Late Baijnath Agarwal L/H Shri Kunj Bihari Agarwal, Kolkata V. ACIT, Cent. Circle-2(3), Kolkata, Kolkata

CO 19/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6720 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 20-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AJOY KUMAR SINGH
• Keywords: Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 153A; 27; 132; 28

Judgement Text

1 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 477/KOL/2017 ASSESSMENT YEAR: 2014-15 ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(3), KOLKATA. VS. LATE BAIJNATH AGARWAL (PAN: ACTPA4174A) APPELLANT RESPONDENT & C.O. NO. 19/KOL/2017 IN I.T.A. NO. 477/KOL/2017 ASSESSMENT YEAR: 2014-15 LATE BAIJNATH AGARWAL VS. ASSISTANT COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-2(3), KOLKATA. CROSS OBJECTOR RESPONDENT DATE OF HEARING 03.01.2019 DATE OF PRONOUNCEMENT 23.01.2019 FOR THE REVENUE SHRI AJOY KUMAR SINGH CIT, DR FOR THE ASSESSEE/CROSS OBJECTOR SHRI A. K. TULSIYAN , FCA & MS. SHIKHA AGARWAL, AR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE AND THE CROSS OBJECTION PREFERRED BY THE ASSESSEE ARE AGAINST THE ORDER OF THE LD. CIT(A)-20 , KOLKATA DATED 13.01.2017 FOR AY 2014-15. 2 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 2. THE REVENUE HAS RAISED THE FOLLOWING SOLE GROUND OF APPEAL: 1. WHETHER, IN THE FACTS & CIRCUMSTANCES OF THE C ASE AND IN VIEW OF THE DISTINCTION OF FACTS OF THE INSTANT CASE (DISCUSSED ELABORATELY IN THE STAT EMENT OF FACTS) THAN THAT OF THE CASE LAWS RELIED UPON, THE LD. CIT(A)S ORDER JUSTIFIED IN AL LOWING RELIEF TO THE ASSESSEE. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING GROUNDS FOR CROSS OBJECTION: 1A. THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE PENALTY PROCEEDINGS U/S 271 (1 )(C) WERE NOT INITIATED WITH THE ASSESSMENT ORDE R PASSED U/S 143(3) DATED 22.03.2016. THE SAME IS INITIATED BY NOTICE DATED 16.09.2016 MUCH A FTER THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. AS SUCH, INITIATION OF PENALTY PROCEED INGS ITSELF IS BAD IN LAW AND NEED TO BE QUASHED. ALSO IN CONSEQUENCE TO THAT THE ORDER PASS ED U/S 271 (1 )(C) OF THE ACT NEED TO BE QUASHED. 1B. THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING T HE FACT THAT IN THE ASSESSMENT ORDER PASSED U/S 143(3) DT. 22.03.2016, THE LD. AO INITIATED THE PENALTY PROCEEDINGS U/S 271 AAB OF THE I. T. ACT, AS EVIDENT FROM THE ASSESSMENT ORDER & PENALTY INITIATION NOTICE U/S 271AAB DT. 22.03.2016. AS PER ASSESSMENT ORDER, THE LD. AO INI TIATED PENALTY PROCEEDINGS U/S 271AAB BUT LATER ON HE ISSUED NOTICE U/S 271 (1)(C) DT. 16.09. 2016 AND IMPOSED PENALTY U/S 271 (1)(C) OF THE ACT. AS NO PENALTY U/S 271 (1 )(C) WAS INITIATED IN THE ASSESSMENT ORDER U/S 143(3), THE ORDER IMPOSING PENALTY U/S 271(1)(C) IS BAD IN LAW & NEED S TO BE QUASHED. 3. BRIEFLY STATED FACTS ARE THAT A SEARCH & SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT IN THE RUPA GROUP OF CASES ON 07.11.201 3 AND ON SUBSEQUENT DATES. THE ASSESSEE AN INDIVIDUAL BELONGED TO THIS GROUP BUT NO SEARCH WARRANT U/S. 132 WAS ISSUED AGAINST THE ASSESSEE. FOR THE YEAR UNDER CONSIDERATION, THE ASS ESSEE FILED HIS ORIGINAL RETURN ON 12-01- 2016 DECLARING TOTAL INCOME OF RS.38,05,69,310/-. A SSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 22-03-2016 BY ACCEPTING THE RETURNED INC OME OF RS.38,05,69,310/-. HOWEVER, WHILE COMPLETING THE ASSESSMENT ORDER U/S. 143(3) O F THE ACT DATED 22.03.2016, THE AO RECORDED HIS OPINION THAT ASSESSEE IS LIABLE TO PEN ALTY U/S. 271AAB OF THE ACT AND THEREAFTER HE RECORDED THAT PENALTY PROCEEDING U/S 271AAB OF T HE ACT WAS INITIATED. THEREAFTER, THE AO ISSUED SHOW CAUSE NOTICE ON 22.03.2016 ASKING TH E ASSESSEE AS TO WHY PENALTY U/S. 271AAB SHOULD NOT BE MADE AGAINST HIM. PURSUANT TO THE NOTICE U/S. 271AAB OF THE ACT, THE ASSESSEE OBJECTED TO THE PENALTY NOTICE U/S. 27 1AAB OF THE ACT ON THE PREMISE THAT AS NO SEARCH U/S. 132 OF THE ACT WAS CONDUCTED AGAINST HI M, THE PENALTY U/S 271AAB IS NOT ATTRACTED IN THE INSTANT CASE AND THEREFORE PLEADED THAT THE SAME TO BE DROPPED. REALIZING HIS 3 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 MISTAKE, THE AO DROPPED THE SEC. 271AAB PENALTY PRO CEEDING AGAINST ASSESSEE, HOWEVER HE THEREAFTER ISSUED A FRESH NOTICE U/S 271(1)(C) OF T HE ACT ON 16-09-2016. FURTHER, THE AO MENTIONED IN THE PENALTY ORDER THAT HE INADVERTENTL Y ISSUED NOTICE U/S. 271AAB OF THE ACT AND THEN LEVIED PENALTY ON 27.09.2016 U/S. 271(1)(C ) AT RS.12,91,28,908/-. AGGRIEVED BY THE SAID PENALTY ORDER, ASSESSEE PREFERRED AN APPEAL BE FORE THE LD. CIT(A), WHO ALLOWED THE ASSESSEES GROUND OF APPEAL. AGGRIEVED REVENUE IS BEFORE US. THE ASSESSEE ALSO FILED CROSS OBJECTION FOR THE OMISSION ON THE PART OF LD. CIT(A ) NOT TO ADJUDICATE THE GROUND RAISED BY THE ASSESSEE THAT THE AO DID NOT INITIATE PENALTY U /S. 271(1)(C) WHILE FRAMING ASSESSMENT ORDER ON 22.03.2016, ADMITTEDLY THE FIRST NOTICE U/ S. 271(1)(C) WAS ISSUED ON 13.09.2016 AND THEREFORE, THE ACTION OF AO IS BAD IN LAW. SINCE T HE ASSESSEE HAS RAISED THE LEGAL ISSUE, WE ARE FIRST GOING TO ADJUDICATE THE GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTION. 4. THE FACTS STATED ABOVE ARE NOT DISPUTED, SO WE A RE NOT REPEATING IT FOR THE SAKE OF BREVITY. AT THE OUTSET ITSELF, WE NOTE THE FOLLOWIN G ADMITTED FACTS THAT THOUGH THERE WAS SEARCH HAPPENED ON M/S. RUPA GROUP ON 07.11.2013, N EITHER THERE WAS ANY SEARCH WARRANT U/S. 132 OF THE ACT WAS ISSUED AGAINST THE ASSESSEE NOR SEC. 153A PROCEEDINGS WAS INITIATED AGAINST THE ASSESSEE. IN THIS REGARD IT IS PERTINE NT HERE TO NOTE THAT THERE WAS NO SEARCH AGAINST THE ASSESSEE THOUGH THE SEARCH & SEIZURE OP ERATION WAS CONDUCTED AGAINST M/S. RUPA GROUP. ALSO WE NOTE THAT NO STATEMENT OF THE A SSESSEE AN INDIVIDUAL WAS RECORDED U/S. 132(4) OF THE ACT OR OF ANY OF HIS SONS AND/OR ANY OF THE FAMILY MEMBERS. AND WE NOTE FROM A PERUSAL OF THE ASSESSMENT ORDER DATED 22.03. 2016 THE AO AFTER PARA 9, CLEARLY INITIATED PENALTY U/S. 271AAB OF THE ACT AFTER ASSE SSING THE INCOME AS RETURNED BY THE ASSESSEE. FURTHER WE NOTE THAT IN THE ASSESSMENT OR DER AT PARA 8, THE AO SPECIFICALLY EXPRESSED HIS OPINION THAT ASSESSEE IS LIABLE TO PE NALTY U/S 271AAB OF THE ACT, WHICH IS AS UNDER: THE ASSESSEE WAS SUPPOSED TO FILE RETURN OF INCOME 31-07-2014. NOW IN THIS RETURN FILED ON 12.01.2016 THE ASSESSEE HAS SHOWN MISCELLANEOUS INC OME OF RS.38,05,50,000/- IN ACCORDANCE WITH THE DISCLOSURE MADE DURING THE COUR SE OF SEARCH IN RUPA GROUP OF CASES. THUS, I AM OF THE OPINION THAT THE ASSESSEE IS LIAB LE TO PENALTY U/S. 271AAB OF THE I. T. ACT, 1961. 4 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 THEREAFTER ON 22.03.2016 IN THE PENALTY NOTICE ISS UED, THE AO HAS STRICKEN DOWN THE INGREDIENTS OF THE CHARGES IN SEC. 271(1)(C) OF THE ACT I.E. CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME AND TH E ASSESSEE WAS PUT TO NOTICE AGAINST LEVY OF PENALTY U/S. 271AAB OF THE ACT. 5. HOWEVER, WHEN ASSESSEE OBJECTED TO PENALTY PROCE EDINGS U/S 271AAB SINCE NO SEARCH U/S. 132 OF THE ACT HAPPENED, THE AO CHANGED HIS OPINION AND AFTER ISSUING NOTICE FOR THE FIRST TIME ON 16.09.2016 U/S. 271(1)(C), HE LEV IED PENALTY U/S. 271(1)(C) OF THE ACT WHICH ACTION ACCORDING TO THE LD. AR CANNOT BE DONE BY TH E AO. THE LD. R DREW OUR ATTENTION TO SECTION 271(1B) OF THE ACT, WHICH READS AS UNDER: 271(1B) WHERE ANY AMOUNT IS ADDED OR DISALLOWED I N COMPUTING THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSESSMENT OR REASSESSM ENT AND THE SAID ORDER CONTAINS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS UND ER CLAUSE (C) OF SUB-SECTION (1), SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATION OF THE PENALTY PROCEEDINGS U NDER THE SAID CLAUSE (C). THE SAID SECTION INSERTED BY FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01.04.1989. THE LD. AR DREW OUR ATTENTION TO THE CIRCULAR ISSUE D TO EXPLAIN THE AMENDMENT TO PARA 40.5 WHICH IS AS UNDER: 40. CLARIFICATION REGARDING SATISFACTION FOR INITIA TION OF PENALTY UNDER SUB-SECTION (1) OF SECTION 271 40.1 SUB-SECTION (1) OF SECTION 271 OF THE INCOME-TAX A CT EMPOWERS THE ASSESSING OFFICER TO LEVY PENALTY FOR CERTAIN OFFENCES LISTED IN THAT SU B-SECTION. IT IS A REQUIREMENT THAT THE ASSESSING OFFICER IS REQUIRED TO BE SATISFIED BEFOR E SUCH A PENALTY IS LEVIED. 40.2 IN THE CONTEXT OF LEVY OF PENALTY UNDER SECTION 271 OF THE INCOME-TAX ACT, THERE HAS BEEN AN ONGOING DISPUTE BETWEEN THE INCOME-TAX DEPARTMEN T AND TAXPAYERS ON WHETHER AN ASSESSING OFFICER IS REQUIRED TO RECORD HIS SATISFA CTION BEFORE INITIATING PENALTY PROCEEDINGS. THE INCOME-TAX DEPARTMENT HAS HELD THE VIEW THAT NO SEPARATE SATISFACTION IS REQUIRED TO BE RECORDED BEFORE INITIATING PENALTY PROCEEDINGS. IN THE CASE OF CIT V. S.V. ANGIDI CHETTIAR (44 ITR 739; 1962), THE SUPREME COURT HAS, WHILE DEALIN G WITH PENALTY UNDER SECTION 28 OF THE INDIAN INCOME-TAX ACT, 1922, HELD THAT 'SATISFACTIO N BEFORE CONCLUSION OF PROCEEDING UNDER THE ACT, AND NOT THE ISSUE OF A NOTICE OR INITIATION OF ANY STEP FOR IMPOSING PENALTY IS A CONDITION FOR THE EXERCISE OF THE JURISDICTION'. THE SAME MAT TER CAME UP ONCE AGAIN BEFORE THE CALCUTTA HIGH COURT IN THE CASE OF BECKER GRAY & CO. (1930) LTD. V. ITO CENTRAL CIRCLE-I CALCUTTA AND OTHERS (112 1TR 503; 1977). RELYING ON THE SUPREME COURT DECISION IN THE ABOVE CASE, THE CALCUTTA HIGH COURT HELD THAT 'IT IS TRUE THAT THE INCOME-TAX OFFICER SHOULD BE PRIMA 5 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 FACIE SATISFIED BEFORE THE PENALTY NOTICE IS ISSUED , BUT IT DOES NOT MEAN THAT HE IS REQUIRED TO RECORD SUCH SATISFACTION IN WRITING IN EVERY CASE.' FOLLOWING THESE DECISIONS, WHEREVER ADDITIONS ARE MADE, ASSESSING OFFICERS HAVE, WITHOU T SEPARATELY RECORDING ANY SATISFACTION, BEEN ISSUING DIRECTIONS FOR INITIATING PENALTY PROC EEDINGS. 40.3 HOWEVER, INTERPRETING THE AFORESAID SUPREME COURT DECISION, THE DELHI HIGH COURT HAS, IN THE CASE OF CIT V. RAM COMMERCIAL ENTERPRISES LT D. (246 ITR 568; 2000) HELD THAT 'IT IS THE ASSESSING AUTHORITY WHICH HAS TO FORM ITS OWN OPINI ON AND RECORD ITS SATISFACTION BEFORE INITIATING PENALTY PROCEEDINGS.' 40.4 SUBSEQUENTLY, THE ALLAHABAD HIGH COURT WENT INTO T HIS ISSUE IN THE CASE OF SHYAM BIRI WORKS (P.) LTD. V. CIT (259 ITR 625; 2002). AFTER C ONSIDERING THE ABOVE CALCUTTA HIGH COURT DECISION AND THE DELHI HIGH COURT DECISION, IT HAS HELD THAT 'WITH PROFOUND RESPECT TO THE DELHI HIGH COURT DECISION, WE ARE UNABLE TO AGREE.. .. WE ARE, THEREFORE, OF THE OPINION THAT ALTHOUGH THE ASSESSING OFFICER MUST HAVE SATISFACTI ON AS REQUIRED UNDER SECTION 273 OF THE ACT, IT IS NOT NECESSARY FAR HIM TO RECORD THAT SATISFAC TION IN WRITING BEFORE INITIATING PENALTY PROCEEDINGS UNDER SECTION 273 OF THE ACT.'. 40.5 IN VIEW OF CONFLICTING JUDICIAL OPINION ON THIS IS SUE, IT WAS NECESSARY TO MAKE LEGISLATIVE INTERVENTION AND SETTLE THE MATTER. THEREFORE, A NE W SUB-SECTION (1B) IN SECTION 271 OF THE INCOME-TAX ACT HAS BEEN INSERTED. THIS SUB-SECTION UNAMBIGUOUSLY PROVIDE THAT WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING THE TOTA L INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSESSMENT OR REASSESSMENT, AND SUCH ORDER CONTAINS A DIRECTION FOR INITIATING OF PENALTY PROCEEDINGS UNDER SUB-SECTION (1) OF SECTIO N 271, SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFAC TION OF THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS UNDER SUB-SECTION (1) OF THAT S ECTION. 40.6 THE PROPOSED AMENDMENT HAS BEEN GIVEN RETROSPECTIV E EFFECT IN ORDER TO PROTECT THE REVENUES CONTENTION ON THIS ISSUE IN PENDING CASES . HOWEVER, THIS RETROSPECTIVE EFFECT WILL NOT PREJUDICE TAXPAYERS RIGHT TO AGITATE THE LEVY OF P ENALTY ON MERITS. FURTHER, WHILE NO SEPARATE SATISFACTION IS REQUIRED TO BE RECORDED BEFORE INIT IATING PENALTY PROCEEDINGS, IT IS STILL INCUMBENT UPON THE ASSESSING OFFICER TO RECORD HIS SATISFACTION BEFORE LEVYING THE PENALTY. ACCORDINGLY, THERE IS NEITHER VIOLATION OF THE PRIN CIPLE OF NATURAL JUSTICE NOR ANY PREJUDICE CAUSED TO THE TAXPAYER AS A RESULT OF THE RETROSPEC TIVE AMENDMENT. 40.7 SIMILAR AMENDMENT HAS ALSO BEEN CARRIED OUT IN THE WEALTH-TAX ACT. 6. SO WHEN WE READ SEC. 271 AND SEC. 271(1B) OF THE ACT, WE NOTE FOR LEVYING PENALTY U/S. 271(1)(C) OF THE ACT THAT THOUGH THE AO HAS TO RECORD HIS SATISFACTION WHILE PASSING THE ASSESSMENT ORDER ITSELF THAT ASSESSEE HAS TO BE PRO CEEDED AGAINST FOR FAULTS SPECIFIED IN PENALTY U/S. 271(1)(C) OF THE ACT AND THE AO HAS TO GIVE DIRECTION TO INITIATE PENALTY U/S. 271(1)(C) OF THE ACT IN THE ASSESSMENT ORDER ITSELF , AND IN CASE, IF HE DOESNT RECORD THE SATISFACTION AS AFORERSTATED, HOWEVER IF HE HAS GIV EN DIRECTION TO INITIATE PENALTY U/S. 271(1)(C) OF THE ACT IN THE ASSESSMENT ORDER ITSELF , THEN IT WOULD BE DEEMED TO CONSTITUTE SATISFACTION OF THE AO FOR INITIATING PENALTY PROCE EDINGS U/S. 271(1)(C) OF THE ACT. WE NOTE THAT IN THE CASE IN HAND, THE AO HAS NOT INITIATED PENALTY U/S. 271(1)(C) OF THE ACT WHILE 6 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 FRAMING THE ASSESSMENT ORDER WHEREAS WE NOTE THAT H E WAS SATISFIED WHILE FRAMING ASSESSMENT ORDER THAT ASSESSEE IS LIABLE TO PENALTY U/S. 271 AAB OF THE ACT AND THEREAFTER HE HAS INITIATED PENALTY U/S. 271AAB OF THE ACT. AND WHEN POINTED OUT BY THE ASSESSEE THAT PENALTY U/S. 271AAB CANNOT BE LEGALLY LEVIABLE AGAI NST THE ASSESSEE, THE AO DROPPED THE SEC. 271AAB PROCEEDINGS AND INITIATED SEC. 271(1)(C ) PROCEEDING WHICH IS LEGALLY NOT TENABLE BECAUSE FOR ASSUMPTION OF JURISDICTION TO L EVY PENALTY U/S. 271(1)(C) OF THE ACT, THE CONDITION PRECEDENT FOR EXERCISING THIS JURISDICTIO N IS THE SATISFACTION OF AO BEFORE CONCLUSION OF PROCEEDINGS UNDER THE ACT THAT PENALT Y U/S. 271(1)(C) NEED TO BE LEVIED AGAINST THE ASSESSEE AS HELD BY THE HONBLE SUPREME COURT I N S.V. ANGIDI CHETTIAR (SUPRA). HOWEVER, THERE WAS CONFLICTING ORDER OF THE HONBLE HIGH COURTS, THE PARLIAMENT IN ITS WISDOM HAS INSERTED SUB SEC. 1B OF THE ACT VIDE FIN ANCE ACT 2008 (WR.E.F. 01.04.1989), HOWEVER, EVEN AS PER SECTION. (1B) TO SEC. 271, AND BY VIRTUE OF THIS INSERTION IF THE AO HAS GIVEN DIRECTION TO INITIATE THE PENALTY U/S. 271(1) (C) OF THE ACT WHILE FRAMING THE ASSESSMENT/REASSESSMENT ORDER, THEN IT WOULD BE DEE MED TO CONSTITUTE SATISFACTION OF THE AO FOR INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) O F THE ACT. HERE IN THIS CASE, EVEN THE DEEMING PROVISION WILL NOT COME TO THE ASSISTANCE O F THE REVENUE, BECAUSE THERE IS NO DIRECTION TO EVEN INITIATE PENALTY U/S. 271(1(C) OF THE ACT WHILE FRAMING THE ASSESSMENT ORDER. THE CBDT HAS CLARIFIED ABOUT INSERTING SU B-SECTION (1B) IN SECTION 271 OF THE ACT, WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTIN G THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSESSMENT OR REASSESSMENT , AND SUCH ORDER CONTAINS A DIRECTION FOR INITIATING OF PENALTY PROCEEDINGS UNDER SUB-SEC TION (1) OF SECTION 271, SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONST ITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS UNDER SU B-SECTION (1) OF THAT SECTION. SO IF IN THE ASSESSMENT/REASSESSMENT ORDER THE AO DIRECTS INITIA TION OF PENALTY U/S 271(1)(C) THEN ONLY THE DEEMED SATISFACTION FOR INITIATING PENALTY PROC EEDINGS UNDER SUB-SECTION (1) OF SEC. 271 CAN BE DEEMED TO CONSTITUTE SATISFACTION AS REQUIRE D U/S. 271 OF THE ACT CAN COME INTO PLAY. HERE IN THIS CASE, WE HAVE REPRODUCED THE SATISFACT ION OF AO IN THE ASSESSMENT ORDER WHICH WAS FOR LEVY OF PENALTY U/S. 271 AAB OF THE ACT AND IN THE ASSESSMENT ORDER, THE AO 7 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 INITIATED PENALTY U/S. 271AAB OF THE ACT. SO, AS P ER THE DISCUSSION ABOVE, THE AO WITHOUT EVEN INITIATING PENALTY U/S. 271(1)(C) OF THE ACT I N THE ASSESSMENT ORDER ITSELF, THE IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT WHERE IN THE A SSESSMENT ORDER AO ADDS ANY AMOUNT OR DISALLOWED WHILE COMPUTING THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN AND THE SAID ORDER DOES NOT CONTAINS A DIRECTION FOR INITIATION OF PEN ALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB- SECTION (1), SUCH AN ORDER OF ASSESSMENT OR REASSES SMENT CANNOT BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATIO N OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C). FROM THE ABOVE DISCUSSION, WE NOTE THA T IN THE ASSESSMENT ORDER THE AO HAS NEITHER RECORDED SATISFACTION TO LEVY PENALTY AGAI NST THE ASSESSEE U/S. 271(1)(C) OF THE ACT NOR HAS HE INITIATED THE PENALTY U/S. 271(1)(C) OF THE ACT. THEREFORE, AFTER RECORDING SATISFACTION IN ASSESSMENT ORDER TO LEVY PENALTY U/ S. 271AAB AND INITIATION OF PENALTY U/S. 271AAB OF THE ACT, THE AO DOES NOT HAVE JURISDICTIO N TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT. FOR COMING TO SUCH CONCLUSION, WE ALSO RELY O N THE KARNATAKA HIGH COURT DECISION IN CIT VS. MWP LTD. (2014) 41 TAXMANN.COM 496 (KAR). S INCE WE ALLOW THE GROUNDS RAISED BY ASSESSEE IN CROSS OBJECTION, THE APPEAL OF REVEN UE IS ACADEMIC AND THE LEGAL ISSUE RAISED BY ASSESSEE IS ALLOWED, THEREFORE, AOS ORDER U/S. 271(1)(C) OF THE ACT IS NOT IN ACCORDANCE TO RULE OF LAW AND IT IS WITHOUT JURISDICTION AS DI SCUSSED ABOVE, SO THE SAME IS QUASHED. 7. IN THE RESULT, APPEAL OF REVENUE AS WELL AS THE CROSS OBJECTION OF ASSESSEE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 23RD JANUA RY, 2019. SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23RD JANUARY, 2019 JD.(SR.P.S.) 8 ITA NO. 477/KOL/2017 & CO NO.19/KOL/2017 LATE BAIJNATH AGARWAL, AY 2014-15 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ACIT, CENTRAL CIRCLE-2(3), KOLKATA. 2 RESPONDENT LATE BAIJNATH AGARWAL, L/H SHRI KUNJ B IHARI AGARWAL, 8A/4, 8 TH FLOOR, 3, ALIPORE ROAD, SATYAM TOWER, ALIPORE, KOLKATA-700 02 7. 3 4 5 CIT(A) -20, KOLKATA (SENT THROUGH E-MAIL) CIT , KOLKATA. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR