MR. AMRISH MANOJ DHUPELIA,MUMBAI vs. DCIT CC 1(1), MUMBAI

“1. On the facts and circumstances of the case and in law, the Learned CIT(A)-47, Mumbai erred in confirming the levy of penalty U/s 271(1)(c) r.w. Explanation 1(A) of Rs.93,707/- on addition of notional interest income of Rs.3,03,259/- accuring on alleged deposit of ₹2,34,64,398/- with LGT Bank Liechtenstein in the name of Ambrunova Trust, without appreciating that

At the outset, the learned Counsel for the assessee took us through ground raised in regard to the issue of jurisdiction that the AO has initiated penalty for both the limbs i.e. for concealment of particulars of income as well as for furnishing of inaccurate particulars of income. This appeal relates to levy of penalty by the AO under section 271(1)(c) of the Act in respect of interest income received from Ambrunova Trust, Vaduz, amounting to ₹3,03,259/-. The AO levied the penalty for concealment of income and issued notice vide order dated 25.03.2013 under section 274 read with section 271(1)(c) of the Act. Aggrieved, assessee preferred the appeal before CIT(A), who confirmed the penalty levied by the Assessing Officer.

We have heard the rival contentions and gone through the facts and circumstances of the case. We also gone through the notice issued under section 274 read with Section 271(1)(c) of the Act dated 25.03.2013 and there is no striking off of inappropriate words or paragraphs, whether the penalty is initiated for concealing the particulars of income or for furnishing of inaccurate particulars of “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

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 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.”

We noted that the Hon’ble Bombay High Court has taken cognizance of the decision of CIT v. Smt. Kaushalya [1994] 216 ITR 660 (Bom) and CIT v. Samson Perinchery [2017] 392 ITR 4 (Bom.).