IN THE HIGH COURT OF JUDICATURE AT BOMBAY VPH ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL No. 52 OF 2007 Rajesh Shah Appellant Vs. The Income Tax Officer Respondent Ward-(22)11, Mumbai Mr. Atul Jasani with P. C. Tripathi, for the appellant. Mr. N. A. Kazi, for the respondent. CORAM : BILAL NAZKI, & A. A. KUMBHKONI, JJ. DATE : JULY 21, 2008. PC :- 1. All questions framed in the memo of appear are not necessarily question of law and do not deserve to be admitted. However, after hearing the parties, we reframe the question in following terms and decide the question after hearing counsel for parties. 1. Whether the penalty could have been imposed under section 271(1)(c) of the Income Tax Act, without issuing a show-cause notice and giving a chance of hearing to an assessee? 2. The appellate authority came to the conclusion - 2 - that although a show-cause notice had been issued, it was kept in abeyance and after assessment was made, mechanically order of penalty was also imposed. The appellate authority gave his finding as under- I have carefully considered facts of the case and submissions of the appellant. I have gone through the assessment order as well as penalty order. On a careful consideration of the relevant facts I find substance in the appellant’s contention. The assessing officer has passed the penalty order without affording reasonable and sufficient opportunity of being heard. The assessing officer has justified in turning down appellant’s request to keep the penalty proceedings in abeyance. However, he should have intimated the appellant that he does not intend to keep the penalty proceedings in abeyance. The appellant should have been asked to furnish his explanation in response to the show cause notice. Another opportunity should have been given to the appellant before concluding the penalty proceedings. The assessing officer has violated the principle of natural justice and equity by levying penalty without giving adequate opportunity to the - 3 - appellant to explain its case. 3. When the matter went to the Tribunal, the Tribunal did not consider this aspect of the matter but came to the conclusion that disclosure of income was not voluntarily and without any detection by the assessing officer, he as was sure that the department had sufficient evidence that it was levying the tax. Since the Tribunal has not gone into the question whether sufficient opportunity was given or not to the assessee for the purpose of showing cause against the penalty, we with the consent of the learned counsel for the parties set aside the impugned order of the Tribunal, pertaining to the penalty and remand the case back to the Assessing Officer, who shall hear the parties on the question of penalty. 4. The assessee shall without further notice from the assessing officer, give reply to the show-cause notice within two weeks from today and the Assessing Officer shall give hearing on 11th September, 2008 and shall decide the matter within one week thereafter. Sd/- [ BILAL NAZKI, J.] Sd/- [ A. A. KUMBHAKONI, J.]