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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 ..... atutory notice and an omnibus notice suffers from the vice of vagueness.
As the notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued, the penalty order passed u/s 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous. Appeal filed by the Assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... thout considering the retracted statement and even when no material is there to support the alleged surrender. 10. That on the facts and circumstances of the case and the provision law the Ld. CIT Appeal II has erred in upholding the addition of Rs. 2236679/- on account of trading results without any valid reason, basis and material. 11. That on the facts and circumstances of the case and the provision law the Ld. CIT Appeal II has erred in upholding the estimation of the total sales at Rs. 2,00,00,000/- and Gross Profit at Rs. 30,00,000/-. 12. That the Ld CIT Appeal II has failed to appreciate that on the facts and circumstances of the case, the Ld AO has erred in law in not considering the relevant material on record and has made the addition even when no adverse material is there. 13. That on the facts and circumstances of the case the learned assessing officer has erred in initiating the Penalty proceedings u/s 271(1)(C) of the Income Tax Act 1961. 14. That on the facts and circumstances of the case the interest charged U/s 234 A, 234 B and 234 C is excessive and has been wrongly and illegally charged. 15.That the Appellant craves the right to amend, append, delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the material available on record. The identical issue has been considered by the Co-ordinate Bench of the Tribunal in Assessee's own case for Assessment Year 2000- 01 to 2004-05 in Assessee's own case in ITA No. 1634 to 1637/Del/2010, wherein the Co-ordinate Bench of the Tribunal adjudicated the similar issue in following manners:- "25. Ground Nos. 4 to 10 of the assessee's appeal and ground 1(a) of revenue's appeal are inter-related and pertain to addition made on account of the rejection of trading result and adoption of estimated sales and GP rate. 26. The AO have observed that in the audited account for the year under consideration, the assessee declared sales of Rs. 69,28,582/- and Gross Profit of Rs. 7,30,961/- yielding gross profit rate of 10.55%. He has noted that the assessee produced only computerized books of account and did not produce sale-bills, purchase bills and vouchers for expenses incurred by it. He has also pointed out that the assessee has not filed confirmation from sundry creditors and debtors other than five creditors. He therefore rejected the books of account and adopted the sale at Rs. 1 crore and GP rate at 20%. He thus made an addition of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties and perused the material on record. The trading addition has been made in the instant year by the AO on the ground that book results as declared by the assessee are not verifiable, since sales bills, purchase bills and vouchers for expenses have not been produced by the appellant before him. We find that the assessee even could not produce before the ldCIT(A) the sale bills, purchase bills and vouchers for the expenses incurred by her in the relevant AY. Even before us there was no material led to assail the aforesaid factual position. In such a scenario we have no other alternate but to uphold the rejection of books of accounts as there is no material to substantiate the correctness and completeness of such books of accounts. We may mention here that thought the ld CIT(A) has correctly held at Pg. 11 in para 11.1.3.1 (supra) that in the absence of bills and vouchers, entries made in books cannot be verified, therefore book result cannot be accepted. However quite strangely he has held in Para1 11.1.3 of his order that there is no justification for rejection of books of account by observing that AO has not placed any material on record to point out defects in books. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by adopting the sales at 1 crore and GP rate at 15% for this Assessment Year. We thus allow the ground raised by the revenue and reject the ground raised by the assessee on this behalf." 7. By respectfully following the order of the Co-ordinate Bench of the Tribunal in Assessee's own case (supra), we restrict the GP rate at 15% for the year under consideration and direct the A.O. to compute the trading addition. 8. In the result, Appeal of the Assessee in ITA No. 1638/Del/2010 is partly allowed. ITA No. 1262/Del/2014 (A.Y. 2005-06) 9. Brief facts of the case are that, the assessment order came to be passed against the Assessee by making addition on account of trading results of Rs. 22,36,679/- and on account of unexplained credit of Rs. 4,52,488/-. A penalty proceedings has been initiated u/s 271(1)(c) of the Act and order of penalty came to be passed on 31/03/2011 by imposing penalty at 100% at Rs. 7,52,866/-. Aggrieved by the penalty order dated 31/03/2011, the Assessee preferred an appeal before the Ld.CIT(A). The Ld.CIT(A) vide order dated 29/01/2014 dismissed the appeal filed by the Assessee. As against the order of Ld.CIT(A) dated 29/01/2014, the Assessee preferred the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den ties on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis 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 effect that Goa Dourado Promotions and other cases have adopted an approach more in consonance with the statutory scheme. That m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat inappropriate words and paragraphs were to be deleted, but the same had not been done". Then, Dilip N. Shroff, on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. 188. We may, in this context, respectfully observe that a contravention of a mandatory condition or requirement for a communication to be valid communication is fatal, with no further proof. That said, even if the notice contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for I.T.A.No.1409/Del/2016 ambiguity. Therefore, Dilip N. Shroff disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays non application of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that "where procedural and/or substantive provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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