9911796707
TMI Blog2024 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... erred, wherein he vide the SCN, had on one hand called upon the assessee to explain as to why penalty u/s 271(1)(c) may not be imposed on her foe having concealed the particulars of income , but thereafter had vide his penalty order u/s. 271(1)(c) visited the assessee for a penalty for both the defaults, viz. furnished inaccurate particulars of income as well as concealed the particulars of income . The aforesaid approach adopted by the A.O. cannot be merely dubbed as a technical default as the same had divested the assessee of her statutory right of a proper opportunity to be heard and defend her case. The assessee had been saddled with penalty u/s 271(1)(c) without validly putting her to notice about the default for which the same was sought to be imposed. A.O had failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which she was being proceeded against, therefore, the penalty under Sec. 271(1)(c) imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. Decided in favour of assessee. - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of petroleum products (dealer of Bharat Petroleum Corporation Ltd.), had filed her return of income for A.Y. 2013-14 on 30.03.2013, declaring a total income of Rs. 4,85,980/-. Observing, that the income of the assessee chargeable to tax had escaped assessment, the A.O initiated proceedings u/s. 147 of the Act. 6. Assessment was framed vide order passed u/s. 147 r.w.s 144 r.w.s. 144B of the Act dated 24.09.2021, wherein the A.O observed that the commission of the retail outlet dealers was fixed @Rs.0.912 per liter for the period 01.04.2012 to 26.10.2012 and @Rs.1.089/- per liter for the period 27.10.2012 to 31.03.2013. Accordingly, the A.O by taking the average commission for the year @ Rs. 1.0005 per liter reworked out the commission on the sales of High-Speed Diesel (HSD) of 1128948 liters as disclosed by the assessee at Rs. 11,29,512/-. As the assessee had disclosed her gross profit on the sale of HSD at Rs. 4,81,153/-, therefore, the A.O made the addition of Rs. 6,48,359/- [Rs. 11,29,512/- (-) Rs. 4,81,153/-] to her returned income. Accordingly, the income of the assessee was determined by the A.O. vide his order u/s. 147 r.w.s. 144 r.w.s.144B of the Act dated 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e framing the assessment. In our considered view as penalty proceedings are like quasi criminal proceedings, therefore, the assessee as a matter of a statutory right is supposed to know the exact charge for which he is being called upon to explain that as to why the same may not be imposed on him. The non-specifying of the charge in the Show cause notice not only reflects the non-application of mind by the A.O but defeats the very purpose of giving a reasonable opportunity of being heard to the assessee as envisaged under Sec. 274(1) of the I.T Act. We find that the fine distinction between the said two defaults contemplated in Sec. 271(1)(c), viz. concealment of income and furnishing of inaccurate particulars of income had been appreciated at length by the Hon ble Supreme Court in its judgments passed in the case of Dilip Shroff Vs. Jt. CIT (2007) 210 CTR (SC) 228 and T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC). The Hon ble Apex Court in its aforesaid judgments had observed that the two expressions, viz. concealment of particulars of income and furnishing of inaccurate particulars of income have a different connotations. The Hon ble Apex Court was of the view that the non-striking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 271(1)(c) without validly putting her to notice about the default for which the same was sought to be imposed. 13. At this stage, it would be relevant to point out that the A.O. at the stage of imposing penalty was not clear as to whether the same was being levied for furnishing inaccurate particulars of income or concealment of particulars of income . The aforesaid facts can safely be gathered from Para 10 of the penalty order, wherein the A.O had referred both the defaults, i.e. furnished inaccurate particulars of income as well as concealed the particulars of income , but while quantifying the amount of penalty had confined himself only to furnishing of inaccurate particulars of income . 14. Be that as it may, as the A.O. had grossly erred in the law and facts of the case by calling upon the assessee to show cause as to why penalty u/s. 271(1)(c) of the Act may not be imposed upon her for concealment of particulars of income , but had thereafter, imposed the same for furnishing of inaccurate particulars , therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. 15. We find that the Hon ble High Court of Karnataka in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke off the irrelevant default in the body of the SCN issued under Sec. 274 of the Act, therefore, the penalty imposed by the AO u/s 271(1)(c) of the Act was liable to be vacated. For the sake of clarity the observations of the Hon ble High Court of Bombay in its aforesaid order are culled out as under: 4. We have carefully examined the record as well as duly considered the rival contentions. Both the Commissioner (Appeals) as well as the ITAT have categorically held that in the present case, there is no record of satisfaction by the Assessing Officer that there was any concealment of income or that any well as in New Era Soya Mine (supra) has held that the notice which is inaccurate particulars were furnished by the assessee. This being a sine qua non for initiation of penalty proceedings, in the absence of such satisfaction, the two authorities have quite correctly ordered the dropping of penalty proceedings against the assessee. 6. Besides, we note that the Division Bench of this Court in Samson (supra) as applicable are required to be struck off, so as to indicate with clarity the nature of the satisfaction recorded. In both Samson Perinchery and New Era Soya furnishing of inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitch in time saves nine. Its one cross or tick mark clears the cloud, enables the assessee to mount an effective defence, and, in the end, its diligence avoids a load of litigation. Is not prejudice writ large on the face of the mechanical methods the Revenue adopts in sending a statutory notice to the assessee under section 271 (1) (c) read with section 274 of the Act? Pragmatically speaking, Kaushalya casts an extra burden on the assessee and assumes expertise on his part. It wants the assessee to make up for the Revenue's lapses. Ex Post and Ex Ante Approaches of Adjudication: 174. In ex-post adjudication, the Court looks back at a disaster or other event after it has occurred and decides what to do about it or how to remedy it. In an ex-ante adjudication, the Court looks forward, after an event or incident, and asks what effects the decision about this case will have in the future on parties 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to have concealed income because of the existence of facts which are set out in Explanation 1, if a mere direction to initiate penalty proceedings under clause (c) of sub-section (1) is found in the said order, by legal fiction, it shall be deemed to constitute satisfaction of the Assessing Officer for initiation of penalty proceedings under the said clause (c). In other words, the Assessing Officer s satisfaction as to be spelt out in the assessment order is only prima facie. Even if the assessment order gives no reason, a mere direction for penalty proceedings triggers the legal fiction as contained in the Explanation (1). 178. Therefore, in every instance, it is a question of inference whether the assessment order contained any grounds for initiating the penalty proceedings. Then, whenever the notice is vague or imprecise, the assessee assails it as bad; the 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 nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the aspect of 'prejudice'? 184. Indeed, Kaushalya did discuss the aspect of prejudice. As we have already noted, Kaushalya noted that the assessment orders already contained the reasons why penalty should be initiated. So, the assessee, stresses Kaushalya, fully knew in detail the exact charge of the Revenue against him . For Kaushalya, the statutory notice suffered from neither non-application of mind nor any prejudice. According to it, the so-called ambiguous wording in the notice [has not] impaired or prejudiced the right of the assessee to a reasonable opportunity of being heard . It went onto observe that for sustaining the plea of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed . Kaushalya closes 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 prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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[ 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 provision is laid down on this behalf, compliance with principles of natural justice would be implicit. If a statue contravenes the 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. Conclusion: We have, thus, answered the reference as required by us; s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income and furnished inaccurate particulars of income ; which thereafter was confined by him to furnishing of inaccurate particulars [while quantifying the amount of penalty in order u/s 271(1)(c)]. As the A.O had in the SCN, dated 24.09.2021 called upon the assessee to explain why she may not be subjected to penalty u/s 271(1)(c) for having concealed the particulars of income but thereafter vide a vague order had saddled her with a penalty for both the defaults, i.e concealed the particulars of income and furnished inaccurate particulars of income ; which thereafter was restricted to furnishing of inaccurate particulars [while quantifying the amount of penalty in order u/s 271(1)(c)]; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. Alternatively, the failure on the part of the A.O. to put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on her by clearly and explicitly pointing out the specific default/defaults in the SCN, dated 24.09.2021, had thus, divested her of an opportunity to put forth an explanation before the A.O that no such penalty was cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
