Chhoriya Developers & Const. Co., Pune V. Assistant Commissioner of Income-tax,

ITA 1187/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0257 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings; Bogus loan; Documents seized
• Section: 143(3); 153A; 27; 132; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 1176 TO 1180 /P U N/2014 / ASSESSMENT YEAR S : 20 0 3 - 04 TO 2007 - 08 CHHORIYA LAND DEVELOPERS & CONSTRUCTION COMPANY, KANHAIYALAL D. JAIN, C/O. CHHORIYA GROUP, IST FLOOR, KOTHARI PLAZA, BIBWEWADI, KONDHWA ROAD, GERA JUNCTION, LULLANAGAR, PUNE 411 040 / APPELLANT PAN : AADFC1329B VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, NASHIK / RESPONDENT . / ITA NO S . 11 81 TO 118 5 /P U N/2014 / ASSESSMENT YEAR S : 200 4 - 05 TO 200 8 - 09 CHHORIYA LAND DEVELOPERS & ASSOCIATES KANHAIYALAL D. JAIN, C/O. CHHORIYA GROUP, IST FLOOR, KOTHARI PLAZA, BIBWEWADI, KONDHWA ROAD, GERA JUNCTION, LULLANAGAR, PUNE 411 040 / APPELLANT PAN : AADFC6935B VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, NASHIK / RESPONDENT 2 CHHORIYA GROUP . / ITA NO S . 1186 & 1187/P U N/2014 / ASSESSMENT YEAR S : 2006 - 07 & 2008 - 09 CHHORIYA DEVELOPERS & CONSTRUCTION COMPANY, KANHAIYALAL D. JAIN, C/O. CHHORIYA GROUP, IST FLOOR, KOTHARI PLAZA, BIBWEWADI, KONDHWA ROAD, GERA JUNCTION, LULLANAGAR, PUNE 411 040 / APPELLANT PAN : AADFC2486M VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, NASHIK / RESPONDENT . / ITA NO S . 1188 TO 1192/P U N/2014 / ASSESSMENT YEAR S : 2003 - 04 TO 2007 - 08 CHHORIYA BUILDERS & ASSOCIATES KANHAIYALAL D. JAIN, C/O. CHHORIYA GROUP, IST FLOOR, KOTHARI PLAZA, BIBWEWADI, KONDHWA ROAD, GERA JUNCTION, KONDHWA ROAD, GERA JUNCTION, LULLANAGAR, PUNE 411 040 / APPELLANT PAN : AADFC9467A VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, NASHIK / RESPONDENT . / ITA NO S . 1193 TO 1195/P U N/2014 / ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2006 - 07 SMT. SHAILAJA S. CHHORIYA, KANHAIYALAL D. JAIN, C/O. CHHORIYA GROUP, IST FLOOR, KOTHARI PLAZA, BIBWEWADI, KONDHWA ROAD, GERA JUNCTION, LULLANAGAR, PUNE 411 040 / APPELLANT PAN : AANPC4485G VS. THE ASST. COMMISSIONER O F INCOME TAX, CENTRAL CIRCLE - 3, NASHIK / RESPONDENT 3 CHHORIYA GROUP . / ITA NO S . 1196 TO 1200/P U N/2014 / ASSESSMENT YEAR S : 2003 - 04, 2007 - 08 SHRI SHANTILAL D. JAIN, KANHAIYALAL D. JAIN, C/O. CHHORIYA GROUP, IST FLOOR, KOTHARI PLAZA, BIBWEWADI, KONDHWA ROAD, GERA JUNCTION, LULLANAGAR, PUNE 411 040 / APPELLANT PAN : AAYPJ6450D VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, NASHIK / RESPONDENT CENTRAL CIRCLE - 3, NASHIK / RESPONDENT / A PPELLANT BY : SHRI NIKHIL PATHAK & SHRI DEEPAK SHARMA / RE SPONDENT BY : SHRI ANIL KUMAR CHAWARE / ORDER / DATE OF HEARING : 21.12 . 201 6 / DATE OF PRONOUNCEMENT: 28 . 1 2 .2016 / ORDER PER SUSHMA CHOWLA, JM : TH IS BUNCH OF APPEAL S FILED BY RELATED ASSESSEE ARE AGAINST RESPECTIVE CONSOLIDATED ORDER S OF CIT (A) - I, NASHIK DATED 16 . 04 . 2014 RELATING TO ASSESSMENT YEAR S 20 03 - 04 TO 2007 - 08 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - T H E F O LL OW IN G GROUND S A R E TAKEN WITHOUT PRE J UDICE TO EACH OTHER - O N F A CT S AND IN L AW, 1 ] T HE L EA RN E D C I T(A) ER RE D IN DIRECTING L EVY OF P E NALT Y U/ S 271 ( 1 ) ( C ) @ 150 % OF THE TA X S OU G HT T O BE E V ADED O N THE GROUND THAT THE APPELLANT HAD CONCEALED ITS INCOM E AND ALSO MISREPRESENTED TH E FACTS OF THE CAS E. 2] T HE L E ARN E D CIT (A) ERRED IN E NHANCING THE PENALT Y LEVIED FROM 100 % 2] T HE L E ARN E D CIT (A) ERRED IN E NHANCING THE PENALT Y LEVIED FROM 100 % TO 150 % W ITHOUT APPRECIATING THAT ON THE FACTS OF THE CASE AND IN LAW, HE HAD NO POWER T O ENH A NC E THE PENALT Y LE V IED B Y THE A.O. AND 4 CHHORIYA GROUP ACCORDINGL Y , THE ENHANCEMENT MADE B Y TH E L E ARN E D CIT( A ) IS NOT JUSTIFIED AT ALL . 3] THE LEARNED CIT( A ) ERRED IN HOLDING THAT THE ADDITIONAL INCOME 3] THE LEARNED CIT( A ) ERRED IN HOLDING THAT THE ADDITIONAL INCOME DECLARED BY THE ASSESS EE GROUP IN THE COURSE OF SEARCH IN RESPECT OF ON MONEY ON SALE OF PLOTS WAS N O T CORRECT AND TH E SEIZED PAPERS INDICATED UNACCOUNTED LOANS RECEIVED B Y TH E A S S ESSE E AND ACCORDINGL Y, THE ASSESSEE HAD MISREPRESENTED TH E FACT S AND TH E REF O R E , THE LE VY O F PENALTY WAS JUSTIFIED IN LAW . 4 ] T HE L E ARNED C IT (A) FAILED TO APPRECIATE THAT TH E ADDITIONAL INCOME DECLARED B Y TH E G ROUP O F RS . 13.99 CRS. W AS TO BU Y PEACE AND TO CO OPERATE WITH THE DEPT. AND TH E RE W AS NO EVIDENCE THA T THE ASSESSEE HAD ACTUALLY EARNED THAT INCOME AND ACCORDINGL Y , THE PENALTY LE V IED BY THE A . O. WAS NOT JUSTIFIED AT ALL. 5] T HE LE A RNED C IT (A) OUGHT TO HAVE APPRECIATED THAT IF ITS CONTENTION IS ACCEPTED AND TH E NOTINGS ON THE SEIZE PAPERS INDICATE UNACCOUNTED ACCEPTED AND TH E NOTINGS ON THE SEIZE PAPERS INDICATE UNACCOUNTED LOANS RECEIVED BY THE ASSES S EE, IN THAT EVENT, THERE IS NO QUESTION OF TAXING SUCH AMOUNTS IN THE HANDS OF THE ASSESSEE AND CONSEQUENTL Y , THE PENALTY LEVIED SHOULD BE DELETED. 6] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSESSEE SUBMITS THAT IN CASE, PENALT Y IS L EV IABLE , THE SAME SHOULD NOT BE LEVIED ON THE ENTIRE ADDITIONAL INCOM E DECLARED B Y THE ASSESSEE BUT ONL Y ON REASONABLE NET PROFIT PERC E NTA G E TO B E AD O PT E D O N TH E ON MONE Y RECEI V ED B Y THE A SSESSEE. 7] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAD MISREPRESENTED THE FACTS WITHOUT APPRECIATING THAT IF HIS CONTENTION IS ACCEPTED, NO INCOME IS TAXABLE IN THE HANDS OF THE ASSESSEE AND THEREFORE, THE QUESTION OF LEVY OF PENALTY SIMPLY DOES NOT ARISE. THEREFORE, THE QUESTION OF LEVY OF PENALTY SIMPLY DOES NOT ARISE. 8] THE LEARNED CIT(A ) HAS ERRED IN PASSING THE ORDER WITHOUT CONSIDERING THE CORRECT FACTS OF THE CASE. 9] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR LACK OF SATISFACTION BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. 4. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON CHHORIYA GR OUP OF CASES ON 22.08.2008 . DURING THE COURSE OF SEARCH, SOME INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED IN WHICH THERE WERE TRANSACTIONS OF PURCHASE AND SALE OF PLOTS AND SHOPS AT VARIOUS SITES. THE RECEIPTS ON ACCOUNT OF SALES WERE MUCH MORE THAN WH AT WAS DISCLOSED BY THE ASSESSEE IN TH E RETURNS OF 5 CHHORIYA GROUP INCOME FILED UNDER SECTION 139(1) OF THE ACT. IN THE STATEMENT RECORDED ON OATH ON 16.10.2008, SHRI K.D. JAIN (CHHORIYA), PARTNER OF THE FIRM HAD ADMITTED THAT THE ASSESSEE HAD RECEIVED ON - MONEY ON SALE O F PLOTS AND SHOPS WHICH WERE NOT DISCLOSED IN THE RETURNS OF INCOME. HE OFFERED SUM OF RS. 11,44,93,507/ - AS ADDITIONAL INCOME. THEREAFTER, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE RESPECTIVE ASSESSEE FOR DIFFERENT ASSESSMENT YEARS. IN RESP ONSE THERETO, THE GROUP OF ASSESSEE FURNISHED THEIR RETURNS OF INCOME AND THE TOTAL INCOME OFFERED FOR TAX OVER AND ABOVE THE INCOME RETURNED UNDER SECTION 139(1) OF THE ACT WAS RS. 13,99,87,648/ - . THE RESPECTIVE ASSESSEE FURNISHED THE RETURNS OF INCOME IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE ASSESSMENTS IN THE HANDS OF EACH OF THE ASSESSEE FOR DIFFERENT ASSESSMENT YEARS WERE COMPLETED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT AND THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE WAS ADDED AS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT PROCEEDINGS OBSERVED THAT THE ADDITIONAL INCOME WAS DISCLOSED PURSUANT TO SEARCH AND SEIZURE OPERATIONS, OTHERWISE, THE SAME WOULD HAVE REMAINED CONCEALED WITH THE ASSE SSEE. THUS, THE ASSESSEE WAS FOUND TO HAVE CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME WITHIN MEANING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF T HE ACT WERE SEPARATELY INITIATED. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT AND THE CASE OF ASSESSEE BEFORE US IS THAT EITHER OF THE LIMBS AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, HAS NOT BEEN STRUCK OFF. THE ASSESSING OFFICER IN EACH OF THE CASES HAD LEVIED PENALTY UNDER SECTION 6 CHHORIYA GROUP 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN APPEAL. 5. THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER: - 1] T HE ASSESSEE SUBMITS THAT THE PENALTY ORDER PASSED U/S. 271(1)(C) WAS NULL AND VOID SINCE THE NOTICE ISSUED BY THE LD. A.O. WAS BAD IN LAW. 6. THE ASSESSEE HAS OBJECTED TO THE RECORDING OF SATISFACTION BY THE ASSESSING OFFICER AND THE NOTICE ISSUED IN THE CASE BEING BAD IN LAW. THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS PURELY LEGAL IN NATURE AND HENCE, THE SAME IS ADMITTED FOR ADJUDICATION. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT WHERE THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION WHILE INITIATING PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT, AS TO WHETHER THE ASSESSEE HAS CO NCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME , THE SAID SATISFACTION RE CORDED BY THE ASSESSING OFFICER WAS NOT CORRECT AND THE CONSEQUENT NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS INVALID FOR NOT STRIKING OF EITHER OF PORTIONS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT PURSUAN T THERETO, ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT IS INVALID AS HE HAS NOT GIVEN A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. HE REFERRED TO THE ORDER PASSED BY THE AS SESSING OFFICER IN THIS REGARD. FURTHER, HE STATED THAT EVEN THE CIT(A) HAS CONFIRMED THE LEVY OF PENALTY OBSERVING APPELLANT NOT ONLY CONCEALED ITS PARTICULARS OF INCOME BUT ALSO TRIED TO DEFEND ITS CONCEALMENT OF INCOME BY MIS - REPRESENTING THE FACTS. 7 CHHORIYA GROUP H ENCE, IN MY CONSIDERED OPINION, THE APPELLANT DESERVES HIGHER RATE OF PENALTY ATLEAST AT 150%. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) AND HAS POINTED OUT THAT FOR LACK OF SATISFACTION I.E. WHERE THERE IS NO PROPER SATISFACTION RECORDED B Y THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS AND CONSEQUENT THERETO IN NOT COMING TO A FINDING UNDER WHICH LIMB THE ASSESSEE HAS EITHER CONCEALED ITS PARTICULARS OF INCOME OR FURNISHED I NACCURATE PARTICULARS OF INCOME, THEN THE PENALTY ORDER PASSED IN THE CASE LACKS JURISDICTION. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE PROVISIONS OF SECTION 271(1)( 1 B) AND ALSO ON THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF PRESENT BUNCH OF APPEALS, SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON CHHORIYA GROUP OF CASES ON 22.08.2008. DURING THE COURSE OF SEARCH, SOME INCRIM INATING DOCUMENTS WERE FOUND AND SEIZED IN WHICH THERE WERE TRANSACTIONS OF PURCHASE AND SALE OF PLOTS AND SHOPS AT VARIOUS SITES. THE RECEIPTS ON ACCOUNT OF SALES WERE MUCH MORE THAN WHAT DISCLOSED BY THE ASSESSEE IN THE RETURNS OF INCOME FILED UNDER SEC TION 139(1) OF THE ACT. IN THE STATEMENT RECORDED ON OATH ON 16.10.2008, SHRI K.D. JAIN (CHHORIYA), PARTNER OF THE FIRM HAD ADMITTED THAT THE ASSESSEE HAD RECEIVED ON - MONEY ON SALE OF PLOTS AND SHOPS WHICH WERE NOT DISCLOSED IN THE RETURNS OF INCOME. HE OFFERED SUM OF RS.11,44,93,507/ - AS ADDITIONAL INCOME. THEREAFTER, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE RESPECTIVE ASSESSEE FOR DIFFERENT ASSESSMENT YEARS. IN RESPONSE THERETO, THE 8 CHHORIYA GROUP GROUP OF ASSESSEE FURNISHED THEIR RETURNS OF INCOME AND THE TOTAL INCOME OFFERED FOR TAX OVER AND ABOVE THE INCOME RETURNED UNDER SECTION 139(1) OF THE ACT WAS RS.13,99,87,648/ - . THE RESPECTIVE ASSESSEE FURNISHED THE RETURNS OF INCOME IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE ASSESS MENTS IN THE HANDS OF EACH OF THE ASSESSEE FOR DIFFERENT ASSESSMENT YEARS WERE COMPLETED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT AND THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE WAS ADDED AS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER WHILE COMPLET ING ASSESSMENT PROCEEDINGS OBSERVED THAT THE ADDITIONAL INCOME WAS DISCLOSED PURSUANT TO SEARCH AND SEIZURE OPERATIONS, OTHERWISE, THE SAME WOULD HAVE REMAINED CONCEALED WITH THE ASSESSEE. THUS, THE ASSESSEE WAS FOUND TO HAVE CONCEALED PARTICULARS OF INCO ME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME WITHIN MEANING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE SEPARATELY INITIATED. THEREAFTER, THE ASSESSING OFFICER ISSU ED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT AND THE CASE OF ASSESSEE BEFORE US IS THAT EITHER OF THE LIMBS AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, HAS NOT BEEN STRUCK OFF . THE ASSESSING OFFICER IN EACH OF THE CASES HAD LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN APPEAL. 11 . WE FIND THAT SIMILAR ISSUE OF RECORDING OF SATISFACTION BY THE ASSESSING OF FICER BEFORE ISSUE OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT AROSE BEFORE THE TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA), WHEREIN IT WAS HELD AS UNDER: - 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS JURISDICTIONAL ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE REQUIREMENT OF SECTION IS THAT 9 CHHORIYA GROUP WHERE THE ASSESSING OFFICER OR THE COMMISSIONER OF APPEALS OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY THE AMOUNTS AS SPECIF IED IN SUB - CLAUSE (III) WHICH WOULD BE IN ADDITION TO TAX, IF ANY, PAYABLE BY THE SAID PERSON. THE SECTION THUS REQUIRES THE CONCERNED OFFICER TO RECORD SATISFACTION IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, THAT THE PERSON HAS CONCEALED THE PARTICU LARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. AFTER RECORDING THE SATISFACTION, DURING THE COURSE OF PENALTY PROCEEDINGS ALSO, THE CONCERNED OFFICER HAS COME TO A FINDING THAT AS TO WHETHER THE PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND THEREAFTER, LEVY THE PENALTY ACCORDINGLY. THE WORD USED BETWEEN THE TWO ACTS I.E. CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IS OR. S O THE PENALTY LEVIED BY THE CONCERNED OFFICER IS ON SATISFACTION OF ANY OF THE LIMBS AND NOT THE SATISFACTION OF BOTH THE LIMBS. WHERE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME IN PARTICULAR CIRCUMSTANCES, THEN THE ASSESSING OFFICER MAY RECORD SATISFACTION TO THAT EFFECT AND INITIATE PENALTY PROCEEDINGS AND THEREAFTER ON FIXATION OF CHARGE, LEVY THE PENALTY FOR SUCH ACT OF CONCEALING THE PARTICULARS OF INCOME. SIMILARLY, IN CASES WHERE THE ASSESSEE CONCERNED HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN SIMILAR EXERCISE HAS TO BE CARRIED OUT BY THE CONCERNED OFFICER. 14. THE FIRST STAGE OF INVOCATION OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS THE SATISFACTION TO BE RECORDED BY THE ASSESSING OFFICER, WHICH ADMITTEDLY, HAS TO BE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SO, WHERE THE ASSESSMENT PROCEEDINGS ARE PENDING, THEN THE ASSESSING OFFICER HAS TO APPLY HIS MIND AND ON BEING SATISFIED, HE HAS TO GIVE A FINDING THAT THE ASSESSEE BEFORE HIM HAS EITHER CONCEALED THE PARTI CULARS OF INCOME OR ASSESSEE BEFORE HIM HAS EITHER CONCEALED THE PARTI CULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE ISSUE BEFORE HIM. THEREAFTER, THE NOTICE SHOULD BE ISSUED TO SUCH PERSON BY THE CONCERNED OFFICER, WHEREIN IT SHOULD BE CLEAR THAT THE ASSESSEE HAS TO JUSTIFY ITS CASE EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THERE MAY BE CASES WHERE THERE IS ISSUE OF BOTH CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME, BASED ON THE NATURE OF ADDITIONS, THEN IN SUCH CASES, S ATISFACTION AND NOTICE THEREON SHOULD SPECIFY EXACT CHARGE AGAINST THE ASSESSEE. THE CHARGE HAS TO BE FURTHER SPECIFIED WHILE COMPLETING PENALTY PROCEEDINGS AND THE ASSESSING OFFICER HAS TO COME TO A CONCLUSION AS TO WHETHER IT IS CASE OF CONCEALMENT OF I NCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE QUESTION WHICH FURTHER ARISES WHERE THE SATISFACTION RECORDED BY THE ASSESSING OFFICER AND THE NOTICE ISSUED THEREAFTER IS WITHOUT APPLICATION OF MIND, THEN CAN THE SUBSEQUENT ORDER PASSED LEVYI NG PENALTY BE HELD TO BE VALID?. THE HONBLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD DEALT UPON THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT FOR THE PURPOSE OF LEVYING PENALTY FOR CONCEALMENT AND OBSERV ED AS UNDER: - 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDINGS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PR OCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISC ERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION - 1 OR IN 10 CHHORIYA GROUP EXPLANATION - 1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERS ON 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 THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OP PORTUNITY TO MEET 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 GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL 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 OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COU LD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME C ASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDI NG HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION 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 PROCEEDIN GS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID PROCEEDIN GS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS T O BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON 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 ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUG H THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED O N THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION 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 OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NO T SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CL AUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE P ARTICULARS. THE APEX COURT IN THE CASE OF 11 CHHORIYA GROUP ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU E NGINEERING WORKS REPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING P. LTD. REPORTED IN [2008] 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSI TION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. T HE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND . 15. THE HONBLE KARNATAKA HIGH COURT HAS LAID DOWN THE PROPOSITION THAT THE ASSESSING OFFICER IS TO BE SATISFIED IN THE COURSE OF PROCE EDINGS THAT THERE IS EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME UNDER CLAUSE (C) TO SECTION 271(1) OF THE ACT. IT HAS BEEN CATEGORICALLY HELD THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THE HONBLE HIGH COURT HAS THUS, LAID DOWN THAT THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO CONCLUSION THAT WHETHER IT IS CASE OF CONCEALMENT OF INCOME OR CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC), WHEREIN AT PAGE 19 IT WAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTAT ION. APPLYING THE SAID PROPOSITION, IT WAS HELD THAT WHERE THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILARLY, FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THE STANDARD PROFORMA WITHOUT STRIKING OF RELEVANT CLAUSES, AS PER THE HONBLE HIGH COURT WOULD LEAD TO INFERENCE AS TO RELEVANT CLAUSES, AS PER THE HONBLE HIGH COURT WOULD LEAD TO INFERENCE AS TO NON - APPLICATION OF MIND. 16. FURTHER, THE HONBLE KARNATAKA HIGH COURT IN CIT VS. SSAS EMERALD MEADOWS (SUPRA) HAS DISMISSED THE APPEAL OF REVEN UE, WHERE THE TRIBUNAL HAD ALLOWED THE APPEAL OF ASSESSEE HOLDING THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT TO BE BAD IN LAW AS IT DOES NOT SATISFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT UNDER WHICH I T HAS BEEN INITIATED THE HONBLE HIGH COURT HAD RELIED ON DECISION OF DIVISION BENCH OF THE COURT RENDERED IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). THE HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS (SUPRA) HAS DISMISSED T HE SPECIAL LEAVE PETITION. 17. THE PUNE BENCH OF TRIBUNAL IN M/S. SAI VENKATA CONSTRUCTION VS. ADDL. CIT (SUPRA) AND IN SANJOG TARACHAND LODHA VS. ITO (SUPRA) HAVE APPLIED THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT (SUPRA) AND HELD THAT WHERE THERE IS NO STRIKING OFF OF EIT HER OF LIMBS, THEN NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS INVALID AND SUBSEQUENT PENALTY PROCEEDINGS WERE HELD TO BE VITIATED. 18. THE MUMBAI BENCH OF TRIBUNAL IN SANGHAVI SAVLA COMMODITY BROKERS P. LTD. VS. ACIT IN ITA NO.1746/ MUM/2011, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 22.12.2015 WHILE DECIDING SIMILAR ISSUE, WHEREIN THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOME WITHOUT STRIKING INAPPROPRIATE WORDS OR ANY PARTS O F NOTICE AND PROCEEDED TO LEVY PENALTY FOR CONCEALMENT, THEN FOLLOWING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT, THE TRIBUNAL HELD THAT NOTICE ISSUED FOR INITIATING PENALTY PROCEEDINGS WERE INVALID AND CONSEQUENTLY PENALTY PROCEEDINGS WERE I NVALID. 12 CHHORIYA GROUP 19. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY KOLKATA BENCH OF TRIBUNAL IN SHRI DEEPAK KUMAR PATWARI VS. ACIT IN ITA NOS.616 TO 618/KOL/2013, RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2009 - 10, ORDER DATED 03.02.2016 AND IT HAS BEEN FURTHER HELD THA T THE PROVISIONS OF SECTION 292B OF THE ACT CANNOT CURE THE BASIC DEFECT IN ASSUMPTION OF JURISDICTION AND COULD ONLY CURE THE MISTAKE, DEFECT OR OMISSION IN THE RETURN OF INCOME, ASSESSMENT, NOTICE OR THE PROCEEDINGS. THE TRIBUNAL FURTHER HELD THAT SHOW CAUSE NOTICE AND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE WERE PART OF PROCESS OF NATURAL JUSTICE AND THE DEFECT IN SUCH NOTICE COULD NOT BE OVERLOOKED. SIMILAR PROPOSITION HAS FURTHER BEEN LAID DOWN IN OTHER DECISIONS OF VARIOUS BENCHES OF TRIBUNAL WHICH HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE US. 20. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED HEAVY RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA). IN THE FACTS OF THE CAS E BEFORE THE HONBLE BOMBAY HIGH COURT, THE HONBLE HIGH COURT QUASHED THE PENALTY LEVIED FOR ASSESSMENT YEAR 1967 - 68 AS THE SAME WAS IMPOSED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN RESPECT OF OTHER TWO YEARS WHERE THERE WA S NON - STRIKING OF INACCURATE PORTION, THE HONBLE HIGH COURT HELD THAT THE SAME WOULD NOT INVALIDATE THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT. IT WAS FURTHER HELD THAT THE ASSESSMENT ORDERS WERE ALSO MADE AND REASONS FOR ISSUING NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WERE RECORDED BY THE ASSESSING OFFICER AND SINCE THE ASSESSEE FULLY KNEW IN DETAIL THE EXACT CHARGE OF DEPARTMENT AGAINST HIM, IT COULD NOT BE SAID THAT EITHER THERE WAS NON - APPLICATION OF MIND BY THE ITO OR SO - CALLED AMBIG UITY WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF ASSESSEE OF REASONABLE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIGH COURT DELIBERATED UPON THE PROVISIONS OF SECTION 274 OF THE ACT WHICH CONTAINED PRINCIPLE OF NATURAL JUSTICE OF THE A SSESSEE BEING HEARD BEFORE LEVYING PENALTY. IT ALSO HELD THAT MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRIKING OF INAPPROPRIATE PORTION COULD NOT ITSELF BE INVALIDATED THE NOTICE. IT STRIKING OF INAPPROPRIATE PORTION COULD NOT ITSELF BE INVALIDATED THE NOTICE. IT WAS HELD THAT THE ENTIRE FACTUAL BACKGROUND WOULD FALL FOR CONSID ERATION IN THE MATTER AND NO ONE ASPECT WOULD BE DECISIVE. 21. IN RESPECT OF ASSESSMENT YEAR 1967 - 68, THE HONBLE HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA) ACKNOWLEDGED THAT THERE COULD EXIST A CASE WHERE VAGUENESS AND AMBIGUITY IN THE NOTICE COULD D EMONSTRATE NON - APPLICATION OF MIND BY THE AUTHORITY AND / OR ULTIMATE PREJUDICE TO THE RIGHT OF OPPORTUNITY OF HEARING CONTEMPLATED UNDER SECTION 274 OF THE ACT. THE SHOW CAUSE NOTICE FOR ASSESSMENT YEAR 1967 - 68 WAS ISSUED EVEN BEFORE THE ASSESSMENT ORDER WAS MADE AND WHERE THE ASSESSEE HAD NO KNOWLEDGE OF EXACT CHARGE OF DEPARTMENT AGAINST HIM AS IN THE NOTICE NOT ONLY THERE WAS USE OF WORD OR BETWEEN THE GROUP OF CASES BUT THERE WAS USE OF WORD DELIBERATELY ALSO. THE HONBLE HIGH COURT HELD THAT NOT ICE CLEARLY DEMONSTRATED NON - APPLICATION OF MIND ON THE PART OF ASSESSING OFFICER. THE VAGUENESS AND AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY TO THE ASSESSEE SINCE HE DID NOT KNOW OF EXACT CHARGES HE HAD TO FACE. IN THIS BACKGROUND, QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967 - 68 WAS HELD TO BE JUSTIFIED. APPLYING THE SAID PRINCIPLE LAID DOWN BY THE JURISDICTIONAL HIGH COURT, APPLICATION OF MIND BEFORE ISSUING THE NOTICE UNDER SECTION 274 OF THE ACT HAS TO BE CONSIDERED. THE HONBLE HIGH COURT CLEARLY HELD THAT WHERE THERE IS VAGUENESS AND AMBIGUITY IN THE NOTICE ISSUED WHICH COULD DEMONSTRATE NON - APPLICATION OF MIND BY THE AUTHORITY WHICH IN TURN, WOULD ULTIMATELY PREJUDICE THE RIGHT OF OPPORTUNITY OF H EARING OF THE ASSESSEE AS CONTEMPLATED UNDER SECTION 274 OF THE ACT, THEN SUCH NOTICE IS INVALID. 22. NOW, COMING TO THE FACTS OF THE CASE BEFORE US, WHEREIN SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON CHHORIYA GROUP OF CONCERNS ON 13 CHHORIYA GROUP 22.08.2008 AND DECLARATION OF RS.11.44 CRORES WAS MADE IN THE HANDS OF WHOLE GROUP FOR VARIOUS YEARS. CONSEQUENT TO THE NOTICES ISSUED UNDER SECTION 153A OF THE ACT FOR VARIOUS YEARS, DIFFERENT ENTITIES FILED THE RETURN OF INCOME FOR THE RESPECTIVE YEARS AND CUMULATIVEL Y FOR RS.13.99 CRORES AS ADDITIONAL INCOME. THE INCOME WAS DECLARED ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS, WHICH WAS DETECTED FROM THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH. ADMITTEDLY, EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED IN SUCH CASES. HOWEVER, THE CASE OF ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT PROCEEDINGS HAD TO BE SATISFIED THAT THE ASSESSEE HAD EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND IS LI ABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) R.W.S. EXPLANATION 5A OF THE ACT. THE NOTICE IS TO BE ISSUED TO THE ASSESSEE UNDER SECTION 274 OF THE ACT. BEFORE ISSUING SUCH NOTICE, SATISFACTION HAS TO COME OUT FROM THE PROCEEDINGS GOING ON BEFORE THE A SSESSING OFFICER. THE PERUSAL OF ASSESSMENT ORDER PASSED IN THE PRESENT CASE REFLECTS THAT THE ASSESSING OFFICER WHILE INITIATING PROCEEDINGS HAS RECORDED SATISFACTION AS TO THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS ALSO CONCEALE D THE INCOME. THE ONLY SOURCE OF ADDITION IN THE HANDS OF ASSESSEE IS ADDITIONAL INCOME OFFERED BY THE ASSESSEE PURSUANT TO SEARCH OPERATIONS. IN SUCH CIRCUMSTANCES, IT IS CATEGORICALLY A CASE OF CONCEALMENT. HOWEVER, THE ASSESSING OFFICER REFERS TO BOT H THE LIMBS OF SECTION 271(1)(C) OF THE ACT AND THE SATISFACTION RECORDED IN THIS CASE SUFFERS FROM INFIRMITY. FURTHER, EVEN IN THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT, IRRELEVANT PART HAS NOT BEEN STRUCK OFF. WHILE COMPLETING PENALTY PROCEEDINGS ALSO, THE ASSESSING OFFICER MAKES REFERENCE TO BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN THE FINAL, LEVIES PENALTY FOR CONCEALMENT OF INCOME. 23. HOWEVER, THE QUESTION WHICH IS RAISED BEFORE US B Y WAY OF ADDITIONAL GROUND OF APPEAL IS ROOT OF START OF THE PROCEEDINGS I.E. RECORDING OF SATISFACTION AND THE ISSUE OF NOTICE, WHICH HAS BEEN CHALLENGED BY THE SATISFACTION AND THE ISSUE OF NOTICE, WHICH HAS BEEN CHALLENGED BY THE ASSESSEE TO BE INVALID. APPLYING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN C IT & ANR. VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA) AND CIT VS. SSAS EMERALD MEADOWS (SUPRA) AND IN VIEW OF SLP BEING DISMISSED, WE FIND MERIT IN THE PLEA OF ASSESSEE THAT THE SATISFACTION RECORDED IN THE PRESENT CASE TO INITIATE PENALTY PROCEEDING S BOTH FOR CONCEALMENT OF INCOME AND FURNISHING OF PARTICULARS OF INCOME AGAINST ADDITIONAL INCOME OFFERED BY THE ASSESSEE IS INCORRECT. FURTHER, WHERE THE ASSESSEE IS NOT AWARE OF EXACT CHARGE AGAINST HIM, THE AMBIGUITY IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT BY NOT STRIKING OF PORTION WHICH IS NOT APPLICABLE, PREJUDICE THE RIGHT OF REASONABLE OPPORTUNITY TO THE ASSESSEE, AS HE WAS NOT MADE AWARE OF EXACT CHARGE HE HAD TO FACE. IT IS A CLEAR - CUT CASE OF CONCEALMENT SINCE THE AS SESSEE HAD OFFERED ADDITIONAL INCOME PURSUANT TO SEARCH CARRIED OUT AT ITS PREMISES. IT IS NOT THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HENCE, THE ASSESSING OFFICER SHOULD HAVE RECORDED THE SATISFACTION ACCORDINGLY AND ISSUED THE NOT ICE ACCORDINGLY. 24. WE FIND NO MERIT ON THE PARTIAL RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA). THE HONBLE HIGH COURT HAS CLEARLY LAID DOWN THE PROPOSITION THAT THE ASSESSING OFFICER HAS TO MAKE THE ASSESSEE FULLY AWARE OF EXACT CHARGE OF THE DEPARTMENT AGAINST HIM. AS POINTED OUT, IN PRESENT CASE, IN THE ASSESSMENT ORDER ITSELF WHILE RECORDING SATISFACTION FOR INITIATING PROCEEDINGS UN DER SECTION 271(1)(C) OF THE ACT, EXACT CHARGE OF THE DEPARTMENT AGAINST THE ASSESSEE IS NOT CLEAR. THE ASSESSING OFFICER RECORDS THE SATISFACTION FOR INITIATING PENALTY PROCEEDINGS ON BOTH THE COUNTS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURAT E PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT HAD ALSO 14 CHHORIYA GROUP UPHELD THE QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967 - 68 TO BE JUSTIFIED ON ACCOUNT OF VAGUENESS AND AMBIGUITY IN THE NOTICE ISSUED. BUT THE HONBLE HIGH COURT FURTHER HELD THA T WHERE THE ASSESSEE WAS FULLY AWARE OF EXACT CHARGE OF THE DEPARTMENT AGAINST HIM, THEN TECHNICAL NON - STRIKING OF CERTAIN TERMS IN THE NOTICE WOULD NOT INVALIDATE THE PROCEEDINGS. WHERE THERE IS DEFAULT IN THE FIRST STAGE OF MAKING THE ASSESSEE AWARE OF EXACT CHARGE OF THE DEPARTMENT, THEN INITIATION OF PENALTY PROCEEDINGS ARE VITIATED AND THE SAME ARE TO BE QUASHED. THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT ON SUCH VAGUENESS AND AMBIGUITY MAKES SUCH NOTICE INVALID AND PROCEEDINGS THEREAFTER ARE T O BE QUASHED. 25. THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (SUPRA) HAD HELD AS UNDER: - 23. SECTION 271(1)(C) REMAINS A PENAL STATUTE. THE RULE OF STRICT CONSTRUCTION SHALL APPLY THERETO. THE INGREDIENTS FOR IMPOSING PENALTY REMAIN THE SAME. THE PURPOSE OF THE LEGISLATURE THAT IT IS MEANT TO BE A DETERRENT TO TAX EVASION IS EVIDENCED BY THE INCREASE IN THE QUANTUM OF PENALTY, FROM 20 PER CENT UNDER THE 1922 ACT TO 300 PER CENT IN 1985. 24. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION VERY OR SUGGESTION FALSI. 26. WHERE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT CONNOTATIONS, THEN AS PER PROVISIONS OF THE ACT, THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS AS TO UNDER WHICH LIMB THE CASE OF ASS ESSEE INITIATING PENALTY PROCEEDINGS AS TO UNDER WHICH LIMB THE CASE OF ASS ESSEE FALLS. IN THE PRESENT SET OF FACTS, THE SATISFACTION AS RECORDED BY THE ASSESSING OFFICER WHICH IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF DOES NOT ESTABLISH THE CASE OF REVENUE AGAINST THE ASSESSEE THAT IT IS LIABLE FOR LEVY OF PENALTY FOR CONCEAL MENT UNDER WHICH LIMB I.E. FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT BY THE ASSESSING OFFICER ALSO DOES NOT SHOW CAUSE THE ASSESSEE AS TO MAKE HIM AWARE OF EXACT CHARGE LEVIED AGAINST HIM. IN THE ABSENCE OF SAME, IT CAUSES PREJUDICE TO THE RIGHT OF REASONABLE OPPORTUNITY TO BE ALLOWED TO THE ASSESSEE BEFORE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. CONSEQUENTLY, PENALTY NOTICE ISSUED IN THE PRESENT CASE SUFFER S FROM INFIRMITIES I.E. LACK OF SATISFACTION AND LACK OF NOTICE BEING ISSUED IN MAKING THE ASSESSEE AWARE OF EXACT CHARGE AGAINST HIM, HENCE THE SAME IS QUASHED. THE PENALTY PROCEEDINGS COMPLETED PURSUANT TO SUCH NOTICE ARE VITIATED AND THE SAME ARE HELD TO BE INVALID . 12 . FURTHER, IN BUNCH OF CASES I.E. IN NANDKISHOR TULSIDAS KATORE VS. ACIT IN ITA NOS.2174 TO 2180/PN/2014, RELATING TO ASSESSMENT YEARS 2002 - 03 TO 2008 - 09, ORDER DATED 14.12.2016, REFERENCE WAS MADE TO THE JUDGMENT OF HONBLE HIGH COURT OF KARNATAKA IN CIT VS. SSAS EMERALD MEADOWS (2016) 73 T AXMANN.COM 241 (KAR), WHEREIN THE ISSUE NO.1 RAISED BEFORE THE HONBLE HIGH COURT AND ITS REPLY WAS AS UNDER: - 15 CHHORIYA GROUP (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTI CULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271(1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMEN DMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? 1 3 . THE HONBLE HIGH COURT HAD ALLOWED THE CLAIM OF ASSESSEE WHERE THE ASSESSING OFFICER HAD NOT EXPLICITLY MENTIONED THAT AS TO WHETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME, SUFFERS FROM INFIRMITY EVEN IF IT IS ESTABLISHED THAT THE ASSESSEE HAD CONCEALED THE INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AP EX COURT HAS DISMISSED THE SLP FILED BY THE DEPARTMENT. 1 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS 1 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS STRE SSED THAT IN VIEW OF THE PROVISIONS OF SECTION 271(1)( 1 B) OF THE ACT, WHERE THE ORDER CONTAINS DIRECTIONS FOR INITIATION OF PENALTY PROCEEDINGS, SUCH AN ORDER OF ASSESSMENT OR RE - ASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS UNDER CLAUSE (C). ADMITTEDLY, THE SATISFACTION HAS TO BE RECORDED IN THE ORDER OF ASSESSMENT OR RE - ASSESSMENT BY THE ASSESSING OFFICER WHILE FINALIZING THE ASSESSMENT ORDER. HOWEVER, THE ASSESSING OFFICER HAS TO AT INITIAL STAGE ITSELF COME TO A FINDING AS TO WHETHER THE ADDITIONS MADE IN THE HANDS OF ASSESSEE JUSTIFY THE LEVY OF PENALTY PROCEEDI NGS UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT IN THE PRESENT SET OF FACTS, THE ASSESSING OFFICER HAS RECORDED SATISFACTION FOR INITIATING PENALTY PROCEEDINGS ON A CCOUNT OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. 16 CHHORIYA GROUP UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, PENALTY FOR CONCEALMENT IS LEVIABLE WHERE THE ASSESSEE HAS FULFILLED EITHER CONDITIONS I.E. CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS HAS TO BE SATISFIED AS TO UNDER WHICH LIMB, THE PENALTY IS LEVIABLE AND CONSEQUENT THERETO, ISSUE NOTICE IN THIS REGARD. HOWEVER, IN THE FACTS OF T HE PRESENT CASE AND AS POINTED OUT HEREINABOVE, THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION CORRECTLY AND CONSEQUENTLY, WE HOLD THAT INITIATION OF PENALTY PROCEEDINGS AGAINST THE ASSESSEE ARE NOT VALID FOR NON - RECORDING OF SATISFACTION BY THE A SSESSING OFFICER WHILE COMPLETING ASSESSMENT PROCEEDINGS. FURTHER, THE ASSESSING OFFICER HAS FAILED TO STRIKE OFF EITHER OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT, WHICH ARE NOT SATISFIED BY THE ASSESSEE AND CONSEQUENTLY, NOTICE ISSUED UNDER SECTION 27 4 R.W.S. 271(1)(C) OF THE ACT IS BAD IN LAW AND ORDER LEVYING PENALTY FOR CONCEALMENT THEREAFTER, IS INFRUCTUOUS. ACCORDINGLY, WE HOLD SO. THE STATUTE HAS PROVIDED DISTINCTION BETWEEN CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCO ME, WHICH MAY BE THIN LINE OF DISTINCTION, BUT THE SAME HAS TO BE KEPT IN MIND WHILE RECORDING SATISFACTION BY THE ASSESSING OFFICER. FOLLOWING THE SAME PARITY OF REASONING AS LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT & ANR. VS. MANJUNATHA C OTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR), CIT VS. SSAS EMERALD MEADOWS (SUPRA) AND THE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA), WE SET ASIDE THE ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT LEVYING PENALTY FOR CONCEALME NT IN THE RESPECTIVE YEARS. 15. NOW, COMING TO THE MERITS OF CASE ALSO , THE ISSUE WAS SAME AS IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA) , WHEREIN IT WAS HELD AS UNDER: - 27. NOW, COMING TO THE MERITS OF CASE, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS. THE ASSESSING OFFICER HAD ACCEPTED THE SAME AND HAD INITIATED PENALTY PROCEEDINGS UNDER 17 CHHORIYA GROUP SECTION 271(1)(C) OF THE ACT. THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS RELATING TO SECTION 271(1)(C) OF THE ACT ISSUED ENHANCEMENT NOTICE TO THE ASSESSEE. THEREAFTER, HE HAD GONE THROUGH THE SEIZED DOCUMENTS AND ELABORATELY REFERRED TO THEM AND EVEN REPRODUCED THE SCANNED COPIES OF SUCH D OCUMENTS AND COMES TO CONCLUSION THAT LOANS WERE RECEIVED FROM RATANLAL BAFNA, BUT STILL UPHOLDS THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. ONCE THE FINDING OF CIT(A) IS THAT THESE ARE LOANS RECEIVED FROM BAFNA AND ARE NOT ON - MONEY RECEIVED ON SALE OF PLOTS, THEN IN CASES WHERE PENALTY PROCEEDINGS HAVE BEEN INITIATED ON A DIFFERENT FOOTING AND THE CIT(A) REVERSES THE SAME AND HOLDS THE SAME TO BE LOANS RECEIVED BY THE ASSESSEE, THERE IS CHANGE IN OPINION AND BASIS FOR LEVY OF PENALTY FOR CONCEA LMENT VARIES. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THERE IS NO MERIT AT ALL IN LEVYING THE PENALTY @ 150%. ACCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE EVEN ON MERITS. THUS, THE GROUNDS OF APP EAL RAISED BY THE ASSESSEE AND ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 16. FOLLOWING THE SAME PARITY OF REASONING, WE ALLOW THE CLAIM OF ASSESSEE. THE GROUNDS OF APPEAL AND ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 7 . IN THE RESULT , ALL THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 28 TH DAY OF DECEMBER, 2016. SD/ - SD/ - (R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 28 TH DECEMBER , 201 6 . GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) - CIT(A) - I, NASHIK 4. S / THE CIT (CENTRAL), NAGPUR 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE