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TMI Blog2023 (12) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] which has held that non striking on the irrelevant limb would vitiate the penalty proceedings in toto . As it is a settled proposition of law that the ld. A.O. ought to have struck off the irrelevant limb while issuing the penalty notice, we are of the considered view that the penalty levied by the ld. A.O. and partly confirmed by the ld. CIT(A) has to be deleted. Thus non striking of the irrelevant limb has been held to be violation of the mandatory condition, which in turn violates the principle of natural justice. Assessee should be aware of the exact charge for which the penalty proceeding has been initiated in order to entitle him to contend on the said charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 and had earned income from granting of broadcasting and sponsorship rights to various broad casters and sponsors. The assessee had filed its return of income declaring total income at Rs. 55,67,480/- dated 27.11.2003 and the same was processed u/s. 143(1) of the Act. The assessee's case was reopened u/s. 147 of the Act vide notice u/s. 148 of the Act dated 28.04.2005 for the reason that the assessee has earned revenue of USD 16,01,27,908 on account of grant of broad casting rights, out of which only USD 1,16,611 was offered for tax as 'royalty income' as per the provisions of Article 12 of India-Singapore treaty and the balance amount has been treated as 'business profit' not taxable in India. Further, the ld. Assessing Officer ('A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenging the penalty order on the ground that the notice issued by the ld. A.O. has not struck off the irrelevant limb as to whether the penalty was levied for concealment of income or for furnishing inaccurate particulars of income. The ld. AR relied on the decision of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. Commissioner Of Income Tax [1998] 229 ITR 383 (SC) for the admission of the additional ground. The ld. AR further contended that the assessee's case is covered by the full bench decision of the Hon'ble Jurisdictional High Court in the case of Mohd. Farhan A. Shaikh vs. Dy. CIT [2021] 125 taxmann.com 253 (Bom). 8. The learned Departmental Representative ('ld.DR' for short), on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 SET Satellite (Singapore) Pte. Ltd. 11,992,500 47.37 568,084,725 2 Prasar Bharati (Broadcasting Corporation of India) 12,137,159 47.37 574,937,222 3 Prasar Bharati All India Radio 1,10,000 47.37 5,210,700 4 LG Electronics India Private Ltd. 3,971,060 47.37 188,109,112 5 Hero Honda Motors Ltd. 2,550,150 47.37 120,800,606 6 Hutchison Max Telecom Private Ltd. 1,520,000 47.37 72,002,400 Total 32,280,869 1,529,144,765 10. The ld. A.O. initiated the penalty proceeding u/s. 271(1)(c) of the Act vide notice dated 15.12.2006 u/s. 274 r.w.s. 271(1)(c) of the Act. The ld.A.O. after hearing the assessee held that the assessee has furnished the inaccurate particulars of income and has also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computation of the income and the explanation offered by the assessee are found to be false and that the same is covered by clause (A) of Explanation 1 to section 271(1)(c) of the Act. The ld. CIT(A) upheld the penalty levied by the ld. A.O. excluding the payment received on account of Broadcasting right from the SET Satellite (Singapore) Pte. Ltd. 12. From the above factual matrix, it is observed that the ld. AR has raised an additional ground, challenging the validity of the notice issued u/s. 274 r.w.s. 271 of the Act dated 15.12.2006 on the ground that non striking of the irrelevant limb in the notice would vitiate the penalty proceedings. As the additional ground goes to the very root of the cause, we hereby admit the additional gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has encapsulated the principles of prejudice. One of the principles is that "where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, 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(1)(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 [(2007) 2 SCC 181], in which the Apex Court has quoted w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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