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Income Tax Appellate Tribunal, ‘C‘ BENCH
Before: SHRI MAHAVIR SINGH & SHRI M.BALAGANESH
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2009-10 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-38, Mumbai in appeal No.CIT(A)-38/ITO-26(2)(4)/IT-418/2014-15 dated 27/06/2019 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act).
The only effective issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s.271(1)(c) of the Act in the facts and circumstances of the instant case.
2.1. We also find that assessee has raised the following additional grounds of appeal:-
“1. On the facts and in the circumstances of the case & in law, the penalty proceedings initiated vide notice u/s. 271(1)(c ) dated 29-12-2011 is invalid and bad in law. 2. On the facts and in the circumstances of the case and in law, the penalty order dated 24-03-2015 passed u/s 271(1)(c) is invalid and bad in law. The Appellant craves leave to add, to alter, to delete and/or to amend any of the above grounds of appeal at any time.”
We have heard rival submissions and perused the material available on record. We find that the additional grounds raised by the assessee are purely legal issues and does not involve verification of facts and hence, the same are hereby admitted and taken up for adjudication in the light of the decision of the Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd., reported in 229 ITR 383.
3.1. We find that the ld. AR argued that the penalty notice issued us/274 r.w.s. 271(1)(c) of the Act dated 29/12/2011 had not struck off irrelevant portion thereon i.e. to say that the ld. AO had not specified whether the penalty is initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income by the assessee. Accordingly, the ld. AR argued that the show-cause notice issued by the ld. AO is defective and hence, argued for cancellation of the said penalty. We find that this issue is no longer res-integra in view of the Full Bench decision of the Hon’ble Jurisdictional High Court in the case of Mohd. Farhan A Shaikh vs. DCIT reported in 125 Taxmann.com 253 dated 11/03/2021, wherein it had been held that a defect in the notice issued u/s.274 r.w.s. 271(1)(c) of the Act in not striking off irrelevant portion thereon would vitiate penalty proceedings. The relevant operative portion of the said judgment is reproduced as under:-
“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 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.”
3.2. We find that the Hon’ble Jurisdictional High Court in the aforesaid decision had duly considered its earlier decision of Ventura Textiles Ltd dated 12.06.2020 reported in 117 Taxmann.com 182 which had been heavily relied upon by the ld. DR before us. Hence, we hold that the reliance placed by the ld DR on this decision of Ventura Textiles reported in 117 Taxmann.com 182 would not advance the case of the Revenue. Moreover, we find that the decision of the Hon’ble Jurisdictional High Court in the case of Mohd. Farhan A Shaikh referred to supra was rendered by Full Bench of Hon’ble Jurisdictional High Court which would supercede the Division Bench Judgment of the Hon’ble Jurisdictional High Court. In view of the same, respectfully following the aforesaid Full Bench decision of the Hon’ble Jurisdictional High court, we direct the ld. AO to delete the levy of penalty u/s.271(1)(c) of the Act. Accordingly, the grounds raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced on 02/ 07 /2021 by way of proper mentioning in the notice board.