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TMI Blog2025 (2) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... has failed to appreciate that there was no valid action U/S 132 of the IT Act consequently the assessment order passed by the Ld AO u/s. 153A is bad in law and wrong on facts. 3. That the assessment framed is against the scheme of the Act whereby the reassessment in such search cases is to be confined to the additions and disallowances consequent to the material found during the course of the search and the material collected/available with the AO and relatable to such evidences and does not give power to the AO to re-appraise the already settled issues and the completed assessment. 4. That the Ld CIT Appeal II has failed to appreciate that impugned assessment order passed by the learned assessing officer is against the principles of natural justice and has been passed without affording reasonable opportunity of being heard. 5. That the Ld CIT Appeal II has failed to appreciate that on the facts and circumstances of the case, the various observations and findings of the learned assessing officer in the impugned assessment order is irrelevant and vitiated in the law. 6. That on the facts and circumstances of the case and the provision of law the Ld CIT Appeal II has failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the initiation of proceedings u/s 271(1)(C) is illegal and bad in law. 2. That on the facts and circumstances of the case and the provision of law the Ld CIT(Appeal) has failed to appreciate that the impugned penalty order passed by learned assessing officer u/s 271(1)(C) is illegal, bad in law, time barred, without jurisdiction and wrong on facts. 3. That on the facts and circumstances of the case and the provision of law the Ld.CIT(Appeal) has failed to appreciate that impugned penalty order passed by the learned assessing officer is against the principles of natural justice and has been passed without affording reasonable opportunity of being heard. 4. That on the facts and on the circumstances of the case and the provision of law the Ld CIT Appeal has erred in sustaining the penalty of Rs. 7,52,866/-u/s 271(1)(c) of the Act. 5. That the Appellant craves the right to amend, append, delete any or all grounds of appeal." ITA No. 1638/Del/2010 (A.Y. 2005-06) 3. Brief facts of the case are that, an assessment order came to be passed on 31/12/2007 u/s 153A/143(3) of the Income Tax Act, 1961 ('Act' for short) by assessing the income of the Assessee at Rs. 29,86,479/- as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1 But it is a fact that appellant except producing the books of account maintained, sales and purchase bahis and stock register, has not been able to substantiate various debits made in the trading account and P&L Account by producing the relevant bills and vouchers. In the absence of bills and vouchers entries made in books/bahis cannot be verified and therefore, book results cannot be accepted as such." 27. The ld CIT(A) has also referred to the statement of Shri Abhay Gupta dated 03.05.2006, wherein the assessee along with all other family members have admitted that they are not disclosing correct gross-profit rate in all group concerns. However in the earlier part of the order, he has observed that so far as the instant year is concerned, the AO has not brought on record any material to point out defect in the books of account except saying that sales and purchase vouchers were not produced. He also observes that on verification it is ascertained for this year that there is no statement either of the appellant or of any other persons to suggest sales are unrecorded. He accordingly has concluded as under:- "I agree with the appellant that there is no justification for reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 crore and GP at 20%. Whereas, the ldCIT(A) has accepted the declared sales and estimated GP at 12%. In the instant case, it is crystal clear that each of the figures declared, be it sales or GP are unverifiable without supporting documents. Thus the question which remains is whether the estimation made by the AO is fair and reasonable on the facts on the case. We have already noted above while disposing of ground No. 1 to 3 that as a result of search, shri Ajay Gupta on behalf of assessee has admitted to unaccounted transactions outside regular books of accounts. It is also true that there is no material indicating unaccounted transactions particularly for the instant year unearthed during search, but it cannot be denied that once book results for the year under consideration are unverifiable in the absence of supporting vouchers, bills then the factum of admission u/s 132(4) of the Act made by Shri Abhay Gupta on behalf of the assessee that unaccounted transactions took place for earlier years would be relevant consideration for estimation. In such circumstances the burden was on the assessee to show as to how the estimation as made by the AO was arbitrary or unreasonable. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to the defective notice u/s 274 read with Section 271 of the Act, wherein the limb or charge for which the notice was issued has not been properly mentioned and the irrelevant limb has not been strike off by the A.O., therefore, the Ld. Counsel for the Assessee submitted that the penalty order passed based on the defective notice cannot be sustained. 11. Per contra, the Ld. DR submitted that the Ld.CIT(A) has adjudicated all the grounds and came to just conclusion by dismissing the appeal, thus, the Ld. DR relying on the orders of the Lower Authorities sought for dismissal of the appeal. 12. We have heard the parties, perused the material on record and gave our thoughtful consideration. The Assessee has produced the notice issued u/s 274 read with Section 271 of the Act, wherein the A.O. has not mentioned the specific charge or limb for which the notice was issued and not even strike off irrelevant limb. The said Notice dated 31/12/2007 is produced by the Assessee is reproduced for ready reference. 13. On verifying the above notice issued u/s 274 read with Section 271 of the Act, it is found that the said notice is stereotype one and the AO has not specified any limb or cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iya did discuss the aspect of prejudice. As we I.T.A.No.1409/Del/2016 have already noted, Kaushaiya noted that the assessment orders already contained the reasons why penalty should be initiated. So, the assessee, stresses Kaushaiya, "fully knew in detail the exact charge of the Revenue against him". For Kaushaiya, the statutory notice suffered from neither nonapplication 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 piea 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 doses 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 prejudice to the right of opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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[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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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