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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI SANJAY GARG, HON’BLE & DR. MANISH BORAD, HON’BLE
O R D E R
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal has been filed by the assessee is directed against the order of the National Faceless Appeal Centre (hereinafter ‘the ld. CIT(A)’) passed u/s 250 of the Income Tax Act, 1961 (hereinafter ‘the Act’), dt. 06/05/2023, for Assessment Year 2003-04.
When the case was called out for hearing, none appeared on behalf of the assessee. However, written submission was filed on 31/07/2023. We, therefore, proceed to adjudicate the appeal on the basis of the available records ex-parte qua the assessee. The assessee has raised the following grounds of appeal:- “1. That the Learned CIT(A) has erred in law and on facts in confirming the penalty of Rs.5,02,635/- imposed by the income tax officer ward -45(2), Kolkata u/s 271(1)(c) of the income tax act, 1961.
2. That the appellant craves leave to add or amend any ground of appeal at or before the hearing of the appeal.”
Assessment Year: 2003-04 Sushma Tandon 2 3. Facts in brief are that the assessee is an individual and declared income from capital gain and other sources at Rs.4,04,950/- declared in the return for Assessment Year 2003-04 filed on 30/07/2003. Thereafter, assessment proceedings were carried out u/s 143(3)(ii) r.w.s. 147 of the Act and income assessed at Rs.27,55,950/- vide order dt. 30/12/2010. Penalty proceedings were initiated and notice u/s 274 was issued on 30/12/2010 followed by framing of penalty order on 20/05/2014 levying penalty at Rs.5,02,635/-, for concealment of particulars of income and furnishing inaccurate particulars with regard to the addition made in the hands of the assessee. Aggrieved the assessee preferred appeal before the ld. CIT(A) but failed to succeed.
Now, the assessee is in appeal before this Tribunal.
Detailed written submissions have been filed by the assessee along with the paper book containing 75 pages which interalia includes copy of the notice issued u/s 274 r.w.s. 271(1)(c) of the Act. The submissions of the assessee indicates that the notice issued u/s 274 of the Act did not indicate as to whether the Assessing Officer is satisfied that the case of the assessee involves concealment of particulars of income or furnishing of inaccurate particulars of income. It is also submitted that both the elements were mentioned in the showcause notice but one of the element not applicable to the assessee was not struck off. Reliance has been placed on the decision in the case of Chandra Prakash Bubna vs. Income-tax Officer, Ward -27(3), Kolkata, in support of the contention that the impugned penalty proceedings are Assessment Year: 2003-04 Sushma Tandon 3 bad in law because the irrelevant charge raised against the assessee in the notice was not struck off.
On the other hand, the ld. D/R has also filed written submissions wherein reference has been made to the provisions of Section 292B of the Act and also reference has been made in the case of CIT vs. Jagat Novel Exhibitors (P.) Ltd. [2012] 18 taxmann.com 138 (Delhi) as well as that of Hon’ble Madras High Court in the case of Sundaram Finance Ltd. vs. ACIT [2018] 93 taxmann.com 250 (Madras).
We have heard rival contentions and perused the material placed before us. Penalty levied u/s 271(1)(c) of the Act at Rs. 5,02,635/- is in challenge before us. The assessee through its written submission has contended that the notice u/s 274 r.w.s. 271 of the Act is bad in law as the specific charge has not been levelled against the assessee as to whether the penalty has been levied for concealing the particulars of income or furnishing inaccurate particulars of income. The showcause notice u/s 274 of the Act dt. 30/12/2011, is reproduced below:-
[this space has been left blank intentionally] P.T.O.
Assessment Year: 2003-04 Sushma Tandon 4
From perusal of the above notice, we find that both the elements for levying penalty u/s 271(1)(c) of the Act i.e., furnishing of inaccurate particulars of income as well as concealment of particulars of income are mentioned but one of the element not applicable to the assessee has not been struck off. In these given condition, both the sides have referred and relied on the judicial precedents. However, in view of judgment of the Hon’ble Supreme Court in the case of CIT v.
Assessment Year: 2003-04 Sushma Tandon 5 Vegetable Products Ltd. [1973] 88 ITR 192 (SC), if two reasonable constructions of a tax provision are possible, then the construction which favors the tax payer, must be adopted. In the instant case, we find that the Hon’ble High Court of Bombay in the case of Mohd. Farhan A. Shaikh vs. DCIT reported in [2021] 125 taxmann.com 253 (Bombay), similar issue has been considered at length by the Hon’ble Court and plethora of judgments have been discussed. The Hon’ble Court has held in favour of the assessee and relevant finding is extracted below:- “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 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.
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 of law embody the principles of natural 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".
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] 27 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 an event, although no express provision is laid down on this behalf, compliance with principles of natural justice would Assessment Year: 2003-04 Sushma Tandon 6 be implicit. If a statue contravenes the principles of natural justice, it may also be held ultra vires Article 14 of the Constitution.
As a result, we hold 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.”