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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI
Before: DR. M. L. MEENA & SHRI ANIKESH BANERJEE
Deputy Commissioner of Income Tax, Vs. M/s. N.B. Hiremath Central Circle, Hubballi Renuka Niwas (Appellant) 3rd Cross, Hosur Hubballi [PAN: AABFN 2435 P] (Respondent) Appellant by Smt. Pratibha R, Advocate Respondent by Smt. Rijula Uniyal, Sr. D/R Date of Hearing 29.03.2022 Date of Pronouncement 31.03.2022 ORDER Per Bench: These captioned appeals are filed against the order of the Learned Commissioner of Income Tax (Appeals)- 2, Hubbballi, [hereinafter the “ld. CIT(A)] passed u/s 250 of the Act (hereinafter the “Act”) even dt. 20/12/2017, for the Assessment Years 2009-10, 2010-11, 2012-13, 2013-14.
The common effective grounds of appeal
raised for all the impugned assessment years are extracted for ready reference:-
1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty u/s 271(1)(c) holding that penalty notice has not been issued for specific charge ignoring the fact that the purpose of initiating the penalty proceedings was clearly brought out in the assessment order?
2 Assessment Year: 2009- Assessment Year: 2010-11 I.T.A. No. 113/PAN/2018 Assessment Year: 2012-13 I.T.A. No. 114/PAN/2018 Assessment Year: 2013-14 M/s. N.B. Hiremath 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) without considering the fact that the assessee participated in the penalty proceedings and was well aware of the reasons of initiating the penalty proceedings as noted in the assessment order and at no stage of penalty proceedings before the Assessing Officer raised the issue of non-ticking of relevant column in penalty show cause notice as held by the Hon'ble High Court of Karnataka in the case of Sri Durga Enterprises (2014) 44 Taxmann 442?”
The sole issue raised by the ld. Counsel for the assessee in all these appeals is the preliminary objection challenging the penalty imposed u/s 271(1)(c) on the ground that the notice issued initiating the penalty proceedings being defective, the penalty imposed in pursuance of such defective notice is not sustainable in law. He has placed on record, a copy of the said notices issued by the A.O. u/s 271(1)(C) of the Act, even dt. 30/11/2016, and pointed out that the irrelevant portion having been not struck off by the A.O. in the said notices, the exact charge/s against the assessee as to whether he concealed the particulars of his income or furnishing inaccurate particulars of such income was not clear. The notices for all the assessment years are extracted for ready reference:-
P.T.O.
7 Assessment Year: 2009- Assessment Year: 2010-11 I.T.A. No. 113/PAN/2018 Assessment Year: 2012-13 I.T.A. No. 114/PAN/2018 Assessment Year: 2013-14 M/s. N.B. Hiremath 4. We have heard rival submissions, perused the material available on record, the orders of the lower authorities as well as the case-law cited.
After perusing the notices issued under section 271(1)(c) for all the impugned assessment years, even dt. 30/11/2016, it is apparent that the irrelevant portion having been not struck off by the A.O. in the said notices and the exact charge/s against the assessee as to whether he concealed the particulars of his income or furnishing inaccurate particulars of such income was not clear. The Hon’ble Bombay High Court in the case of Mohd. Farhan A. Shaikh vs. DCIT reported in [2021] 125 taxmann.com 253 (Bombay) wherein a similar issue has been decided by the Hon’ble High Court by framing a question of law, and after taking into consideration, the relevant decision of various High Courts as well as the Hon’ble Apex Court, holding as under:
“Question No. 3: What is effect of Supreme Court's decision in Dilip N. Shroff v. Jt. CIT [2007] 161 Taxman 218/291 ITR 519 (SC), on issue of non-application of mind when irrelevant portions of printed notices are not struck off ? ■ In Dilip N. Shroff, case (supra) for the Supreme Court, it is of 'some significance that in the standard Pro-forma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done'. Then, Dilip N. Shroff, case (supra) 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. [Para 187] ■ It may, in this context, be respectfully observed 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 ambiguity. Therefore, Dilip N. Shroff case (supra) 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. [Para 188] ■ In State of U.P v. Sudhir Kumar Singh 2020 SCC Online SC 847 the Supreme Court 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 8 Assessment Year: 2009- Assessment Year: 2010-11 I.T.A. No. 113/PAN/2018 Assessment Year: 2012-13 I.T.A. No. 114/PAN/2018 Assessment Year: 2013-14 M/s. N.B. Hiremath 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'. [Para 189] ■ 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, Rajesh Kumar v. CIT [2007] 2 SCC 181, may be referred to 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 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. [Para 190] ■ As a result, it is held that Dilip N. Shroff Case (supra) 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. [Para 191]"
In our opinion, the decision rendered by the Hon’ble Bombay High Court in the case of Mohd. Farhan A. Shaikh vs. DCIT (supra) is squarely applicable in the present case and even the Ld. DR has not disputed this aspect of the matter. We, therefore, respectfully following the said decision of the Hon’ble Bombay High Court quash the impugned penalty imposed by the Assessing Officer under section 271(1)(c) of the Act and confirmed by the Ld. CIT(A).
In the result, all these appeals of the revenue are dismissed.