NARAYAN HEIGHTS & TOWERS, Jaipur V. ITO, Jaipur

ITA 1033/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5583 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 25-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Principle of natural justice; Bonafide belief; Initiation of penalty proceedings
• Section: 143(3); 50C; 153A; 27

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 1033/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. NARAYANA HEIGHTS & TOWERS , S-220, TIME SQUARE, CENTRAL SPINE, VIDHYADHAR NAGAR, JAIPUR CUKE VS. ITO WARD - 2 - 4 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAFFN8605H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : VIJAY GOYAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07.02.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT 20.02.2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-1, JAIPUR DATED 20/09/2016 PERTAINING TO ASSESSMENT Y EAR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO HAS ERRED IN IMPOSING THE PENALTY U/S 271 (1 )(C) OF INCOME TAX ACT, 196 WITHOUT SPECIFYING THE LIMB FOR REASONS IN THE PENALTY NOTICE TO IMPOSE THE PENALTY I.E. WHETHER IT IS FOR CONCEALM ENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE THE INITIATION AND IMPOSING OF PENALTY PROCEEDINGS IS WRONG, BAD IN LAW, IN VALID AND VOID AB-INITIO AND LD. CIT(A) HAS NOT JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF INC OME TAX ACT. (2) UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, JAI PUR HAS ERRED IN CONFIRMING THE PENALTY OF RS. 34,05,436/- IMPOSED U NDER SECTION 271(1)(C) OF I.T. ACT, 1961 BY LD. AO. 2 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. (3) THE APPELLANT PRAYS OR LEAVE TO ADD, TO AMEND, TO DELETE, TO MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFOR E THE HEARING OF APPEAL. 2. BRIEFLY STATED THE FACTS ARE THAT, THE CASE OF T HE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS COMPLE TED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE ORDER DATED 25/03/2015. WHILE FRAMING THE ASSESSMENT , THE ASS ESSING OFFICER ALSO DIRECTED PENALTY UNDER SECTION 271(1)(C). SUBSEQUENTLY, THE ASSESSING OFFICER IMPOSED PENALTY VIDE ORDER DATED 30.09.2015 BY OBSERVING TH AT THE ASSESSEE HAD NOT FILED AN APPEAL AGINST THE ASSESSMENT ORDER AND IT APPEARS T HAT THE ASSESSEE IS SATISFIED WITH THE ORDER PASSED BY THE ASSESSING OFICER. THEREFOR E, IT APPEARS THAT THE ASSESSEE HAS NOTHING TO SAY AND HAS NO OBJECTION REGARDING I MPOSING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND PROCEEDED TO IMPOE D A PENALTY OF RS. 34,05,436/- ON THE CONCEALED INCOME. AGGRIVED BY THIS, THE ASE SSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) BUT AFTER CONSIDERING THE SUBMISSION DISMISSED THE APPEAL. NOW THE ASSESEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. APROPOS THE GROUND NOS. 1 AND 2, THE LD. COUNSE L FOR THE ASSESSEE REITERATED THE SUBMISSION AS MADE IN THE WRITTEN SUBMISSION OF SYNOPSES OF ARGUMENT. THE SUBMISSION AS MADE ARE REPRODUCED AS UNDER:- SUBMISSION OF THE ASSESSEE . 1. INITIATION OF PENALTY IN ASSESSMENT ORDER:- THE LD. AO INITIATED THE PENALTY PROCEEDING U/S 27 1(1)(C) OF INCOME TAX ACT IN THE ASSESSMENT ORDER DATED 25.03.2015 (PB PG 10). THE LD AO INITIATED PENALTY BY MENTIONING THAT:- AS THE ASSESSEE HAS CONCEALED/FURNISHED THE INACCU RATE PARTICULARS OF INCOME THEREFORE, PENALTY U/S 271(1)(C) IS ALSO INI TIATED. NOTICE U/S 274 3 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. FURTHER IN THE PENALTY NOTICE U/S 274 READ WITH SE CTION 271 OF I.TAX ACT DATED 25.03.2015 (COPY AT PB PG 16) , AO MENTIONED THAT:- 271(1)(C) CONCEALED PARTICULARS OF INCOME OR FURNI SHED INACCURATE PARTICULARS OF INCOME PENALTY ORDER:- THE PENALTY ORDER WAS PASSED ON 30/09/15 BY HOLDING THAT THE ASSESSEE HAS CONCEALED INCOME. THE RELEVANT FINDINGS OF LD AO (PB PG 23) IS AS UNDER:- THEREFORE, I IMPOSE A PENALTY OF EQUAL TO 100% O T AX SOUGHT TO BE EVADED ON ACCOUNT OF THE ABOVE FACTS OF THE ASSESSEE OF RS . 34,05,436/- I.E. 100% TAX EVADED. THEREFORE, PENALTY U/S 271(1)(C) IS IMP OSED ON THE CONCEALED INCOME AS PER WORKING GIVEN BELOW. CIT(A) ON PENALTY IN PARA (IX) AT PAGE 13 OF CIT(A)S ORDER, LD CIT(A ) MENTIONED THAT:- THEREFORE, IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT THE APPELLANT FIRM HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY ADOPTING A UNIQUE METHOD WHEREIN SALE CONSIDERATION/COMPENSATION WAS NOT DECLARED ANYWHERE IN ITS RETURN OF INCOME. THUS THE PENALTY PROCEEDINGS WERE INITIATED WITHOUT SPECIFYING THE LIMB FOR REASONS IN THE PENALTY NOTICE TO IMPOSE THE PENALTY I.E. WHETHER THE PENALTY WAS INITIATED FOR CONCEALMENT OF PARTICULARS OF INC OME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER THE PE NALTY WAS LEVIED BY HOLDING THAT THE ASSESSEE HAS CONCEALED THE INCOME. LD CIT( A) TOOK A DIFFERENT VIEW AND CONFIRMED THE PENALTY BY HOLDING THAT THE ASSES SEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFORE THE INITIATION AND IMPOSING OF PENALTY PR OCEEDINGS IS WRONG, BAD IN LAW, IN VALID AND VOID AB INITIO. 2. THE NOTICE U/S 271 SHOULD BE SPECIFIC ON IMPOSIN G OF PENALTY U/S 271(1)(C) OF INCOME TAX ACT, 1961 I.E. CONCEALED PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. RELIANCE IS PLAC ED ON THE DECISION IN THE CASE OF H. LAKSHMINARAYANA VS. ITO, ITAT BANGLORE TRIBUNAL ITA NOS. 992 TO 996/BAN/2014 ORDER DATED 3RD JULY, 2015 WHEREIN THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS MANJUNATHA COTTON AND GINNING FACTORY HAS BEEN CONSIDERED WHEREIN IT HAS BEEN HELD THAT PENALTY PROCEEDING IS A CIVIL LIABILITY, IN FA CT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THE Y INTEND TO IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR TH AT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPOR TUNITY TO MEET THE CASE OF 4 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULA TED IN SECTION 271(1)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY O N THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE TH OUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FIN AL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANN OT BE SUSTAINED. ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALT Y SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATI ON OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THEREFORE, IN N OTICE U/S 274 IS TO BE MARKED APPROPRIATE ON THE BASIS OF LEVY OF PENALTY. THE ST ANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT ITEM WILL LEAD TO AN INFER ENCE AS NON-APPLICATION OF MIND. 3. HONBLE ITAT JAIPUR BENCH, JAIPUR IN ITS JUDGMEN T IN ITA 878/JP/2013 DATED 11.03.2016 IN THE CASE OF SHANKAR LAL KHANDELWAL VS DCIT HELD THAT WHEN ASSESSING OFFICER HAS MENTIONED AT THE TIME OF INIT IATION OF PENALTY PROCEEDING UNDER BOTH THE LIMBS I.E. CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME BUT AT THE TIME OF NOTICE U/S 274 HE SIMPLY HAS TICKED IN PRESCRIBED PROFORMA CONCEALED PARTICU LARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME WITHOUT DELETING E ITHER LIMB OF PENALTY EVEN HE HAS NOT PUT AND IN THE NOTICE ITSELF BETWEEN TWO LIMBS THAN THE INITIATION OF PENALTY PROCEEDINGS CANNOT BE CONSIDERED AS PER LAW AND ASSESSING OFFICER DID NOT HAVE ANY JURISDICTION TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. THE FINDINGS OF HONBLE JURISDICTIONAL ITAT IS AS UNDER :- 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THIS CASE, THE LD ASSES SING OFFICER INITIATED PENALTY PROCEEDINGS FOR CONCEALING OF PARTICULARS OF INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME VIDE ORDER DATED 31/12/2009. NOTICE U/S 274 READ WITH SECTION 271-272 OF THE ACT WAS ISSUED ON 30/12/2009 BY TICK ING OF THE NOTICE AS UNDER:- U/S 271(1)(C):- CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD ASSESSING OFFICER AGAIN GAVE NOTICE DURING T HE COURSE OF PENALTY PROCEEDINGS ON 23/1/2012 WHEREIN HE GAVE SHOW CAUSE NOTICE U/S 271(1)(C) FOR IMPOSING OF PENALTY WITHOUT SPECIFYING THE LIMB FOR REASONS TO IMPOSE THE PENALTY, WHETHER IT IS FOR CONCEALED PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. THE LD CIT(A) HAS CONSIDERED ALL THE ASPECT AND HEL D THAT EXPLANATION 5A TO SECTION 271(1)(C) IS APPLICABLE AS IN THIS CASE, A SEARCH W AS CARRIED OUT AFTER 01/6/2007 AND THE ASSESSEE HAS FURNISHED RETURN FOR A.Y. 2007-08 BEFORE SEARCH AND ADDITIONAL INCOME HAS BEEN DISCLOSED U/S 153A.THEREFORE, DEEMI NG PROVISIONS ARE APPLICABLE. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS DISCLOSED ADDITIONAL INCOME IN RETURN FILED U/S 153A ON THE BASIS OF INCRIMINATING DOCUMENT FOU ND DURING THE COURSE OF SEARCH. WE HAVE CONSIDERED VIEW THAT EXPLANATION 5A IS NOT REQUIRED TO BE MENTIONED BY THE ASSESSING OFFICER SPECIFICALLY AT THE TIME OF INITI ATION OR EVEN IN THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER, BUT BASIC D EFECT WE FOUND THAT THE LD ASSESSING OFFICER HAS MENTIONED AT THE TIME OF INITIATION OF PENALTY PROCEEDING UNDER BOTH THE LIMBS I.E. CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME BUT AT THE TIME OF NOTICE U/S 274 HE SIMPLY HAS TICKED IN PRESCRIBED PROFORMA CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME WITHOUT DELETING EITHER LIMB OF PENALTY EVEN HE HAS NOT PUT AND IN THE NOTICE ITSELF 5 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. BETWEEN TWO LIMBS. THE AMENDED PROVISIONS OF SUB-SE CTION (1B) OF SECTION 271 HAS BEEN CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF MADHU SHREE GUPTA VS. UOL, 317 ITR 107 WHEREIN IT HAS BEEN HELD THAT AT THE STAGE OF INITIATION OF PENALTY PROCEEDINGS, THE ORDER PASSED BY THE ASSESS ING OFFICER NEED NOT REFLECT SATISFACTION VIS A VIS EACH AND EVERY ITEM OF ADDIT ION OR DISALLOWANCE IF THE OVERALL SENSE GATHERED FROM THE ORDER IS THAT A FURTHER PRO GNOSIS IS CALLED FOR. IT WOULD BE SUFFICIENT COMPLIANCE WITH THE LAW THAT THERE IS A PRIMA FACIE EVIDENCE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EVEN AFTER THIS SECTION, THE ASSESSING OFFICER HAS TO SATISFY THE PARTICULAR LIMB OF INITIATION OF PENALTY IMPOSABLE U/S 271(1)(C) OF TH E ACT AT THE TIME OF ASSESSMENT PROCEEDINGS. THE HONBLE KARNATAKA HIGH COURT IN TH E CASE OF CIT VS. M/S MANJUNATHA COTTON & GINNING FACTORY & ORS.(2013) 35 9 ITR 565 (KARN) HELD THAT SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONE D IN SECTION 271 WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE ASSESSEE SHOULD KNOW THE GROUND WHICH HE HAS TO MEET SPECIFICALLY, OTHERWISE, THE PRINCIPLE OF NATU RAL JUSTICE IS OFFENDED ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF TEJ BHAN COTTON GINNING & PRESSING FACTORY VS. CIT, ROHTAK (SUPRA) HAS HELD THAT THE A SSESSING OFFICER IN ASSESSMENT ORDER HAS SATISFIED HIMSELF REGARDING INITIATION OF PENALTY PROCEEDINGS, WHICH WAS TANTAMOUNT TO SATISFACTION HAVE RECORDED TO THE FAC T ON THE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER FOR CONCEALED INCOME IN ASSES SMENT ORDER. THE HONBLE COURT HAS CONFIRMED THE PENALTY EVEN PENALTY PROCEEDINGS INITIATED BY THE ASSESSING OFFICER BY MENTIONING PENALTY PROCEEDING FOR CONCEALING/FUR NISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE PUNJAB & HARYANA HIGH COURT HAS EXPRESSED DIFFERENT VIEW ON INITIATION OF PENALTY PROCEEDINGS EVEN NOTICE U/ S 274 ISSUED BY PUTTING OBLIQUE BETWEEN CONCEALING AND FURNISHING OF INACCURATE PAR TICULARS OF INCOME WHEREAS THE HONBLE KARNATAKA HIGH COURT HAS HELD THAT THE ASSE SSING OFFICER HAS TO SATISFY AT THE TIME OF INITIATION OF PENALTY PROCEEDING AND IS SUING NOTICE U/S 274 OF THE ACT THAT WHETHER PENALTY IS FOR CONCEALED PARTICULARS OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THERE WERE TWO OPINIONS OF T HE HONBLE COURTS. THE HON'BLE SUPREME COURT HAS HELD THAT IN CASE OF TWO VIEWS OF THE COURT, FAVOURABLE VIEW OF THE ASSESSEE WOULD BE TAKEN AS HELD IN THE CASE OF CIT VS VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192 (SC) AND A RECENT DECISION IN THE CASE OF CIT VS. VATIKA TOWNSHIP P LTD. (2014) 367 ITR 466 (SC). THEREFORE, WE ARE O F THE CONSIDERED VIEW THAT INITIATION OF PENALTY PROCEEDINGS IS NOT AS PER LAW AND ASSESSING OFFICER DID NOT HAVE ANY JURISDICTION TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. AS THE MATTER HAS BEEN DECIDED ON TECHNICAL ISSUE, WE ARE NOT EXPRESSING A NY VIEW ON MERIT OF THE CASE. ACCORDINGLY, WE DELETE THE PENALTY CONFIRMED BY THE LD CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 4. HONBLE ITAT IN ITS RECENT JUDGMENT IN CASE OF S HRI MURARI LAL MITTAL ITA NO. 334/JP/2015 ORDER DATED 09/11/16 HAS CANCEL ED THE PENALTY ON THE SAME GROUNDS FOLLOWING THE DECISION OF SHRI SHANKER KHANDELWAL. THE FINDINGS OF HONBLE ITAT ARE AS UNDER:- 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE RECORD THAT THE ASSESS EE IS AN INDIVIDUAL DECLARING INCOME FROM HOUSE PROPERTY AND INCOME FROM BUSINESS OR PROFESSION AS PROPRIETOR OF M/S. MITTAL ENTERPRISES. THE RETURN U /S 139(1) OF THE ACT WAS FILED ON 25-10-2004 BY THE ASSESSEE DECLARING TOTAL INCOME OF RS. 1,51,100/-. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON 2 7-08-2008 ON RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. THE RETURN U /S 153 OF THE I.T. ACT WAS FILED ON 31-03-2009 DECLARING TOTAL INCOME OF RS. 5 ,85,090/- WHICH INCLUDED ADDITIONAL INCOME SURRENDER OF RS.4,53,819/-. THE A SSESSMENT WAS MADE BY 6 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. THE AO U/S 153A/143(3) OF I.T. ACT ON TOTAL INCOME OF RS. 6,18,980/- WHICH INCLUDED THE ADDITION OF RS. 33,892/- MADE BY THE A O ON ACCOUNT OF DISALLOWANCE MADE FROM VARIOUS EXPENSES. IN PENALTY PROCEEDINGS, THE AO IMPOSED THE PENALTY OF RS. 1,36,145/- BEING 100% OF TAX PAYABLE ON ADDITIONAL INCOME OF RS. 4,53,819/- DECLARED BY THE ASSESSEE. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. IT IS NOTED FROM TH E RECORD THAT THE AO HAD INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF IN COME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE NOTICE ALS O, THE AO HAS NOT SPECIFIED FOR WHICH SPECIFIC REASON THE PENALTY PROCEEDINGS H AS BEEN INITIATED WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. ULTIMATELY, THE AO LEVIED THE PENALTY FOR C ONCEALMENT OF INCOME. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT & A NR VS. MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 HELD AS UNDER :- THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF C IVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HIM AS SECTION 274 MAKES IT CLEAR THAT THE ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AN D SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AS SUC H HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A P RINTED FORM WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOUL D NOT SATISFY THE REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASS ESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100 PER CENT. TO 300 PER CENT. OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWIS E, THE PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW-CAUSE NOTIC E IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON TH E ASSESSEE. IT IS ALSO NOTED THAT SIMILAR TYPE OF ISSUE WAS DEC IDED IN FAVOUR OF THE ASSESSEE BY ITAT COORDINATE BENCH IN THE CASE OF SHANKAR LAL KHANDELWAL VS. DCIT, CENTRAL CIRCLE- 1, JAIPUR VIDE ITS ORDER DATED 11-0 3-2016 IN ITA NO. 878/JP/2013 FOR THE ASSESSMENT YEAR 2007-08 BY OBSE RVING AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THIS CASE, THE LD ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR CONCEALING OF PAR TICULARS OF INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME VIDE OR DER DATED 31/12/2009. NOTICE U/S 274 READ WITH SECTION 271-272 OF THE ACT WAS ISSUED ON 30/12/2009 BY TICKING OF THE NOTICE AS UNDER:- U/S 271(1)(C):- CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD ASSESSING OFFICER AGAIN GAVE NOTICE DURING T HE COURSE OF PENALTY PROCEEDINGS ON 23/1/2012 WHEREIN HE GAVE SHOW CAUSE NOTICE U/S 271(1)(C) FOR IMPOSING OF PENALTY WITHOUT SPECIFYING THE LIMB FOR REASONS TO IMPOSE 7 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. THE PENALTY, WHETHER IT IS FOR CONCEALED PARTICULAR S OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD CIT(A) HAS CONSIDERED ALL THE ASPECT AND HELD THAT EXPLANATION 5A TO SECTION 271(1)(C) I S APPLICABLE AS IN THIS CASE, A SEARCH WAS CARRIED OUT AFTER 01/6/2007 AND THE ASSESSEE HAS FURNISHED RETURN FOR A.Y. 2007-08 BEFORE SEARCH AND ADDITIONA L INCOME HAS BEEN DISCLOSED U/S 153A. THEREFORE, DEEMING PROVISIONS A RE APPLICABLE. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS DISCLOSED ADD ITIONAL INCOME IN RETURN FILED U/S 153A ON THE BASIS OF INCRIMINATING DOCUME NT FOUND DURING THE COURSE OF SEARCH. WE HAVE CONSIDERED VIEW THAT EXPLANATION 5A IS NOT REQUIRED TO BE MENTIONED BY THE ASSESSING OFFICER SPECIFICALLY AT THE TIME OF INITIATION OR EVEN IN THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSI NG OFFICER, BUT BASIC DEFECT WE FOUND THAT THE LD ASSESSING OFFICER HAS M ENTIONED AT THE TIME OF INITIATION OF PENALTY PROCEEDING UNDER BOTH THE LIM BS I.E. CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PART ICULARS OF INCOME BUT AT THE TIME OF NOTICE U/S 274 HE SIMPLY HAS TICKED IN PRESCRIBED PROFORMA CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME WITHOUT DELETING EITHER LIMB OF PENALTY EVEN HE HAS NOT PUT AND IN THE NOTICE ITSELF BETWEEN TWO LIMBS. THE AMENDED PROVIS IONS OF SUBSECTION (1B) OF SECTION 271 HAS BEEN CONSIDERED BY THE HON'BLE D ELHI HIGH COURT IN THE CASE OF MADHU SHREE GUPTA VS. UOL, 317 ITR 107 WHER EIN IT HAS BEEN HELD THAT AT THE STAGE OF INITIATION OF PENALTY PROCEEDI NGS, THE ORDER PASSED BY THE ASSESSING OFFICER NEED NOT REFLECT SATISFACTION VIS A VIS EACH AND EVERY ITEM OF ADDITION OR DISALLOWANCE IF THE OVERALL SENSE GATHE RED FROM THE ORDER IS THAT A FURTHER PROGNOSIS IS CALLED FOR. IT WOULD BE SUFFIC IENT COMPLIANCE WITH THE LAW THAT THERE IS A PRIMA FACIE EVIDENCE FOR CONCEALMEN T OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EVE N AFTER THIS SECTION, THE ASSESSING OFFICER HAS TO SATISFY THE PARTICULAR LIM B OF INITIATION OF PENALTY IMPOSABLE U/S 271(1)(C) OF THE ACT AT THE TIME OF A SSESSMENT PROCEEDINGS. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S MANJUNATHA COTTON & GINNING FACTORY & ORS.(2013) 359 ITR 565 ( KARN) HELD THAT SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONE D IN SECTION 271 WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE ASSESSEE SH OULD KNOW THE GROUND WHICH HE HAS TO MEET SPECIFICALLY, OTHERWISE, THE P RINCIPLE OF NATURAL JUSTICE IS OFFENDED ON THE BASIS OF SUCH PROCEEDINGS, NO PENAL TY COULD BE IMPOSED TO THE ASSESSEE.THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF TEJ BHAN COTTON GINNING & PRESSING FACTORY VS. CIT, ROHTAK ( SUPRA) HAS HELD THAT THE ASSESSING OFFICER IN ASSESSMENT ORDER HAS SATISFIED HIMSELF REGARDING INITIATION OF PENALTY PROCEEDINGS, WHICH WAS TANTAM OUNT TO SATISFACTION HAVE RECORDED TO THE FACT ON THE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER FOR CONCEALED INCOME IN ASSESSMENT ORDER. THE HONB LE COURT HAS CONFIRMED THE PENALTY EVEN PENALTY PROCEEDINGS INITIATED BY T HE ASSESSING OFFICER BY MENTIONING PENALTY PROCEEDING FOR CONCEALING/FURNIS HING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE PUNJAB & HARYANA HIGH COURT HAS EXPRESSED DIFFERENT VIEW ON INITIATION OF PENALTY P ROCEEDINGS EVEN NOTICE U/S 274 ISSUED BY PUTTING OBLIQUE BETWEEN CONCEALING AN D FURNISHING OF INACCURATE PARTICULARS OF INCOME WHEREAS THE HONBL E KARNATAKA HIGH COURT HAS HELD THAT THE ASSESSING OFFICER HAS TO SATISFY AT THE TIME OF INITIATION OF PENALTY PROCEEDING AND ISSUING NOTICE U/S 274 OF TH E ACT THAT WHETHER PENALTY IS FOR CONCEALED PARTICULARS OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. THERE WERE TWO OPINIONS OF THE HONBLE C OURTS. THE HON'BLE SUPREME COURT HAS HELD THAT IN CASE OF TWO VIEWS OF THE COURT, FAVOURABLE 8 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. VIEW OF THE ASSESSEE WOULD BE TAKEN AS HELD IN THE CASE OF CIT VS VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192 (SC) AND A RECENT D ECISION IN THE CASE OF CIT VS. VATIKA TOWNSHIP P LTD. (2014) 367 ITR 466 ( SC).THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT INITIATION OF PENALTY P ROCEEDINGS IS NOT AS PER LAW AND ASSESSING OFFICER DID NOT HAVE ANY JURISDICTION TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. AS THE MATTER HAS BEEN DECIDE D ON TECHNICAL ISSUE, WE ARE NOT EXPRESSING ANY VIEW ON MERIT OF THE CASE. A CCORDINGLY, WE DELETE THE PENALTY CONFIRMED BY THE LD CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 5. HONBLE KOLKATA ITAT IN THE CASE OF VAIBHAV TULS YAN VERSUS I.T.O WARD 29 (4) , KOLKATA I.T.A NOS. 736 & 737/KOL/2013 DATED: 27MA Y 2016 [2016 (11) TMI 1030] HAS CANCELLED THE PENALTY ON THE SAME GROUND BY HOLDING THAT:- 10. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. THE QUESTION BEFORE US IS AS TO WHETHER THE PENALTY ORD ER PASSED BY THE AO AND CONFIRMED BY THE CIT(A) FALLS FOR OUR CONSIDERATION IN PURSUA NCE OF THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT SUPRA. THAT ON PERUSAL OF THE SAID SHOW CAUSE NOTICE DATED 30- 12-2010 ISSUED U/S. 274 R.WS. 271(1)( C) OF THE ACT PURPORTEDLY ISSUED TO SHOW CAUSE WHY THE PENALTY SHALL NOT BE IMPOSED, WE FIND THAT IRRELEVANT PORTION OF SUCH NOTICE WAS NOT STRUCK OUT BY THE AO. THEREFORE, THE SAID N OTICE IS NOT CLEAR WHETHER IT WAS ISSUED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF SUCH INCOME. WE FIND THAT THE ASSESS EE AS RELIED ON THE ORDER DATED 06- 11-2015 IN THE CASE OF SUVAPRASSANNA BHATTACHARYA V S. ACIT, KOLKATA IN ITA NO. 1303/KOL/2010 FOR THE AY 2006-07 IS APPLICABLE TO T HE CASE ON HAND. THE RELEVANT FINDINGS OF THE SAID TRIBUNAL ORDER IS REPRODUCED H EREIN BELOW FOR BETTER UNDERSTANDING: 8. THE NEXT ARGUMENT THAT THE SHOW CAUSE NOTICE U/S . 274 OF THE ACT WHICH IS IN A PRINTED FORM DOES NOT STRIKE OUT AS TO WHETHER TH E PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURATE PARTICULAR S OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT THE AO HAS NOT STRUCK OU T THE IRRELEVANT PART. IT IS THEREFORE NOT SPELL OUT AS TO WHETHER THE PENALTY P ROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF IN COME OR CONCEALING PARTICULARS OF SUCH INCOME. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACT ORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SH OULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTA IN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NO T SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PEN ALTY PROCEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB I S BAD IN LAW. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID D ECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 9 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. 5.1 THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS L AID DOWN THE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER OF IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDIN GS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS I NITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY R EFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WH ICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD N OT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMIN G PROVISION CONTAINED IN EXPLANATION1 OR IN EXPLANATION1(B), THEN THOUGH PEN ALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED I N SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND I MPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEE T THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE GRO UND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INIT IAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, T HAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE O FFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATIS FACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE C ONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE G ROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS O N WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSES SEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PR OCEEDINGS MAY BE VALID AND 10 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEN D PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROC EEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON T HE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSI TION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS O F THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHE R DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALI DATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE A CT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURAT E PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISS UING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEAL MENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE A PEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HEL D THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED A ND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASS ESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE N OTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PRO FORMA WITHO UT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON APPLICA TION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS F OLLOWS: 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EME RGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIA BILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOS ING PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGRED IENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SEC TION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DIS CERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORIT Y OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FRO M THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BEC AUSE OF DEEMING PROVISION. 11 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE A SSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER . I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILIT Y IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE OR DER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTER EST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIAT E PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSME NT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORIT IES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO B E ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXP LANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PRO VE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SU BSTANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE AND ALL FACT S RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDING S, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PR OCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE AS SESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPE CIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETH ER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS O F INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENT IONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. 12 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB A ND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SE PARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEE DINGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORREC T PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, TH E VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PE NALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) IT IS CLEAR FROM THE AFORESAID DECISION THAT ON TH E FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECT IVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IM POSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HO LD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE T O BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE, THEREFORE, CANCEL THE ORDE RS IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. 11. IN THE PRESENT CASE, AS WE NOTED ABOVE, THE AO FAILED TO STRIKE OUT THE IRRELEVANT PORTION IN THE SAID SHOW CAUSE NOTICE, RESPECTFULLY FOLLOWING THE ORDER ABOVE, WE CANCEL THE PENALTY LEVIED U/S. 271(1) ( C) OF THE A CT BY THE ASSESSING OFFICER AS CONFIRMED BY THE CIT( A) FOR BOTH THE ASSESSMENT YE ARS UNDER CONSIDERATION. HAVING HELD THAT THE NOTICE ISSUED BY THE AO U/SEC 274 R/W SEC 271(1)(C) OF THE ACT DURING THE COURSE OF PENALTY PROCEEDINGS IS NOT IN CONFORM ITY WITH THE RELEVANT PROVISIONS OF THE ACT, WE ARE OF THE VIEW THAT SECTION 292B CAN N OT COME TO THE RESCUE OF THE REVENUE AND THE RELIANCE OF THE LD.DR ON THE SAID P ROVISION IS CLEARLY MISPLACED. THEREFORE, PRELIMINARY ISSUE AS RAISED BY THE ASSES SEE BY WAY OF ADDITIONAL GROUND FOR BOTH THE ASSESSMENT YEARS 2006-07 & 200708 ARE ALLOWED, IN VIEW OF THE SAME THE OTHER GROUNDS RAISED REQUIRES NO ADJUDICATION, THER EFORE, ALL ARE DISMISSED. 12. IN THE RESULT, THE APPEALS OF ASSESSEE ARE ALL OWED. 13 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. THEREFORE, THE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME, TWO ARE DIFFERENT DEFAULTS AND THEY CANNOT BE INTERMIXE D. FURTHER, THE CIT(A) HAS NOT CONFIRMED THE CONCEALMENT OF INCOME BUT HE TOOK A DIFFERENT V IEW BY HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFO RE, THE ORDER OF LOWER AUTHORITIES DESERVES TO BE SET ASIDE AND PENALTY LEVIED BY AO DESERVES T O BE CANCELLED. 3.1. ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTAT IVE OPPOSED THE SUBMISSION AND SUBMITTED THAT THERE IS NO INFIRMITY INTO THE O RDER OF THE AUTHORITIES BELOW. FURTHER, HE SUBMITTED SMALL PROCEDURAL MISTAKES CAN NOT BE THE BASIS TO HOLD THE IMPUGNED ORDER AS BAD IN LAW. 3.2. WE HAVE HEARD THE RIVAL CONTENTION, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. FOR THE SAKE OF CLARITY THE RELEVANT CONTENTS OF THE ASSESSMENT ORDER ARE REPR ODUCED AS UNDER: PENALTY U/S 271(1)(C) IS SEPARATELY AS ASSESSEE HA S CONCEALED THE INCOME. RELEVANT CONTENTS OF THE PENALTY ORDER ARE REPRODU CED AS UNDER:- AS THE ASSESSEE HAD NOT FILED ANY APPEAL AGAINST O RDER OF THE AO AND IT APPEARS THAT THE ASSESSEE IS SATISFIED WI TH THE ORDER PASSED BY THE AO. THEREFORE, IT APPEARS THAT THE ASSESSEE HAS NOTHING TO SAY AND HAS NO OBJECTION REGARDING IMPOSING THE PENALTY U/S 271(1)(C) OF I.T. ACT, 1961. THEREFORE, I IMPOSE A PENALTY OF EQUAL TO 100% OF TAX SOUGHT TO BE EVADED ON ACCOUNT OF THE ABOVE ACTS OF THE ASSES EE OF RS. 34,05,436/- I.E. 100% TAX EVADED. IN THE LIGHT OF THE ABOVE, WE NEED TO EXAMINE WHETH ER ASSESSMENT ORDER AND THE PENALTY ORDER COMPLY WITH THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. WE FIND THAT ON PAGE 3 OF THE ASSESSMENT ORDER, THE ASSESSI NG ORDER, AO OBSERVED AS UNDER:- 14 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. AS THE ASSESSEE HAS CONCEALED/FURNISHED THE INACCU RATE PARTICULARS OF INCOME THEREFORE, PENALTY U/S 271(1) (C) IS ALSO INITIATED. 3.3. AS PER SECTION 271 (1)(C), THE ASSESSING OFFIC ER IS EMPOWERED TO IMPOSE PENALTY IF IN THE COURSE OF ANY PROCEEDINGS UNDER T HIS ACT IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF SUCH INCOME. FROM THE ABOVE PROVISION IT IS CLEAR THAT THERE HAS TO BE A SPECIFIC SATISFACTION BY THE ASSESSING OFFICER THAT THE ASSE SSEE IS GUILTY OF CONCEALING THE PARTICULARS OF HIS INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOMES. 3.4. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSIN G OFFICER SHOULD GIVE A SPECIFIC FINDING. IN THE PRESENT CASE, IN THE ASSESSMENT OR DER AS NOTED ABOVE THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS CONCEALED/ FURNISHED THE INACCURATE PARTICULARS OF INCOME. THEREFORE, THE PENALTY UNDE R SECTION 271(1) (C) WAS ALSO INITIATED, FROM THIS IT CAN NOT BE INFERRED WHETHER THERE IS SPECIFIC CHARGE OF CONCEALING THE PARTICULARS OF INCOME OR FURNISHED T HE INACCURATE PARTICULARS OF SUCH INCOME LAW IS WELL SETTLED THAT THE ASSESSING OFFIC ER HAS TO COME TO A DEFINITE SATISFACTION WHETHER THE ASSESSEE HAS CONCEALED THE INCOME OF PARTICULARS OR FURNISHED THE INACCURATE PARTICULARS OF INCOME. TH E HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. MANJUNATHA COTTON A ND GINNING FACTORY,359 ITR 565(KAR.) HAS HELD THAT THE NOTICE U/S 274 OF TH E ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED FOR CONCEALMENT O F PARTICULARS OF INCOME OR INACCURATE PARTICULARS OF INCOME. IN THE PRESENT C ASE NOTICE UNDER SECTION 274 DATED 25/3/2015 ENCLOSED AT PAPER BOOK PAGE 16 READS AS U NDER: PENALTY NOTICE UNDER SECTION 274, READ WITH SECTIO N 271 OF THE IT ACT. 1961 15 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2012-13. IT APPEARS TO ME THAT YOU HAVE:- READ WITH SECTION 271(1)(C) CONCEALED PARTICULARS OF INCOME OR FURNIS HED INACCURATE PARTICULARS OF INCOME. THEREFORE, THERE IS NO SPECIFIC CHARGE BY THE ASSES SING OFFICER. FURTHER, IT IS NOTED THAT THE ASSESSING OFFICER IN PENALTY ORDER (AS NOT ED HEREINABOVE) HAS PROCEEDED ON THE BASIS OF THE ASSUMPTION THAT THE ASSESSEE IS SA TISFIED WITH THE ASSESSMENT ORDER. THEREFORE, IT APPEARS THAT THE ASSESSEE HAS NOTHING TO SAY AND HAS NO OBJECTION REGARDING THE IMPOSING OF THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER WAS NOT JUST IFIED IN IMPOSING THE PENALTY ON THIS BASIS, THE ACTION OF THE ASSESSING OFFICER IS CONTRARY TO THE PROVISION OF LAW. THE LD. CIT (A) WITHOUT CONSIDERING THE BINDING PRECEDE NTS PROCEEDED TO HOLD THAT THE PENALTY ORDER CAN NOT BE INVALIDATED ON ACCOUNT OF ANY MISTAKE OR AFFECT OR OMISSION IF ANYWHERE IN VIEW OF THE PROVISION OF SECTION 292 B OF THE ACT. THIS FINDING OF THE LD. CIT (A) IS CONTRARY TO THE JUDGMENT OF THE HON BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT AND ANOTHER VS. MANJUNA THA COTTON AND GINNING FACTORY,359 ITR 565(KAR.) (SUPRA). THE HONBLE KARN ATAKA HIGH COURT HAS HELD AS UNDER:- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMER GES IS AS UNDER : (A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIAB ILITY. (B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. 16 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. (C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. (D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 . (E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR THE ORDER OF THE APPELLATE AUTHORITY OR TH E REVISIONAL AUTHORITY. (F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) AND 1(B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER W HICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION . (G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 2 71(1)(C) IS A SINE QUA NON FOR THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS B ECAUSE OF THE DEEMING PROVISION CONTAINED IN SUB-SECTION (1B). (H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE COMMIS SIONER. (I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. (J) THE IMPOSITION OF PENALTY EVEN IF THE TAX LIABI LITY IS ADMITTED IS NOT AUTOMATIC. (K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORD ER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDI NGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT I S ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY THE AUTHORITIES IT HAS RESU LTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMIT TED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER. (L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. (M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. (N) THE DIRECTION REFERRED TO IN EXPLANATION 1(B) T O SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. (O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN A PPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY . 17 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME (Q) SENDING PRINTED FORM WHERE ALL THE GROUNDS MENT IONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW. (R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPE CIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE IS OFF ENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASS ESSEE. (S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. (T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PRO CEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANAT E FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT O F THE PROCEEDINGS. (U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORREC T PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON THE MERITS. HOWEVER , THE VALI DITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PE NALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSE SSMENT OR REASSESSMENT CANNOT BE DECLARED AS INVALID IN THE PENALTY PROCEE DINGS. IN THE LIGHT OF THE ABOVE JUDGMENT WE ARE UNABLE TO AFFIRM THE ACTION OF THE AUTHORITIES BELOW. AS THE INITIATION OF PENALTY UN DER SECTION 271(1)(C) VIDE NOTICE 274 OF THE ACT IS NOT INCONFORMITY WITH THE REQUIRE MENT OF THE LAW. THUS, THE PENALTY ORDER CAN NOT BE SUSTAINED IN THE EYES OF T HE LAW. SAME DESERVES TO BE QUASHED. HENCE, GROUND NO. 1 THE ASSESSEES APPEA L IS ALLOWED. 4. GROUND NO. 2 IS ON MERIT, THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSION AS MADE IN THE WRITTEN BRIEF. THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY PROCEEDINGS ARE SEPARATE FROM ASSE SSMENT PROCEEDINGS AND FINDING IN THE ASSESSMENT PROCEEDINGS DOES NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE IS GUILTY OF CONCEALING THE INCOME AS SUBMISSIONS OF S UBMITTED INACCURATE PARTICULARS OF 18 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. INCOME. HE SUBMITTED THAT THE PENALTY UNDER SECTIO N 271(1)(C) IS NOT AUTOMATIC. HE SUBMITTED THAT THERE IS NO POSITIVE MATERIAL TO DEM ONSTRATE THAT THE ASSESSEE HAS MADE WILLFUL ATTEMPT TO CONCEAL THE INCOME AND FURN ISH THE INACCURATE PARTICULAR OF INCOME. HE SUBMITTED THAT THERE MUST BE AN INDEPEN DENT FINDING TO THIS EFFECT AS HELD BY THE HONBLE CALCUTTA HIGH COURT, IN THE CA SE OF DURGA KAMAL RICE MILLS VS CIT (2004) 265 ITR 25(CAL.). 4.1. HE SUBMITTED THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER MADE TWO ADDITIONS ONE OF RS. 61,09,482/- APPLYING THE PROVI SIONS OF SECTION 45(4) OF THE INCOME TAX ACT, THE OTHER IS OF RS. 49,11,349/- ON ACCOUNT OF SHORT-TERM CAPITAL GAIN ON LAND ACQUIRED BY THE NHAI THESE ADDITIONS MADE R EPRESENT TO ASSESSED INCOME BUT NOT CONCEALED INCOME OR INCOME FOR WHICH INACCU RATE PARTICULAR WERE SUBMITTED. 4.2. HE SUBMITTED THAT IN RESPECT OF ADDITION OF RS . 61,09,482/-, THE ASSESSEE TRANSFER ITS PART OF AGRICULTURE LAND (0.2300 HECTA RES) TO ONE OF ITS PARTNERS SHRI SITARAM ON REDEMPTION AS PART OF CAPITAL REDEMPTION WHILE SALE DEED DATED 5/11/2011 FOR RS. 1,81,95,000/- THE COST OF THE LAN D AGAINST THE SALE WAS RS. 2,04,19,388/- THE STAMPED AUTHORITY ADOPTED VALUE F OR THE PURPOSE OF STAMP DUTY OF RS. 1,98,42,556/-. HOWEVER, THE ASSESSING OFFICER IGNORED THE ACTUAL SALE CONSIDERATION AT RS. 1,81,95,000/- AS WELL AS THE D EEMED CONSIDERATION UNDER SECTION 50C OF THE ACT OF RS. 1,98,42,556/- BUT TOO K THE SALE CONSIDERATION OF RS. 2,65,28,870/- TREATING THE SAME AS FAIR MARKET VALU E ON THE BASIS OF COMPENSATION PAID BY NHAI. HE SUBMITTED THAT HAD THE ACTUAL SAL E CONSIDERATION AND DEEM CONSIDERATION UNDER SECTION 54C WAS TAKEN THEN THER E HAVE BEEN NO PROFIT BUT LOSS. HE SUBMITTED THAT THIS ADDITION IS PATENTLY WRONG A ND IT CAN NOT BE CONSIDERED AS CONCEALED INCOME FOR WHICH INACCURATE PARTICULARS H AVE BEEN FILED. HE SUBMITTED 19 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. THAT EVEN SECTION 45(4) OF THE ACT CAN NOT BE APPLI ED. HE FURTHER SUBMITTED THAT THE ASSESSEE WAS OF THE VIEW THAT COMPULSORY ACQUISITIO N BY NHAI WOULD NOT ATTRACT THE CAPITAL GAIN FURTHER IN RESPECT OF ADDITION OF RS. 49,11,349/- THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE INCOME WAS EXEMPT FROM THE TAX ON ACCOUNT OF COMPULSORY ACQUISITION UNDER SECTION 10(37) OF THE ACT. THE L D. COUNSEL RELIED ON THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF GTO VS. RAJMATA SHANTI DEVI(2001) 76 ITR 299 (AHD) AND ALSO PLACE RELIANCE ON THE JUD GMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF PRICE WATERHOUSE COOP ERS PVT. LTD. VS. CIT AND ANOTHER 348 ITR 306 (SC). HE FURTHER SUBMITTED THA T THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT, WAS PASSED ON THE BASIS OF INFORMATION SUPPLIED BY THE ASSESSEE. SO, IT IS NOT THE CASE WHERE THE ASSESSE E HAS DELIBERATELY CONCEALED THE MATERIAL PARTICULARS. IN SUPPORT OF THIS LD. COUNS EL FOR THE ASSESSEE DREW OUR ATTENTION TO PROFIT AND LOSS ACCOUNT AND THE DETAIL S ON FIXED ASSETS AS FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4.3. THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED TH IS SUBMISSION AND SUBMITTED THAT THERE IS NO ILLEGALITY INTO THE ORDER OF THE A UTHORITY BELOW. 4.4. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT INTO THE CONTENTION OF THE LD . COUNSEL FOR THE ASSESSEE THAT OUT OF TWO ADDITIONS ONE ADDITION OF RS. 61,09,482/- WA S WRONGLY MADE AND THE ASSESSEE HAS FURNISHED ALL MATERIAL FACTS BEFORE TH E ASSESSING OFFICER UNDER THESE FACTS THE ASSESSING OFFICER OUGHT NOT TO HAVE LEVIE D THE PENALTY. WE FIND FORCE INTO THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE THAT IN THE PENALTY PROCEEDING THE AO SHOULD CONSIDER THE FACTS IN RIGHT PERSPECTIVE. HE SHOULD COME TO A SPECIFIC FINDING 20 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. WITH REGARD TO CONCEALMENT OF INCOME. IN THE CONSID ERED VIEW, THE EXPLANATION AS GIVEN BY THE ASSESSEE OUGHT TO HAVE BEEN CONSIDERED BY THE AO, THE AO SHOULD NOT TO HAVE PASSED PENALTY ORDER IN A MECHANICAL WAY M ERELY ON THE ASSUMPTION THAT THE ASSESSEE HAS ACCEPTED THE CHARGE OF CONCEALMENT OF INCOME. GROUND NO. 2 OF APPEAL IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20/02 /2017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 20/02/2017 POOJA- VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S NARAYAN HEIGHTS & TOWERS, JA IPUR. 2. THE RESPONDENT THE INCOME TAX OFFICER, WARD 2 (4), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1033/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR