits that the initiation and levy of penalty under Section 271(1)(c) of the Act is bad in law as there is no specific charge mentioned in the notice issued under Section 274 r.w.s. 271(1)(c) of the Act as to whether the notice was issued for concealment of income or for furnishing inaccurate particulars of income. The ld. Counsel for the assessee placing reliance on the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Karn.) and the decision of the Hon'ble Supreme Court in the case of CIT Vs. SSA's Emerald Meadows (2016) 73 taxmann.com 248 (SC) submits that since there is no specific charge mentioned in the notice the initiation and levy of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the penalty proceedings, but they are not composite proceedings 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 to the effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontemplated under section 274. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain, prejudice must be caused to the litigant, "except in the case of a mandatory provision of law which is conceived not only in individual interest but also in the public interest". 190. Here, section 271(l)(c) is one such provision. With calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling with or dilution. For a further precedential prop, we may refer to Rajesh Kumar v. CIT[74], in which the Apex Court has quoted with approval its earlier judgment in State of Orissa v. Dr. Binapani Dei[ 75]. According to it, when by reason of action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice must be followed. In such an event, although no express provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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