DY CIT CC 4 (1), MUMBAI V. CENTAUR MERCHANTILE PVT LTD., MUMBAI

ITA 324/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5373 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR SINGH CHAUHAN
• Keywords: Bogus purchase; Search and seizure; Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c); 143(3); 274; 13; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI RAVISH SOOD ( JM) I.T.A. NOS. 324,325 & 326/MUM/2020 (ASSESSMENT YEARS : 2008-09,2009-10 & 2010-11 ) DCIT, CC - 4 (1) ROOM NO.1918, 19 TH FLOOR, AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021 VS . CENTAUR MERCHANTILE PVT.LTD. 10 TH FLOOR, 215 ATRIUM ANDHERI KURLA ROAD ANDHERI(E) MUMBAI-400 059 PAN : AACCC4199F ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA DEPARTMENT BY SHRI JASBIR SINGH CHAUHAN DATE OF HEARING 0 7 /09 /2021 DATE OF PRONOUNCEMENT 20 /09 /2021 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE REVENUES APPEALS DIRECTED AGAINST RESPEC TIVE ORDERS OF LEARNED CIT(A) FOR RESPECTIVE ASSESSMENT YEARS. 2. SINCE THE ISSUES ARE COMMON AND CONNECTED AND TH E APPEALS WERE HEARD TOGETHER, THESE HAVE BEEN CONSOLIDATED AND DISPOSED OFF TOGETHER FOR THE SAKE OF CONVENIENCE. 3. SINCE, GROUNDS ARE IDENTICAL, WE ARE REFERRING TO GROUNDS FROM ITA NO. 324/MUM/2020 FOR AY 2008-09. THE GROUNDS OF APPEAL ARE READ AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS CORRECT IN DELETING THE PENALTY U/S 271(1)(C) OF TH E IT ACT, 1961 ON TECHNICAL GROUND BY HOLDING THAT PENALTY NOTICE WAS NOT VALID AS THE RELEVANT PORTION WAS NOT STRUCK OFF, WITHOUT CONSIDERING THAT IN THE ASSESSMENT ORDER PE NALTY WAS INITIATED FOR 'FURNISHING CENTAUR MERCANTILE PVT.LTD. 2 INACCURATE PARTICULARS OF INCOME' AND IN THE PENALT Y ORDER ALSO THE PENALTY WAS IMPOSED FOR THE SAME DEFAULT? 2. WHETHER LD. CIT(A) IS CORRECT IN LAW HOLDING THAT T HE NOTICE IS INVALID DUE TO NON- STRIKING OF IRRELEVANT COLUMN IN THE NOTICE WHEN NO PREJUDICE IS CAUSED TO THE ASSESSES, AS THE ASSESSEE WAS FULLY AWARE OF HIS DE FAULT REGARDING FURNISHING OF INACCURATE PARTICULARS OF INCOME AS IS CLEARLY MENT IONED IN ASSESSMENT ORDER BY CLAIMING BOGUS PURCHASES AND THE ASSESSEE WAS OFFER ED ADEQUATE OPPORTUNITY BEFORE THE ASSESSING OFFICER TO SET OUT HIS DEFENSE AGAINS T LEVY OF PENALTY? 3. WHETHER LD. CIT(A) IS CORRECT IN LAW BY FOLLOWING T HE DECISION OF CIT VS SSA EMERALED MEADOWS CASE WHERE THE DISMISSAL OF THE CA SE BY HON'BLE APEX COURT IS DISMISSAL SIMPLICITER AND THE SAME IS NOT BINDING I N VIEW OF THE DECISION OF HON'BLE SC AS HELD IN SHANMUGAVEL NADAR 263ITR 658 (SC)? 4. WHETHER LD. CJT(A) IS CORRECT IN CANCELLING PENALTY BY IGNORING SEVERAL DECISIONS LIKE CIT VS CHANDULAL 152 ITR 238 (AP) AND SRINIVAS A PITTY & SONS VS CIT 173 FTR 306 WHERE IT WAS HELD THAT NON STRIKING OFF IRR ELEVANT PORTION CANNOT RENDER PENALTY NOTICE AS INVALID? 5. WHETHER LD. CIT(A) IS CORRECT IN CANCELLING PENA LTY BY FOLLOWING THE DECISION OF SUNDARAM FINANCE LTD. VS CIT 403 ITR 407 (MADRAS) W HERE HON'BLE MADRAS HC HAS CONSIDERED THE DECISION OF SSA EMERALED MEADOWS AND CONFIRMED THE PENALTY LEVIED BY DEPARTMENT BY HOLDING THAT NO PREJUDICE IS CAUSED T O THE ASSESSEE BY NOT STRIKING OFF THE IRRELEVANT PORTION OF PENALTY NOTICE. THE SLP FILED BY THE ASSESSEE HAS BEEN DISMISSED BY HON'BLE SC ( 2018 99 TAXMAN.COM 152)?' 4. BRIEF FACTS OF THE CASE ARE AS UNDER:- THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT COMPANY BELONGS TO KANAKIA GROUP, WHERE A SEARCH AND SEIZURE ACTION U/S. 132(1 ) OF THE ACT WAS CARRIED OUT ON 29.03.2011. IN COURSE OF THE SEARCH ACTION, EVIDENC ES WERE FOUND THAT THE PURCHASES CLAIMED BY THE ASSESSEE FOR AN AGGREGATE AMOUNT OF RS. 17,05,48,209/- FOR THE YEARS RELEVANT TO A.YS.2007-08 TO 2011-12 ARE BOGUS. ON T HESE EVIDENCES UNEARTHED AT THE TIME OF THE SEARCH ACTION, STATEMENT WAS RECORDED U /S.132(4) OF SHRI RASESH KANAKIA, MANAGING DIRECTOR WHEREIN HE ACCEPTED THAT THE SAID PURCHASES ARE BOGUS. A DECLARATION OF ADDITIONAL INCOME OF RS.17.05 CRORES IN RESPECT OF THESE BOGUS PURCHASES WAS ALSO MADE IN THE HANDS OF THE ASSESSE E COMPANY FOR THE RELEVANT YEARS. THE ASSESSMENT U/S.143(3) R.W.S.153A WAS COMPLETED BY THE AO FOR THE RELEVANT YEAR, AFTER TREATING THE SAID PURCHASES BOOKED IN T HE RELEVANT YEAR TO BE BOGUS. THE ASSESSEE HAD NOT BOOKED ANY INCOME FOR THE RELEVANT YEAR SINCE IT WAS FOLLOWING CENTAUR MERCANTILE PVT.LTD. 3 PERCENTAGE COMPLETION METHOD OF ACCOUNTING AND THE PROJECT WAS NOT SUBSTANTIALLY COMPLETED, RESULTANTLY THE ENTIRE BOGUS PURCHASES B OOKED IN THE RELEVANT YEAR, WERE CAPITALIZED AS CLOSING WORK IN PROGRESS (CWIP). THE AO, THEREFORE DID NOT MAKE ANY ADDITION TO THE TOTAL INCOME OF THE ASSESSEE BUT ON LY REDUCED THE AMOUNT OF THE BOGUS PURCHASES FROM THE CWIP SHOWN BY THE ASSESSEE FOR T HE RELEVANT YEAR. WHILE COMPLETING THE ASSESSMENT, THE AO ALSO INITIATED PE NALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE DID NOT FILE AN Y APPEAL AGAINST THE ASSESSMENT ORDER U/S. 143(3) R.W.S.153AFOR THE RELEVANT YEAR, AND TO GIVE EFFECT TO THE AMOUNT OF BOGUS PURCHASES, THE ASSESSEE APPROPRIATELY REDUCED ITS OPENING WIP IN THE YEAR RELEVANT TO A.Y.2011-12. IN THE PENALTY PROCEEDINGS, THE AO OBSERVED THAT T HE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN ITS RETURN FOR THE RELEVANT YEAR, BY CLAIMING BOGUS PURCHASES IN ITS BOOKS AND THEREBY INFLATING ITS CW IP. HE FURTHER OBSERVED THAT THE ASSESSEE HAS ADMITTED THAT IT HAD CLAIMED BOGUS PUR CHASES FOR THE SAID VARIOUS YEARS, WHICH WERE REVERSED IN ITS BOOKS IN THE YEAR TO REL EVANT TO A.Y.2011-12, THIS LEAVES LITTLE DOUBT THAT THE PURCHASE ENTRIES ORIGINALLY M ADE WERE INACCURATE AND THEREFORE THE ASSESSEE IS LIABLE FOR PENALTY U/S.271(1)(C). T HE ARGUMENT OF THE ASSESSEE THAT EVEN AFTER THE ASSESSMENT U/S. 143(3) R.W.S.153A, ITS IN COME REMAINED UNCHANGED AND THEREFORE IT CANNOT BE SAID THAT ANY TAX WAS SOUGHT TO BE EVADED, WERE REJECTED BY THE AO ON THE GROUND THAT IT HAD NOT BOOKED ANY INCOME FOR THE RELEVANT YEAR ONLY BECAUSE IT WAS FOLLOWING PERCENTAGE COMPLETION METH OD OF ACCOUNTING AND THE PROJECT WAS NOT SUBSTANTIALLY COMPLETED, RESULTANTL Y THE ENTIRE BOGUS PURCHASES WERE CAPITALIZED AS CWIP. THE AO FINALLY LEVIED PENALTY U/S.271(1)(C) IN RESPECT OF THE BOGUS PURCHASES CLAIMED FOR THE RELEVANT YEAR. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). THE FAA NOTED THAT AS PE R THIS EXPLANATION 5A TO SEC. 271(1) WHICH IS APPLICABLE FOR SEARCHES CONDUCTED A FTER 01.06.2007, AN ASSESSEE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME, IF THE ASSESSEE IS FOUND TO BE OWNER OF ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMEN TS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER T RANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH. THE FAA ALSO NOTED THAT IN THE STATEMENT ON OATH RE CORDED U/S. 132(4) OF SHRI RASESH KANAKIA, MD, IT WAS ACCEPTED THAT THE SAID P URCHASES OF RS. 17,05,48,209/-ARE BOGUS AND THE SAID INCOME WAS ALSO SURRENDERED. ACC ORDINGLY, THE FAA HELD THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S 271(1)(C) FOR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. AS REGARDS, THE ARGUMENT OF THE ASSESSEE TH AT SINCE NO ADDITION HAS BEEN MADE BY THE AO WHILE COMPLETING THE ASSESSMENT, PEN ALTY IS NOT LEVIABLE, THE FAA AGREED WITH THE VIEW OF THE AO THAT THE ASSESSEE HA D NOT BOOKED ANY INCOME FOR THE RELEVANT YEAR ONLY BECAUSE IT WAS FOLLOWING PERCENT AGE COMPLETION METHOD OF ACCOUNTING AND THE PROJECT WAS NOT SUBSTANTIALLY CO MPLETED, RESULTANTLY THE ENTIRE BOGUS PURCHASES WERE CAPITALIZED AS CWIP. IT WAS FU RTHER HELD BY THE FAA THAT THE CENTAUR MERCANTILE PVT.LTD. 4 CWIP HAS BEEN REDUCED BY THE AO FOR THE RELEVANT YE AR WHICH WILL HAVE A CONSEQUENTIAL EFFECT OF INCREASING THE PROFITS IN T HE SUBSEQUENT YEARS WHEN THE INCOME IS BOOKED AS PER THE METHOD OF ACCOUNTING FO LLOWED BY THE ASSESSEE. THE FAA EQUATED THE REDUCTION OF CLOSING WIP TO REDUCTI ON OF LOSS AS ENVISAGED IN EXPLANATION 4 TO SECTION 271(1). THE FAA ALSO REJEC TED THE RELIANCE PLACED BY THE ASSESSE ON THE DECISION IN THE CASE OF NALWA SONS INVESTMENTS LTD. (327 ITR 543) BY DISTINGUISHING THAT IN THE SAID CASE, THE INCOME WAS ASSESSED AS PER PROVISIONS OF MAT U/S.115JB AND NOT AS PER THE NORMAL PROVISIONS OF THE ACT. FINALLY, THE FAA CONFIRMED THE PENALTY LEVIED BY THE AO U/S.271(1)(C ) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF THE FAA CONFIRMING THE PENALTY LEVIED BY THE AO, THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE THE HON'BL E ITAT. THE HON'BLE ITAT AGREED WITH THE FINDINGS OF THE FAA THAT THE PROVISIONS OF EXPLANATION 5A ARE ATTRACTED IN THE CASE OF THE ASSESSEE. THE HON'BLE ITAT ALSO AGR EED WITH THE VIEW OF THE FAA THAT THE RATIO OF THE DECISION IN THE CASE OF NALWA SONS INVESTMENTS LTD. (SUPRA) CANNOT BE APPLIED SINCE IN THE SAID CASE THE INCOME WAS COMPU TED UNDER THE PROVISIONS OF MAT U/S.115JB WHEREAS, IN THE INSTANT CASE, THE INCOME WAS COMPUTED AS PER THE NORMAL PROVISIONS OF THE ACT. HOWEVER, IN COURSE OF THE PROCEEDINGS BEFORE THE HON'BLE ITAT, THE ASSESSEE HAD ALSO RAISED AN ADDITIONAL GROUND THAT THE PENALTY O RDER IS BAD IN LAW SINCE THE RELEVANT LIMB UNDER WHICH PENALTY HAS BEEN LEVIED WAS NOT ST RUCK OFF IN THE NOTICE ISSUED U/S.271 (1 )(C). THE HON'BLE ITAT OBSERVED THAT THI S ADDITIONAL GROUND OF APPEAL WAS NOT RAISED BEFORE THE FAA AND THEREFORE HE NEVER HA D AN OPPORTUNITY TO EXAMINE THE SAME. THE HON'BLE ITAT THEREFORE REMITTED THE ISSUE TO THE FILE OF THE FAA TO GIVE A FINDING ON THIS ADDITIONAL GROUND OF APPEAL AFTER G IVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 . THE LD.CIT(A) IN THE PRESENT PROCEEDINGS HAS GIV EN FOLLOWING FINDING:- THE CONTENTIONS OF THE ASSESSEE HAVE BEEN DULY C ONSIDERED. AS DISCUSSED EARLIER, THE ISSUE WAS REMITTED BY THE HON'BLE ITAT TO THE F AA ON A LIMITED POINT FOR EXAMINING AS TO WHETHER THE PENALTY LEVIED U/S.271( 1)(C) WAS BAD IN LAW SINCE THE IRRELEVANT LIMB WAS NOT STRUCK OFF IN THE NOTICE IS SUED U/S.271(1)(C). AS PER THE DIRECTIONS OF THE HON'BLE ITAT, THE ISSUE AS TO WHE THER THE IRRELEVANT PORTION OF THE NOTICE U/S.271 (1)(C) HAS BEEN STRUCK OFF OR NOT, W AS EXAMINED IN COURSE OF THE PRESENT PROCEEDINGS. IT IS NOTED THAT IN THE NOTICE ISSUED BY THE AO, THE IRRELEVANT LIMB HAS NOT BEEN STRUCK OFF. AS NOTED EARLIER, THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE UNDERSIGNED THAT THE HON'BLE ITAT IN THE CASES OF I TS RELATED CONCERNS, M/S. SARANG PROPERTY DEVELOPERS P. LTD. AND M/S. KANAKIA HOSPIT ALITY P. LTD., ON THE SAME SET OF FACTS, HAS DELETED THE PENALTY LEVIED U/S.271(1)(C) FOR NOT STRIKING OFF THE IRRELEVANT CENTAUR MERCANTILE PVT.LTD. 5 LIMB AND THEREFORE IT WAS CONTENDED THAT JUDICIAL D ISCIPLINE DEMANDS THAT THE PENALTY LEVIED IN THE CASE OF THE ASSESSEE SHOULD ALSO BE D ELETED. 6. FINALLY LD.CIT(A) CONCLUDED AS UNDER:- IN THE INSTANT CASE, THE HON'BLE TRIBUNAL ON THE SAME SET OF FACTS HAS ALREADY ADJUDICATED AGAINST THE REVENUE IN THE CASES OF KAN AKIA HOSPITALITY PVT. LTD. FOR A,YS.2008-09 TO 2010-11 AND SARANG PROPERTY DEVELOP ERS PVT. LTD. FOR A.YS.2009- 10 TO 2011-12 AND DELETED THE PENALTIES LEVIED U/S. 271(1)(C). MOREOVER, NO STAY HAS BEEN GRANTED BY ANY HIGHER COURT ON THE OPERATION O F THE ORDERS OF THE TRIBUNAL IN THE SAID CASES OF M/S. KANAKIA HOSPITALITY P. LTD. AND M/S. SARANG PROPERTY DEVELOPERS P. LTD. AND HENCE, THE SAID DECISIONS ARE BINDING O N THE UNDERSIGNED. THEREFORE, JUDICIAL DISCIPLINE REQUIRES THAT THE DECISION OF T HE HON'BLE ITAT IN THE SAID CASES OF M/S. KANAKIA HOSPITALITY P. LTD. AND M/S. SARANG PR OPERTY DEVELOPERS P. LTD. BE FOLLOWED IN THE CASE OF THE ASSESSEE ALSO, SINCE AS DISCUSSED IN THE INITIAL PARAS THAT THE FACTS ARE ALMOST IDENTICAL WITH THE FACTS OF TH E SAID 2 CASES AND EMERGING FROM THE SAME SEARCH ACTION ON THE ASSESSEE GROUP. IN VIEW OF THE AFORESAID DISCUSSION, THOUGH IN P RINCIPLE THE UNDERSIGNED DOES NOT AGREE THAT THE PENALTY IN THE CASE OF THE ASSESSEE IS BAD IN LAW ON ACCOUNT OF NOT STRIKING OFF THE IRRELEVANT LIMB OF THE NOTICE ISSU ED U/S.271(1)(C), HOWEVER IN VIEW OF OF THE HON'BLE ITAT IN THE CASES OF THE RELATED CON CERNS OF THE ASSESSEE, M/S. SARANG PROPERTY DEVELOPERS P. LTD. AND M/S. KANAKIA HOSPITALITY P. LTD., THE PENALTY LEVIED U/S.271(1)(C) FOR THE RELEVANT YEAR IN THE CASE OF THE ASSESSEE ON THE SAME SET OF FACTS, IS DELETED. 7. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BE FORE US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ISSUE IS FULLY COVERED IN F AVOUR OF THE ASSESSEE BY HONBLE BOMBAY HIGH COURT DECISION IN MOHAMMED FARHAN A. SHAIKH VS. PCIT (125 TAXAMNN.COM 253) . LD.DR STATED THAT THIS DECISION WAS NOT CITED BEF ORE LD.CIT(A). HOWEVER, HE DID NOT DISPUTE THE PROPOSIT ION THAT RELEVANT LIMBS OF FRAMING OF CHARGE UPON THE ASSESSEE WAS NOT SPECIF IED IN THE NOTICE OF PENALTY. WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF FULL BENCH DECISION BY HONBLE BOMBAY HIGH COURT IN THE CASE OF FARHAN SHEIKH (SUPRA). WE MAY GAINFULLY REFER TO THE SAID ORDER AS UNDER:- CENTAUR MERCANTILE PVT.LTD. 6 WE HAVE ALREADY DISCUSSED WHAT CONSTITUTES THE RATI O DECIDENDI OR CASE HOLDING AND WHAT IT TAKES TO B A PRECEDENT. NOW, WE WILL SEE WHAT MAKES A PRECEDENT CONFLICT WITH ANOTHER. THE PRECEDENTIAL CONFLICT: 164. TO CUT THE DISCUSSION SHORT, WE WILL TAKE AID OF THE LATEST SUPREME COURT JUDGMENT ON THIS POINT. IN MAVILAYI SERVICE CO-OPER ATIVE BANK LTD. V. COMMISSIONER OF INCOME TAX[2021 SCC ONLINE SC 16] ( 'MAVILAYI'), THE QUESTION CONCERNS THE DEDUCTIONS A PRIMARY AGRICULT URAL CREDIT SOCIETY CAN CLAIM UNDER SECTION 80P(2)(A)(I) OF THE IT ACT, AFT ER THE INTRODUCTION OF SECTION 80P(4) OF THAT ACT. TWO DIVISION BENCHES OF KERALA HIGH COURT HAVE TAKEN CONFLICTING VIEWS THE LATTER DECISION BEING UNAWARE OF THE FORMER ONE. FINALLY, THAT PRECEDENTIAL CONFLICT STOOD RESOLVED THROUGH A FULL BENCH DECISION IN MAVILUYI SERVICE. CO-OPERATIVE BANK LTD. V. COMMISS IONER OF INCOME TAX, CATICUT [2019 (2) KHC 287]. THIS FULL BENCH DECISIO N WAS TAKEN TO SUPREME COURT. THAT IS HOW, ON 12 JANUARY 2021, A THREE-JUD GE BENCH OF THE SUPREME COURT HAS DECIDED MAVILAYI. 165. MAVILAYI HAS NOTED THAT THE FULL BENCH OF KERA LA HIGH COURT HAS REACHED ITS CONCLUSION BASED ON THE SUPREME COURT'S JUDGMENT CITIZEN COOPERATIVE SOCIETY LTD. V, ASST. CIT, HYDERABAD [( 2017) 9 SCC 364]. INDEED, MAVILAYI ACKNOWLEDGES THAT THE KERALA HIGH COURT'S FULL BENCH DID FOLLOW CITIZEN COOPERATIVE. BUT IT HOLDS THAT IN CITIZEN COOPERATIVE SOCIETY LTD., THE COUNSEL FOR THE ASSESSEE ADVANCED NO ARGUMENT THAT 'THE ASSESSING OFFICER AND OTHER AUTHORITIES UNDER THE IT ACT COULD NOT GO BEHIND THE REGISTRATION OF THE I CO-OPERATIVE SOCIETY IN ORDER TO DISCOVER AS TO WHETHER IT WAS CONDUCTING BUSINESS IN ACCORDANCE WITH ITS J BYE-LAWS'. THAT S ETS CITIZEN COOPERATIVE APART, ACCORDING TO MAVILAYI. 166. IN THIS CONTEXT, MAVILAYI HOLDS THAT ONLY THE RATIO DECIDENDI OF A JUDGMENT BINDS AS A PRECEDENT. TO ELABORATE ON THIS PROPOSITION, MAVILAYI REFERS TO STATE OF ORISSA V. SUDHANSHU SEKHAR MISRA [(1968) 2 SCR 154], WHICH HOLDS THAT A DECISION IS ONLY AN AUTHORITY FO R WHAT IT ACTUALLY DECIDES. WHAT IS OF THE ESSENCE IN A DECISION IS ITS RATIO A ND NOT EVERY OBSERVATION FOUND THEREIN, NOR WHAT LOGICALLY FOLLOWS FROM THE VARIOUS OBSERVATIONS MADE IN IT. THEN, IT QUOTES DALBIR SINGH V. STATE OF PUN JAB[1919) 3 SCR 1059]. THOUGH IT WAS FROM THE DISSENTING JUDGMENT, MAVILAY I POINTS OUT, IT REMAINED UNCONTRADICTED BY THE MAJORITY: ACCORDING TO THE WELL-SETTLED THEORY OF PRECEDENTS EVERY DECISION CONTAINS THREE BASIC INGREDIENTS: (I) FINDINGS OF MATERIAL FACTS, DIRECT AND INFERENTIAL. AN INFERENTIAL FINDING OF FACTS IS THE INFERENCE WHICH THE JUDGE DRAWS FRO M THE DIRECT OR PERCEPTIBLE FACTS; CENTAUR MERCANTILE PVT.LTD. 7 (II) STATEMENTS OF THE PRINCIPLES OF LAW APPLICA BLE TO THE LEGAL PROBLEMS DISCLOSED BY THE FACTS; AND (III) JUDGMENT BASED ON THE COMBINED EFFECT OF (I) AND (II) ABOVE.' FOR THE PURPOSES OF THE PARTIES THEMSELVES AND THEI R PRIVIES, INGREDIENT (HI} IS THE MATERIAL ELEMENT IN THE DECI SION FOR IT DETERMINES FINALLY THEIR RIGHTS AND LIABILITIES IN RELATION TO THE SUBJECT-MATTER OF THE ACTION. IT IS THE JUDGMENT THAT ESTOPS THE PART IES FROM REOPENING THE DISPUTE. HOWEVER, FOR THE PURPOSE OF THE DOCTRI NE OF PRECEDENTS, INGREDIENT (II) IS THE VITAL ELEMENT IN THE DECISIO N. THIS INDEED IS THE RATIO DECIDENDI. 167. THEN, MAVILAYI APPLIED THE ABOVE PRINCIPLE AND HELD THAT THE RATIO DECIDENDI IN CITIZEN COOPERATIVE WOULD NOT DEPEND U PON THE CONCLUSION ARRIVED AT ON FACTS IN THAT CASE. FOR THE CASE IS A N AUTHORITY FOR WHA F IT ACTUALLY DECIDES IN LAW AND NOT FOR WHAT MAY SEEM T O LOGICALLY FOLLOW FROM IT. DO GOA DOURADO PROMOTIONS AND KAUSHALYA CONFLICT? 168. AS WE HAVE SEEN GOA DOURADO PROMOTIONS CONCLUD ES THE CASE BASED ON THE REASONING GIVEN IN TAX APPEAL NO. 24/2019 (DECI DED ON 11-11-2019), SAMSON PERINCHERRY, AND NEW ERA SOVA MINE. 169. THE TAX APPEAL NO. 24/2019, DECIDED ON 11-11-2 019, RELATES TO THE PRINCIPAL COMMISSIONER OF INCOME-TAX (CENTRAL) V. G OA COASTAL RESORTS AND RECREATION PVT. LTD. IN THAT ONE, THE LEARNED DIVIS ION BENCH HAS HELD: - 6. BESIDES, WE NOTE THAT THE DIVISION BENCH OF THI S COURT IN SAMSON(SUPRA) AS WELL AS IN NEW ERA SOVA MINE(SUPRA ) HAS HELD THAT THE NOTICE WHICH IS ISSUED TO THE ASSESSEE MUST IND ICATE 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 OR BOTH, WITH CLARITY. IF THE NOTICE IS ISSUED IN THE PRINTED FORM, THEN THE NECESSARY PORTIONS WHICH ARE NOT APPLICABLE ARE REQUIRED TO BE STRUCK OFF, SO AS TO INDICATE WITH C LARITY THE NATURE OF THE SATISFACTION RECORDED. IN BOTH SAMSON PERINCHER Y AND NEW ERA SOVA MINE, THE NOTICES ISSUED HAD NOT STRUCK OF THE PORTION WHICH WERE INAPPLICABLE. FROM THIS, THE DIVISION BENCH CO NCLUDED THAT THERE WAS NO PROPER RECORD OF SATISFACTION OR PROPER APPL ICATION OF MIND IN A MATTER OF INITIATION OF PENALTY PROCEEDINGS. 7. IN THE PRESENT CASE, AS WELL IF THE NOTICE DATED 30/09/16 (AT PAGE 33) IS PERUSED, IT IS APPARENT THAT THE RELEVANT PO RTIONS HAVE NOT BEEN STRUCK OFF. THIS COUPLED WITH THE FACT ADVERTED TO IN PARAGRAPH (5) OF THIS ORDER, LEAVES NO GROUND FOR INTERFERENCE WITH THE IMPUGNED ORDER. THE IMPUGNED ORDERS ARE QUITE CONSISTENT BY THE LAW LAID DOWN IN THE CASE OF SAMSON PERINCHERY AND NEW ERA SOVA MINE AND THEREFORE, WARRANT NO INTERFERENCE. CENTAUR MERCANTILE PVT.LTD. 8 170. SAMSON PERINCHERY, TOO, HAS HELD THAT THE NOTI CE ISSUED UNDER SECTION 274 OF THE ACT SHOULD STRIKE OFF IRRELEVANT CLAUSES . AND NEW ERA SOVA MINE HAS ENDORSED THE TRIBUNAL'S VIEW THAT 'THE PENALTY NOTICES IN THESE CASES WERE NOT ISSUED FOR ANY SPECIFIC CHARGE, THAT IS TO SAY, FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS'. IN FACT, SAMSON PERINCHERRY RELIES ON KARNATAKA HIGH COURT'S SSA'S EMERALD MEADOWS, WHICH, AS WE HAVE ALREADY SEEN, HAS FOLLOW ED MANJUNATHA. SO, IN A SENSE, IT IS A CONFLICT BETWEEN KAUSHALYA AND MANJU NATHA IF WE TAKE COMITY, RATHER THAN STARE DECISIS, AS THE RECKONING FACTOR. 171. THAT SAID, AS MAVILAYI FOUND DISTINGUISHING FE ATURES IN CITIZEN COOPERATIVE; HERE, TOO, THE FACT SITUATION AS OBTAI NED IN KAUSHALYA HAS BEEN SEEN IN NONE OF THESE DECISIONS: GOA DOURADO PROMOT IONS, GOA COASTAL RESORTS AND RECREATION, SAMSON PERINCHERY, NEW ERA SOVA MINENOT EVEN IN MANJUNATHA POINTED, IN BOTH SETS OF CASES, THE P ROPOSITION IS THIS: TO AN ASSESSEE FACING PENALTY PROCEEDINGS, THE REVENUE MU ST SUPPLY COMPLETE, UNAMBIGUOUS INFORMATION SO THAT HE MAY DEFEND HIMSE LF EFFECTUALLY. THIS PROPOSITION HAS GIVEN RISE TO THIS QUESTION: WHERE SHOULD THE ASSESSEE GATHER THE REQUIRED INFORMATION FROM? 172. GOA DOURADO PROMOTIONS AND OTHER CASES HAVE HE LD THAT THE INFORMATION MUST BE-GATHERED FROM THE NOTICE UNDER SECTION 271(L)(C) READ WITH SECTION 274 OF THE IT ACT. NO OTHER SOURCE WAS _IN_THE_COURTS CONTEMPLATION. IN KAUSHALYA, BOTH THE PROPOSITION A ND THE QUESTION WERE THE SAME. BUT IT HAS ONE EXTRA INPUT: THE ORDER IN ASSE SSMENT PROCEEDINGS. SO IT HAS HELD THAT THE NOTICE ALONE IS NOT THE SOLE SOUR CE OF INFORMATION THE ASSESSMENT PROCEEDINGS, TOO, MAY SHED LIGHT ON THE ISSUE AND INFORM THE ASSESSEE ON THE SCOPE OF PENALTY PROCEEDINGS. WHETH ER ASSESSMENT PROCEEDINGS CAN BE A SOURCE OF INFORMATION AND WHET HER IT CAN COMPLEMENT THE NOTICE HAVE NOT BEEN CONSIDERED IN GOA DOURADO PROMOTIONS AND OTHER CASES. 173. WE, HOWEVER, ACCEPT THAT THE REVENUE, OFTEN, A DOPTS A PERNICIOUS PRACTICE OF SENDING AN OMNIBUS, CATCH-ALL, PRINTED NOTICE. IT CONTAINS BOTH RELEVANT AND IRRELEVANT INFORMATION. IT ASSUMES, PE RHAPS UNJUSTIFIABLY, THAT WHOEVER PAYS TAX IS OR MUST BE WELL-VERSED IN THE N UANCES OF TAX LAW. SO IT SENDS A NOTICE WITHOUT SPECIFYING WHAT THE ASSESSEE , FACING PENALTY PROCEEDINGS, MUST MEET. IN JUSTIFICATION OF WHAT IT OMITS TO DO, IT WILL ASK, RATHER EXPECT, THE ASSESSEE TO LOOK INTO PREVIOUS P ROCEEDINGS FOR JUSTIFICATION OF ITS ACTION IN THE LATER PROCEEDINGS, WHICH ARE, UNDENIABLY, INDEPENDENT. IT FORGETS THAT A STITCH IN TIME SAVES NINE. ITS ONE C ROSS OR TICK MARK CLEARS THE CLOUD, ENABLES THE ASSESSEE TO MOUNT AN EFFECTIVE D EFENCE, AND, IN THE END, ITS DILIGENCE AVOIDS A LOAD OF LITIGATION. IS NOT P REJUDICE WRIT LARGE ON THE FACE OF THE MECHANICAL METHODS THE REVENUE ADOPTS IN SEN DING A STATUTORY NOTICE TO THE ASSESSEE UNDER SECTION 271 (1) (C) READ WITH SECTION 274 OF THE ACT? PRAGMATICALLY SPEAKING, KAUSHALYA CASTS AN EXTRA BU RDEN ON THE ASSESSEE AND ASSUMES EXPERTISE ON HIS PART. IT WANTS THE ASS ESSEE TO MAKE UP FOR THE REVENUE'S LAPSES. CENTAUR MERCANTILE PVT.LTD. 9 EX POST AND EX ANTE APPROACHES OF ADJUDICATION: 174. IN EX-POST ADJUDICATION, THE COURT LOOKS BACK AT A DISASTER OR OTHER EVENT AFTER IT HAS OCCURRED AND DECIDES WHAT TO DO ABOUT IT OR HOW TO REMEDY IT. IN AN EX-ANTE ADJUDICATION, THE COURT LOOKS FOR WARD, AFTER AN EVENT OR INCIDENT, AND ASKS WHAT EFFECTS THE DECISION ABOUT THIS CASE WILL HAVE IN THE FUTURE - ON PARTIES WHO ARE ENTERING SIMILAR SITUAT IONS AND HAVE NOT YET DECIDED WHAT TO DO, AND WHOSE CHOICES MAY BE INFLUE NCED BY THE CONSEQUENCES THE LAW SAYS WILL FOLLOW FROM THEM. TH E FIRST PERSPECTIVE ALSO MIGHT BE CALLED STATIC SINCE IT ACCEPTS THE PARTIES ' POSITIONS AS GIVEN AND FIXED; THE SECOND PERSPECTIVE IS DYNAMIC SINCE IT A SSUMES THEIR BEHAVIOUR MAY CHANGE IN RESPONSE TO WHAT OTHERS DO, INCLUDING JUDGES, (FOR A DETAILED DISCUSSION, SEE WARD FARNSWORTH'S LEGAL ANALYST: A TOOLKIT FOR THINKING ABOUT THE LAW). 175. KAUSHALYA HAS ADOPTED AN EX-POST APPROACH TO T HE ISSUE RESOLUTION; GOA DOURADO PROMOTIONS, AN EX-ANTE APPROACH. KAUSHA FYA SAVES ONE SINGLE CASE FROM FURTHER LITIGATION. IT ASKS THE ASSESSEE TO LOOK BACK AND GATHER ANSWERS FROM WHATEVER SOURCE HE MAY FIND, SAY, THE ASSESSMENT ORDER. ON THE OTHER HAND, GOA DOURADO PROMOTIONS SAVES EVERY OTHER CASE FROM LITIGATION. IT COMPELS THE REVENUE TO BE CLEAR AND CERTAIN. TO BE MORE SPECIFIC, WE MAY NOTE THAT IF WE ADOPT KAUSHALYA'S APPROACH T O THE ISSUE, IT REQUIRES THE ASSESSEE TO LOOK FOR THE PRECISE CHARGE IN THE PENALTY PROCEEDINGS NOT ONLY FROM THE STATUTORY NOTE BUT FROM EVERY OTHER S OURCE OF INFORMATION, SUCH AS THE ASSESSMENT PROCEEDINGS. THAT SAID, FIRST, PE NALTY PROCEEDINGS MAY ORIGINATE FROM THE ASSESSMENT PROCEEDINGS, BUT THEY ARE INDEPENDENT; THEY DO NOT DEPEND ON THE ASSESSMENT PROCEEDING FOR THEI R OUTCOME. ASSESSMENT PROCEEDINGS HARDLY INFLUENCE THE PENALTY PROCEEDING S, FOR ASSESSMENT DOES NOT AUTOMATICALLY LEAD TO A PENALTY. 176. SECOND, NOT ALWAYS DO WE FIND THE ASSESSMENT P ROCEEDINGS REVEALING THE GROUNDS OF PENALTY PROCEEDINGS. ASSESSMENT ORDER NE ED NOT CONTAIN A SPECIFIC, EXPLICIT OF WHETHER THE CONDITIONS MENT IONED IN SECTION 271(L)(C) EXIST IN THE CASE. IT IS BECAUSE EXPLANATION 1(A) A ND 1(B), AS THE DEEMING PROVISIONS, CREATE A LEGAL FICTION AS TO THE GROUND S FOR PENALTY PROCEEDINGS. INDEED, THE APEX COURT IN CIT V. ATU MOHAN BINDA [2 009]317 ITR 1 (SC) HAS EXPLAINED THE-SCOPE OF SECTION 271(L)(C) THUS: 'EXPLANATION 1, APPENDED TO SECTION 27(1) PROVIDES THAT IF THAT PERSON FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OF FERED BY SUCH PERSON IS FOUND TO BE FALSE, OR THE EXPLANATION OFFERED BY HIM IS NOT SUBSTANTIATED, AND HE FAILS TO PROVE THAT SUCH EXPL ANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, FOR THE PURPOSES OF SECTION 271(L)(C), THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME IS DEEMED TO REPRESENT T HE CONCEALED INCOME. CENTAUR MERCANTILE PVT.LTD. 10 177. THAT IS, EVEN IF THE ASSESSMENT ORDER DOES NOT CONTAIN A SPECIFIC FINDING THAT THE ASSESSEE HAS CONCEALED INCOME OR HE IS DEE MED TO HAVE CONCEALED INCOME BECAUSE OF THE EXISTENCE OF FACTS WHICH ARE SET OUT IN EXPLANATION 7, IF A MERE DIRECTION TO INITIATE PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB- SECTION (1) IS FOUND IN THE SAID ORDER, BY LEGAL FI CTION, IT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FO R INITIATION OF PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C). IN OTHER WOR DS, THE ASSESSING OFFICER'S SATISFACTION AS TO BE SPELT OUT IN THE ASSESSMENT O RDER IS ONLY PRIMA FACIE. EVEN IF THE ASSESSMENT ORDER GIVES NO REASON, A MER E DIRECTION FOR PENALTY PROCEEDINGS TRIGGERS THE LEGAL FICTION AS CONTAINED IN THE EXPLANATION (1). 178. THEREFORE, IN EVERY INSTANCE, IT IS A QUESTION OF INFERENCE WHETHER THE ASSESSMENT ORDER CONTAINED ANY GROUNDS FOR INITIATI NG THE PENALTY PROCEEDINGS. THEN, WHENEVER THE NOTICE IS VAGUE OR IMPRECISE, THE ASSESSEE ASSAILS IT AS BAD; THE REVENUE DEFENDS IT BY SAYING THAT THE ASSESSMENT ORDER CONTAINS THE PRECISE CHARGE. THUS, IT BECOMES A MAT TER OF ADJUDICATION, OPENING LITIGIOUS FLOODGATES. THE SOLUTION IS A TIC K MARK IN THE PRINTED NOTICE THE REVENUE IS USED TO SERVING ON THE ASSESSEES. 179. BESIDES, THE PRIMA FACIE OPINION IN THE ASSESS MENT ORDER NEED NOT ALWAYS TRANSLATE INTO ACTUAL PENALTY PROCEEDINGS. T HESE PROCEEDINGS, IN FACT, COMMENCE WITH THE STATUTORY NOTICE UNDER SECTION 27 1(L)(C) READ WITH SECTION 274. AGAIN, WHETHER THIS PRIMA FACIE OPINION IS SUF FICIENT TO INFORM THE ASSESSEE ABOUT THE PRECISE CHARGE FOR THE PENALTY I S A MATTER OF INFERENCE AND, THUS, A MATTER OF LITIGATION AND ADJUDICATION. THE SOLUTION, AGAIN, IS A TICK MARK; IT AVOIDS LITIGATION ARISING OUT OF UNCE RTAINTY. 180. ONE COURSE OF ACTION BEFORE US IS CURING A DEF ECT IN THE NOTICE BY REFERRING TO THE ASSESSMENT ORDER, WHICH MAY OR MAY NOT CONTAIN REASONS FOR THE PENALTY PROCEEDINGS. THE OTHER COURSE OF ACTION IS THE PREVENTION OF DEFECT IN THE NOTICEAND THAT PREVENTION TAKES JUST A TICK MARK. PRUDENCE DEMANDS PREVENTION IS BETTER THAN CURE. ANSWERS: QUESTION NO. 1: IF THE ASSESSMENT ORDER CLEARLY REC ORDS SATISFACTION FOR IMPOSING PENALTY ON ONE OR THE OTHER, OR BOTH GROUN DS MENTIONED IN SECTION 271(L)(C), DOES A MERE DEFECT IN THE NOTICENOT STR IKING OFF THE IRRELEVANT MATTERVITIATE THE PENALTY PROCEEDINGS? 181. IT DOES. THE PRIMARY BURDEN LIES ON THE REVENU E. IN THE ASSESSMENT PROCEEDINGS, IT FORMS AN OPINION, PRIMA FACIE OR OT HERWISE, TO LAUNCH PENALTY PROCEEDINGS AGAINST THE ASSESSEE. BUT THAT TRANSLAT ES INTO ACTION ONLY THROUGH THE STATUTORY NOTICE UNDER SECTION 271(L)(C ), READ WITH SECTION 274 OF IT ACT. TRUE THE ASSESSMENT PROCEEDINGS FORM THE BA SIS FOR THE PENALTY PROCEEDINGS, BUT THEY ARE NOT COMPOSITE PROCEEDING 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 PROCE EDINGS CULMINATE UNDER A DIFFERENT STATUTORY SCHEME THAT R EMAINS DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THEREFORE, THE ASSESSEE MUS T BE INFORMED OF THE CENTAUR MERCANTILE PVT.LTD. 11 GROUNDS OF THE PENALTY PROCEEDINGS ONLY THROUGH STA TUTORY NOTICE. AN OMNIBUS NOTICE SUFFERS FROM THE VICE OF, VAGUENESS. 182. MORE PARTICULARLY, A PENAL PROVISION, EVEN WIT H CIVIL CONSEQUENCES, MUST BE CONSTRUED STRICTLY. AND AMBIGUITY, IF ANY, MUST BE RESOLVED IN THE AFF ECTED 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 MEANS WE MUST HOLD THAT KAUSHALYA DOES NOT LAY DOWN THE CORRECT PROPOSITION OF LAW. QUESTION NO. 2: HAS KAUSHALYA FAILED TO DISCUSS THE ASPECT OF PREJUDICE'? 184. INDEED, KAUSHALYA DID DISCUSS THE ASPECT OF PR EJUDICE. AS WE HAVE ALREADY NOTED, KAUSHALYA NOTED THAT THE ASSESSMENT ORDERS ALREADY CONTAINED THE REASONS WHY PENALTY SHOULD BE INITIAT ED. SO, THE ASSESSEE, STRESSES KAUSHALYA, 'FULLY KNEW IN DETAIL THE EXACT CHARGE OF THE REVENUE AGAINST HIM'. FOR KAUSHALYA, THE STATUTORY NOTICE S UFFERED FROM NEITHER NON- APPLICATION OF MIND NOR ANY PREJUDICE. ACCORDING TO IT, 'THE SO-CALLED AMBIGUOUS WORDING IN THE NOTICE [HAS NOT] IMPAIRED OR PREJUDICED THE RIGHT OF THE ASSESSEE TO A REASONABLE OPPORTUNITY OF BEING H EARD'. IT WENT ONTO OBSERVE THAT FOR SUSTAINING THE PLEA OF NATURAL JUS TICE ON THE GROUND OF ABSENCE OF OPPORTUNITY, 'IT HAS TO BE ESTABLISHED T HAT PREJUDICE IS CAUSED TO THE CONCERNED PERSON BY THE PROCEDURE FOLLOWED'. KA USHALYA CLOSES THE DISCUSSION BY OBSERVING THAT THE NOTICE ISSUING 'IS AN ADMINISTRATIVE DEVICE FOR INFORMING THE ASSESSEE ABOUT THE PROPOSAL TO LE VY PENALTY IN ORDER TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DO NE'. 185 NO DOUBT, THERE CAN EXIST A CASE WHERE VAGUENES S AND AMBIGUITY IN THE NOTICE CAN DEMONSTRATE NON-APPLICATION OF MIND BY T HE AUTHORITY AND/OR ULTIMATE PREJUDICE TO THE RIGHT OF OPPORTUNITY OF H EARING CONTEMPLATED UNDER SECT7ORT274. SO ASSERTS KAUSHALYA. IN FACT, FOR ONE ASSESSMENT YEAR, IT SET ASIDE THE PENALTY PROCEEDINGS ON THE GROUNDS OF NON -APPLICATION OF MIND AND PREJUDICE. 186. THAT SAID, REGARDING THE OTHER ASSESSMENT YEAR , IT REASONS THAT THE ASSESSMENT ORDER, CONTAINING THE REASONS OR JUSTIFI CATION, AVOIDS PREJUDICE TO THE ASSESSEE. THAT IS WHERE, WE RECKON, THE REASONI NG SUFFERS. KAUSHALYA'S INSISTENCE THAT THE PREVIOUS PROCEEDINGS SUPPLY JUS TIFICATION AND CURE THE DEFECT IN PENALTY PROCEEDINGS HAS NOT MET OUR ACCEP TANCE. QUESTION NO. 3: WHAT IS THE EFFECT OF THE SUPREME C OURT'S DECISION IN DILIP N. SHROFF ON THE ISSUE OF NON-APPLICATION OF MIND WHEN THE IRRELEVANT PORTIONS OF THE PRINTED NOTICES ARE NOT STRUCK OFF? 187 IN DILIP N. SHROFF, FOR THE SUPREME COURT, IT IS OF 'SOME SIGNIFICANCE THAT IN THE STANDARD PRO-FORMA USED BY THE ASSESSIN G OFFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTULATES TH AT INAPPROPRIATE WORDS AND CENTAUR MERCANTILE PVT.LTD. 12 PARAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE'. THEN, DILIP N. SHROFF, ON FACTS, HAS FELT THAT THE ASSESSING OF FICER HIMSELF WAS NOT SURE WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSE SSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. 188. WE MAY, IN THIS CONTEXT, RESPECTFULLY OBSERV E THAT A CONTRAVENTION OF A MANDATORY CONDITION OR REQUIREMENT FOR A COMMUNICAT ION 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 MU ST BE PRECISE, IT SHOULD GIVE NO ROOM FOR AMBIGUITY. THEREFORE, DILIP N. SHROFF D ISAPPROVES OF THE ROUTINE, RITUALISTIC PRACTICE OF ISSUING OMNIBUS SHOW-CAUSE NOTICES. THAT PRACTICE CERTAINLY BETRAYS NON- APPLICATION OF MIND AND, THE REFORE, THE INFRACTION OF A MANDATORY PROCEDURE LEADING TO PENAL CONSEQUENCES A SSUMES OR IMPLIES PREJUDICE. 189. IN SUDHIR KUMAR SINGH, THE SUPREME COURT HAS ENCAPSULATED THE PRINCIPLES OF PREJUDICE. ONE OF THE PRINCIPLES IS T HAT 'WHERE PROCEDURAL AND/OR SUBSTANTIVE PROVISIONS OF LAW EMBODY THE PRI NCIPLES OF NATURAL JUSTICE, THEIR INFRACTION PER SE DOES NOT LEAD TO I NVALIDITY OF THE ORDERS PASSED. HERE AGAIN, PREJUDICE MUST BE CAUSED TO THE LITIGAN T, 'EXCEPT IN THE CASE OF A MANDATORY PROVISION OF LAW WHICH IS CONCEIVED NOT O NLY IN INDIVIDUAL INTEREST BUT ALSO IN THE PUBLIC INTEREST'. 190. HERE, SECTION 271(L)(C) IS ONE SUCH PROVISION. WITH CALAMITOUS, ALBEIT COMMERCIAL, CONSEQUENCES, THE PROVISION IS MANDATOR Y AND BROOKS NO TRIFLING WITH OR DILUTION. FOR A FURTHER PRECEDENTIAL PROP, WE MAY REFER TO RAJESH KUMAR V. CIT [(2007) 2 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, PRINCI PLES 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 JUST ICE, IT MAY ALSO BE HELD ULTRA VIRES ARTICLE 14 OF THE CONSTITUTION. 191. AS A RESULT, WE HOLD THAT DILIP N. SHROFF TREA TS OMNIBUS SHOW-CAUSE NOTICES AS BETRAYING NON-APPLICATION OF MIND AND DI SAPPROVES OF THE PRACTICE, TO BE PARTICULAR, OF ISSUING NOTICES IN PRINTED FOR M WITHOUT DELETING OR STRIKING OFF THE INAPPLICABLE PARTS OF THAT GENERIC NOTICE. 9. EXAMINING THE PRESENT CASE ON THE ANVIL OF AFORE SAID CASE LAW, WE FIND THAT THE NOTICE IN THIS ALSO IS AN OMNIBUS SHOW-CAU SE NOTICE AS IT DOES NOT STRIKE OFF/DELETE THE INAPPROPRIATE/IRRELEVANT/NOT APPLICABLE PORTION. SUCH A GENERIC NOTICE BETRAYS A NON-APPLICATION OF MIND. H ENCE, THE PENALTY LEVIED PURSUANT TO SUCH A NOTICE IS NOT LEGALLY SUSTAINABL E IN LAW. HENCE FOLLOWING THE CENTAUR MERCANTILE PVT.LTD. 13 AFORESAID PRECEDENT FROM THE FULL BENCH OF THE HON' BLE JURISDICTIONAL HIGH COURT WE HOLD THAT THE ASSESSING OFFICER WAS BEREFT OF VALID JURISDICTION AS THE NOTICE ISSUED TO ASSESSEE IS UNSUSTAINABLE IN LAW. HENCE, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS LIABLE TO BE RIGHTLY DELETED BY LD.CIT(A). WE UPHOLD THE ORDER OF LD.CIT(A). 14. IN THE RESULT, REVENUES APPEALS ARE DISMISSED . PRONOUNCED IN THE OPEN COURT ON 20 /09/2021 SD/- SD//- (RAVISH SOOD) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 20 /09/2021 THIRUMALESH, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) ITAT, MUMBAI