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TMI Blog2024 (6) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment order which is clearly evident from the assessment order passed by the AO, where the AO simply initiated penalty proceedings u/s.271(1)(c) of the Act, without specifying a particular charge on the assessee i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars of income and said lapse even continued in show cause notice issued u/s.274 r.w.s.271(1)(c) of the Act, where the AO has issued a printed form of notice without striking of inapplicable portion of the notice. From the above, it is very clear that the AO has not arrived at satisfaction whether penalty is initiated for concealment of particulars of income or furnishing of inaccurate particulars of income . In absence of proper notice, it cannot be said that the AO has applied his mined to relevant facts and also arrived at satisfaction that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. In absence of specific charge under which limb the penalty proceedings has been initiated, the AO cannot levy penalty u/s.271(1)(c) of the Act. In our considered view, penalty proceedings initiated u/s.271(1)(c) of the Act by issuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction as well as non-application of mind thereby making the said levy illegal and opposed to law. In the instant case the penalty notice suffers from aforesaid infirmity. 4. The learned CIT(A) ought to have seen that the discretion to impose penalty must be exercised judicially. The learned CIT(A) failed to see that addition made in the assessment order is on ad hoc basis, based on estimated disallowances of portion of marketing expense and based on surrender of income not backed by any incriminating material. It is not a case of which either the appellant or the investigation team had any evidence as to the quantum of inflated expenditure warranting levy of penalty under section 271(1)(C). 5. The learned CIT(A) failed to see that in the instant case addition is made by the assessing officer merely based on income surrendered by the appellant and not based on any incriminating material warranting levy of penalty. Neither the appellant nor the investigation team had any evidence as to the quantum of inflated expenditure year wise. 6. The learned CIT(A) failed to see that the AO while levying penalty under section 271(1)(C) placed undue reliance on section 271AAB of the Act. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the course of search and seizure on 06.12.20128 in the residential premise of Shri. M.Kothandarmi Reddy and others was tabulated in Page No. 2 of the assessment order. In the course of search, a sworn statement u/s.132(4) of the Act, was recorded from Shri S.D.Rami Reddy, working Director of the assessee company and in response to Q. Nos. 17 18, he has explained the modus operandi of generation of cash found and seized during the course of search and also admitted a sum of Rs. 113.99 Crs. as additional income for the period from 01.04.2014 to 06.12.2018 which includes cash seizure of Rs. 55.27 Crs. The Director of the assessee company has also explained the modus operandi of generation of unaccounted cash by way of inflated expenditure booked under the head marketing expenses being gift articles and admitted that on an average 1/3rd of actual expenditure accounted in the books of accounts, has been received back in cash from the suppliers. The relevant question and answers in the statement recorded u/s.132(4) of the Act, from Shri S.D.Rami Reddy, was reproduced as under: Q.17 . While answering to Q.6, in your sworn statement recorded under section 132(4) dated 9.12.2018, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee towards inflated expenditure under the head gift articles . While completing the assessment, the AO observed that after considering relevant submissions of the assessee, the income offered by the assessee, including estimated disallowance of portion of marketing expenses, is found to be in order and accepted. The relevant submissions of the assessee and findings of the AO are reproduced as under: In continuation to the above, during assessment proceedings, assessee claimed that no corroborative evidence to the sworn statement w.r.t. found/seized materials was unearthed so as to suggest the culpability of tax evasion. After going through the circumstances in entirety. The income offered by the assessee, including the estimated disallowance of portion of marketing expenses, is found to be in order and accepted. 5. Along with the assessment order dated 26.07.2021 for both assessment years, the AO initiated penalty proceedings u/s.271(1)(c) of the Act and notice u/s.274 r.w.s.271(1)(C) of the Act, dated 26.07.2021 was issued and served on the assessee. In the said show cause notice, in bold letters, the AO stated that it appears to me that you have concealed the particulars of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y levied on estimated addition towards additional income offered by the assessee for inflated expenditure under the head marketing expenses on the ground that allocation of additional income for both assessment years was only on ad hoc basis and there was no evidence with the AO as regards concealment of particulars of income or furnishing of inaccurate particulars of income . 8. The Ld.CIT(A) after considering relevant submissions of the assessee and also taken note of certain judicial precedents, including the decision of the Hon ble Supreme Court in the case of MAK Data Pvt. Ltd. v. CIT-II [2013] 358 ITR 593 (SC) held that going by the facts and circumstances of the present case, the assessee case gets covered by Explanation-5(A), where any income based on any entry in any books of accounts or other documents or transaction and assessee claims that such entry in the books of accounts or other documents or transactions represents his income for any previous year which has ended before the date of search and return of income for such previous year, has been furnished before the said date, but such income has not been declared, then, notwithstanding that such income declared by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiates the entire proceedings, including consequent order passed by the AO imposing penalty u/s.271(1)(C) of the Act. The Ld.Counsel for the assessee referring to the plethora of judicial precedents, including the decision of the Hon ble Supreme Court in the case of CIT v. SSA s Emerald Meadows reported in [2016] 73 taxmann.com 241 submitted that non-specifying the specific charge in the show-cause notice would vitiates the penalty proceedings. In the present case, the assessment order is silent about satisfaction arrived at by the AO about concealment of particulars of income or furnishing of inaccurate particulars of income which is evident from the assessment order dated 26.07.2021, where the AO stated that penalty proceedings u/s.271(1)(c) of the Act, is being initiated separately. The said lapse is even continued in show cause notice issued by the AO notice u/s.274 r.w.s.271(1)(c) of the Act, where the AO has issued printed form of show cause notice without striking of inapplicable portion of the notice. From the above, it is undoubtedly clear that the AO has not recorded satisfaction before initiation of penalty proceedings u/s.271(1)(c) of the Act. In this regard, he relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld.DR, Shri. R. Clement Ramesh Kumar CIT, on the other hand, supporting the order of the Ld.CIT(A), submitted that it is an admitted fact that during the course of search huge amount of unaccounted cash was found and seized from the residential premise of the assessee Director and their associates. Further, they have admitted additional income towards inflated expenditure under the head marketing expenses which is further backed by the enquiries conducted during the course of assessment proceedings, where the suppliers have admitted to have returned 1/3rd of cash to the assessee. Based on the admission of the assessee coupled with enquiries conducted during the course of search, a statement was recorded from the working Director of the assessee, where he has explained modus operandi of generation of unaccounted income and further admitted additional income of Rs.113.99 Crs. Towards mdisallowance of marketing expenses. Had search been not conducted in the case of the assessee, the modus operandi of the assessee and generation of unaccounted income was gone unnoticed. Therefore, the arguments of the assessee that it has not furnished inaccurate particulars of income or concealment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar limb of u/s.271(1)(c) of the Act, the AO must clearly record his satisfaction and such satisfaction should discernable from the assessment order itself. This is because, if penalty proceedings are commenced against the assessee on a particular footing which is concealment of particulars of income, but finally levy of penalty is based on a different footing altogether i.e. on the footing of inaccurate particulars of income is not only deprived of the right of the assessee to face the charge before the authority but also violates principles of natural justice. It cannot be said that in such circumstances, the assessee had been given a reasonable opportunity of hearing before the order imposing penalty was passed. Therefore, before initiating penalty proceedings, the AO should record clear satisfaction in the assessment order itself and specify under which limb he proposed to initiate penalty proceedings u/s.271(1)(c) of the Act. In case, there is no clear satisfaction as required under the law in the assessment order, but at least such satisfaction should be discernable from the show cause notice issued by the AO u/s.274 r.w.s.271(1)(c) of the Act. Issuing printed form of notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble Supreme Court in the case of CIT v. SSA s Emerald Meadows 73 Taxmann.com 248 (SC), where the Hon ble Supreme Court dismissed the SLP against the order of the Hon ble High Court which in turn upheld the decision rendered by the Karnataka High Court in the case of CIT v. Manjunatha Cotton Ginning Factory (supra). A similar view has been expressed by the larger Bench of Hon ble Bombay High Court in the case of Mohd. Farhan A.Shaikh vs. DCIT 125 taxmann.com 253, wherein it has been clearly held that 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 u/s.274 of the Act. 14 . In this legal back ground, if you examine the facts of the present case, there is no dispute with regard to the fact that there is no satisfaction from the AO in the assessment order which is clearly evident from the assessment order passed by the AO, where the AO simply initiated penalty proceedings u/s.271(1)(c) of the Act, without specifying a particular charge on the assessee i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains were computed and the assessee requested for deduction under Section 54F of the Act, as the sale consideration received was utilized for purchase of a new flat, in which, the name of the assessee's wife was also included as a purchaser. The assessee further stated about the sale of livestock and standing crops. The assessee also stated that he is a senior citizen carrying on agricultural operations for 27 years and that his income was based upon the interest received from bank deposits and offered that a sum of Rs.50 lakhs may be treated as revenue in nature and taxed as income though there was no positive fact or finding had been found so as to avoid protracted litigation. 19. Further, with regard to deposits, the assessee explained that he had received the amount of Rs.21,56,250/- towards development cost of the agricultural land and a copy of the letter acknowledging payment made by the party was produced. This amount was received by RTGS to his bank account and the buyer had confirmed in writing that this was paid as development cost. Hence, this amount related to sale consideration of the land. 20. This explanation, which was offered by the assessee, did not find favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seedling and other miscellaneous items, that the farming sector was an unorganized sector, that all were sold to agriculturists and that he cannot be compelled to furnish details in this regard. The assessee furthermore pointed out that full particulars such as bank statements, cash deposit out of accumulated income were fully disclosed and furnished to the Assessing Officer, that there was no non disclosure, that the explanation offered was bona fide and that therefore, penalty could not be imposed. 24. The Assessing Officer, while imposing penalty vide order dated 28.9.2016, held that but for the scrutiny assessment under Section 143(3) of the Act, the cash deposits would not have come to light and therefore, rendered a finding that the assessee furnished inaccurate particulars. 25. This finding of the Assessing Officer is incorrect because while completing the assessment under Section 143(3) of the Act, there was no allegation against the assessee as to furnishing of inaccurate particulars. But, the Assessing Officer did not accept the explanation offered by the assessee and made certain additions, which will not automatically result in interpreting the same as furnishing of ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2014) 42 Taxmann.com 493] and the aspect as to how onus/burden of proof shifts from the assessee to the Revenue when penalty proceedings are initiated, is held in the following terms : 11. In a recent decision of the Hon'ble Supreme Court in Civil Appeal No.9772 of 2013, dated 30.10.2013 (Mak Data P. Ltd., vs. Commissioner of Income Tax-II), the Hon'ble Supreme Court while considering the Explanation to Section 271(1), held that the question would be whether the assessee had offered an explanation for concealment of particulars of income or furnishing inaccurate particulars of income and the Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer between the reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence and when the initial onus placed by the explanation, has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted their income and not otherwise. Factually, we find that the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation. Therefore, if the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court and considering the administrative set up of the said assessee and the fact that the assessee was never prejudiced on account of the alleged defect, the Court rejected the argument of the assessee. 33. In the case on hand, we find that at the first instance, while replying to the penalty show cause notice dated 30.3.2016, the assessee raised a specific plea that there was no concealment of income, that he had not furnished inaccurate particulars of income and that the notice was not proper. Therefore, the phraseology, which was adopted by the assessee, if read as a whole, would clearly show that he had objected to the issuance of the notice and as there was no basis for issuance of the notice under Section 271(1)(c) of the Act, both limbs in the said provision do not get attracted. Hence, the decision of this Court in the case of Sundaram Finance Ltd., cannot be applied. 34. The decision of the Hon'ble Supreme Court in the case of K.P.Madhusudhanan is factually different wherein the assessee was unable to furnish evidence for loans and that he offered the amount of transaction as additional income and this explanation was not acceptable to the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the word particulars used in Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income . We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. 37. On this issue, a useful reference can be to the decision of the Gujarat High Court in the case of National Textiles Vs. CIT [reported in (2001) 249 ITR 125], which related to the assessment year 1974-75 wherein it was held that in order to justify the levy of penalty, two factors must co- exist namely (i) there must be some material or circumstance leading to a reasonable conclusion that the amount does not represent the assessee's income and it is not enough for the purpose of penalty that the amount has been assessed as income and (ii) the circumstances must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement of law. The relevant findings of the Hon ble Karnataka High Court are as under: Penalty under section 271(l)(c) is a civil liability. Therefore, mens re a is not an essential element for imposing penalty for breach of such civil obligations or liabilities. Willful concealment is not an essential ingredient for attracting civil liability. [Para 63] Existence of conditions stipulated in section 271(l)(c) is a sine qua non for initiation of penalty proceedings under section 271. The existence of such conditions should be discernible from the assessment order or order of the Appellate Authority or Revisional Authority. Even if there is no specific finding regarding the existence of the conditions mentioned in section 271(1)(c), at least the facts set out in Explanation I (A) and (B) should be discernible from the said order, which would, by a legal fiction, constitute concealment because of deeming provision. Even if these conditions cio not exist in the assessment order passed, at least, a direction to initiate proceedings under section 271(l)(c) is a sine qua non for the Assessing Officer to initiate the proceedings because of the deeming provision contained in section 1( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of penalty, though emanate from proceedings of assessment, are independent and separate aspect of the proceedings. The findings recorded in the assessment proceedings in so far as 'concealment of income1 and 'furnishing of incorrect particulars' would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. [Para 63] Therefore, it is clear that merely because the assessee agreed for addition and accordingly assessment order was passed on the basis of this addition and when the assessee had paid the tax and the interest thereon in the absence of any material on record to show the concealment of income, it cannot be inferred that the said addition was on account of concealment. Moreover, the assessee had offered the explanation. The said explanation was not found to be false. On the contrary, it was held to be bona fide. In fact, in the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly appreciated the facts in a proper perspective and was justified in not interfering with the order passed by the Appellate Authority, setting aside the penalty order. In that view of the matter, there is no justification to interfere with the well considered order passed by the Tribunal. Thus, the substantial questions of law are answered in favour of the assessee and against the revenue. [Para 67] Case 4 When two fact finding authorities were satisfied that the explanation offered by the assessee was not false and it was a bona fide one, though the assessee had failed to conclusively prove the explanation offered, there is no justification to interfere with the well considered order passed by the Tribunal. Accordingly, the substantial question of law is answered in favour of the assessee and against the revenue. [Para 68] 17 . The assessee is also relied upon the order of the ITAT Chennai in the case of Shri Mahaveerchand Jain in ITA No.912/Chny/2020 order dated 13.05.2022. The Tribunal under identical set of facts held as under: 6. Upon careful consideration of factual matrix, it could be gathered that the assessee made large cash deposits in his bank account and attributed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied only for a specific charge. Furnishing of inaccurate particulars of income means, when the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are found to be incorrect whereas, concealment of particulars of income would mean that the assessee has concealed the income and has not reflected certain income in its return of income. It could be seen that the show-cause notice issued u/s 274 r.w.s 271 was a vague notice in a printed form without specifying the exact charge for which the assessee was being penalized and therefore, it was a clear case of non-application of mind while initiating penalty against the assessee. The Ld. AO, while initiating the penalty was not clear as to specific limb which was applicable to given factual matrix. This is further fortified by the fact that no such exact charge has not been framed in the penalty order. 9. At this juncture, it would be useful to take note of the decision of Hon ble High Court of Madras in the case of Babuji Jacob Vs. lTO (430 lTR 259; 08.12.2020). Upon perusal of the same, we find that the ratio of this decision is squarely applicable to the legal grounds raised by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealment of particulars of income. 21. Admittedly, all the amounts were received by the assessee through banking channels and he had mentioned about the same in his return of income. The only mistake done by the assessee was to treat both the lands as agricultural lands. Once the notice under Section 143(3) of the Act was issued, the assessee was able to convince the Assessing Officer that the lands in Pudhupakkam Village were to be treated as agricultural lands. But, he was unable to convince the Assessing Officer that the lands in Egattur Village were agricultural lands, which were treated to be a capital asset. Therefore, there wasno material available with the Assessing Officer to allege concealment of particulars of income. 22. With regard to furnishing of inaccurate particulars, the stand taken by the assessee was that both lands were agricultural lands, that he had been carrying on agricultural operations for 27 years, that he had been filing return of income regularly and that the source of income was from agricultural income and interest income from bank deposits. These facts were never disputed by the Assessing Officer. 23. After receipt of the penalty notice, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through banking channels. Hence, the argument of Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the Revenue that both limbs of Section 271(1)(c) of the Act are attracted has to necessarily fall. Hence, we hold that there is inherent defect in the notice dated 30.3.2016 issued under Section 271(1)(c) of the Act, as it will vitiate the entire proceedings. 26. Since we have heard the learned counsel on the correctness of the orders passed by the Assessing Officer, the CIT(A) and the Tribunal on the merits of the matter, we proceed to discuss the other issues as well. 27. The CIT(A), while confirming the order of penalty, took note of the order passed by the Assessing Officer wherein the Assessing Officer rejected the explanation offered by the assessee, which ultimately resulted in an addition and the assessment was completed vide order dated 30.3.2016. The question would be as to whether rejection of the explanation and the consequential addition would automatically result in an order of penalty. 28. Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the Revenue seeks to substantiate her case by relying upon the decision of the Hon'ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances, we do not find that there is any ground for this Court to substitute our interfere with the finding of the Tribunal on the aspect of the bonafides of the conduct of the assessee. 30. In the instant case, the assessee offered an explanation and we find the explanation to be cogent because all deposits were made through banking channels and out of two properties sold, the Assessing Officer accepted the assessee's stand that one of the properties was an agricultural land. Hence, we find that the burden cast upon the assessee to offer an explanation stands fulfilled. Consequently, the burden now shifts to the Revenue to establish the concealment of income or furnishing of inaccurate particulars of income or both. If the Revenue does not agree with the explanation offered by the assessee as in the instant case, then the onus is on the Revenue to prove that there was concealment of particulars of income or furnishing of inaccurate particulars of income. We find this aspect to be completely absent in the instant case. Therefore, we also find the imposition of penalty to be unjustified. 31. The assessee filed an appeal before the Tribunal, which confirmed the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(2) of the Act, which explanation he maintained till he filed an appeal before the Tribunal. Therefore, on facts, the decision of the Hon'ble Supreme Court in the case of K.P.Madhusudhanan is distinguishable. 36. Further, the CIT(A) found fault with the assessee in not challenging the assessment order and for having accepted the same. However, this cannot be a ground to enable the Assessing Officer to automatically levy penalty. In this regard, it is beneficial to refer to the decision of the Hon'ble Division Bench of this Court in the case of CIT Vs. Smt.Anitha Kumaran [reported in (2017) 79 Taxmann.com304] wherein the decision of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products (P) Limited [reported in (2010) 322 ITR 158] was followed wherein the Hon'ble Supreme Court examined the issue threadbare and discussed at length as to what was meant by the expression 'concealment of particulars of income and/or furnishing of inaccurate particulars of income' and after applying the decision in the case of Reliance Petro Products (P) Ltd., the Hon'ble Division Bench of this Court dismissed the appeal filed by the Revenue in the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r's Dictionary, the word inaccurate has been defined as:- not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript . We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case,there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will notamount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. 10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort the case of the assessee. In the said case, the Appellate Assistant Commissioner, in the penalty proceedings, held that the amount, the addition of which was agreed to by the assessee was an amount, which had been set out in an enclosure filed along with the return. While testing the correctness of the order, the Tribunal held that the levy of penalty under Section 271(1)(c) of the Act was wholly unwarranted as there had been no fraud or wilful neglect and that the assessee had only, with a view to cooperate with the Department, agreed to the addition. We observe that the above position will help the assessee, as there is not even a remote allegation that there was any fraudulent act by the assessee or the assessee was guilty of wilfully or negligently concealing the income and that his agreement to the addition of the amount, by itself, will not establish fraud or wilful neglect without something more. 39. For the above reasons, the assessee has to succeed on all grounds and consequently, it has to be held that the notice initiating the penalty proceedings is defective and invalid and the other findings rendered by the Assessing Officer, the CIT(A) and the Tribunal do not warr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P.) Ltd.(supra) also does not appeal to us in the peculiar facts of the present case. The notice in the present case is itself is defective and further, there is no finding or satisfaction recorded in relation to concealment or furnishing of inaccurate particulars. 9. For the aforesaid reasons, we hold that no substantial questions of law arises in this appeal. Consequently, this appeal is dismissed. The revenue s SLP against this decision has already been dismissed by Hon ble Supreme Court on 31.08.2021 (130 Taxmann.com 379) by observing as under: - 1. Delay condoned. 2. We are not inclined to interfere with the impugned order. 3. The special leave petition is, accordingly, dismissed. 4. Pending application stands disposed of. 11. Similar is the decision of Hon ble Bombay High Court rendered in CIT Vs. Samson Perinchery [2017 88 taxmann.com 413] wherein Hon ble Court has confirmed the ratio laid down by Hon ble Karnataka High Court in CIT V/s Manjunatha Cotton Ginning Factory (359 ITR 565). This decision of Hon ble Karnataka High Court has subsequently been followed by the same court in the case of CIT V/s SSA s Emerald Meadows (2016 73 Taxmann.com 241) which was agitated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cases have adopted an approach more in consonance with the statutory scheme. That means we must hold that Kaushalya does not lay down the correct proposition of law. Question No. 2: Has Kaushalya failed to discuss 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural 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 with approval its earlier judgment in State of Orissa v. Dr. Binapani Dei [AIR 1967 SC 1269]. 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 anevent, 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-applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal position, since no specific charge was framed either in the show-cause notice or in the body of penalty order and there was failure on the part of Ld. AO to frame specific charge against the assessee, the penalty would not be sustainable in the eyes of law. By deleting the impugned penalty, we allow the appeal. Consequently, going into the merits of the penalty has been rendered academic in nature. 16. Similar are the facts in all the other years and impugned order is common order for all the years. The show-cause notices as well as penalty orders are substantially on the same line except for change in figures. The penalty, upon confirmation by Ld. CIT(A), is in further appeal before us. Facts being pari-materia the same as in AY 1998-99, the penalty for all these years stand deleted on legal grounds. All the appeals stand allowed on similar lines. 18 . The assessee had also relied upon the decision of ITAT Chennai Benches in the case of Shri R. Sathiamurthy in ITA No.2197/Chny/2016 order dated 25.05.2022, wherein, the Tribunal under identical set of facts held as under: 6. We noted that this issue has been considered by the Hon'ble Karnataka High Court in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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