Manoj Kumar Jain & Sons (HUF), Kolkata V. ACIT, CC-IV, Kolkata, Kolkata

ITA 1238/KOL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5065 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 09-03-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 23-09-2011
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL
• Assessee Lawyers: AMIT KUMAR ACA
• Keywords: Search and seizure; Document seized; Principle of natural justice; Peak credit; Retrospective amendment; Initiation of penalty proceedings; Documents seized
• Section: 133A; 153A; 139

Judgement Text

1 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NOS.1238 TO 1243/KOL/2011 ASSESSMENT YEARS : 2002-03 TO 2007-08 MANOJ KUMAR JAIN & SONS (HUF) -VERSUS- A.C.I.T., CENTRAL CIRCLE-IV, KOLKATA KOLKATA (PAN:AAIHM9669P) (APPELLANT) (RESPONDENT) ITA NOS. 1183 TO 1187/KOL/2011 ASSESSMENT YEARS: 2002-03 TO 2005-06 & 2007-08 A.C.I.T., CENTRAL CIRCLE-IV -VERSUS- MANOJ KUMAR J AIN & SONS (HUF) KOLKATA KOLKATA (PAN: AAIHM9669P) (APPELLANT) (RESPONDENT) FOR THE ASSESSEE SHRI AMIT KUMAR, ACA FOR THE DEPARTMENT : SHRI RAJAT KUMAR KUREEL, JCI T, SR.DR DATE OF HEARING : 09.03.2016. DATE OF PRONOUNCEMENT : 6.4.2016. ORDER PER BENCH ITA NOS.1238 TO 1243/KOL/2011 ARE APPEALS BY THE AS SESSEE AGAINST THE SIX ORDERS ALL DATED 16.6.2011 OF CIT(A)-CENTRAL-I, KOL KATA RELATING TO A.Y.2002-03 TO 2007-08. IN THESE APPEALS, THE ASSESSEE HAS CHALLEN GED THE ORDER OF CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF AO IMPOSING PENAL TY @ 100% OF THE TAX SOUGHT TO BE EVADED U/S 271(1)(C) OF THE ACT. ITA NO.1183 TO 1187/KOL/2011 ARE APPEALS BY THE REVENUE AGAINST THE VERY SAME ORDERS OF CIT(A) FOR AY 2002-03 TO 2005-06 & 2007- 08. IN THESE APPEALS THE REVENUE HAS CHALLENGED TH E ORDER OF THE CIT(A) WHEREBY THE CIT(A) REDUCED THE QUANTUM OF PENALTY IMPOSED BY TH E AO FROM 300% OF THE TAX SOUGHT TO BE EVADED TO 100% OF THE TAX SOUGHT TO BE EVADED. 2 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED ON THE ASSESSEE BY AO ARE AS FOLLOWS :- THE ASSESSEE IS AN HUF. THE ASSESSEE CARRIES ON TH E BUSINESS OF INFRASTRUCTURE DEVELOPMENTS AND TRADING. THERE WAS A SEARCH AND S EIZURE OPERATION CARRIED OUT U/S.132 OF THE INCOME TAX ACT, 1961 (ACT) ON 18.3.2 008 BY THE INCOME TAX DEPARTMENT. IN THE COURSE OF SAID SEARCH & SEIZURE PROCEEDINGS MR.MANOJ KUMAR JAIN, KARTA OF THE ASSESSEE MADE A DISCLOSURE OF RS .8.75 CRORES U/S 132(4) OF THE I.TAX ACT. THE ASSESSEE FILED A LETTER DT.19.02.09 CLAIMI NG THAT SOME OF THE ASSETS AND DOCUMENTS FOUND AND SEIZED IN THE COURSE OF SEARCH & SEIZURE OPERATION AT THE VARIOUS PREMISES OF THE GROUP, BELONGED TO IT. IN THE SAID LETTER, MR. MANOJ KUMAR JAIN, KARTA OF THE ASSESSEE ALSO STATED THAT THE DISCLOSURE OF INCOME MADE U/S 132(4) OF THE I.TAX ACT ON 19.03.08 BY HIM OF RS.8.75 CRORES WAS ON BEH ALF OF THE ASSESSEE. THE BREAK-UP OF THE SAID ADDITIONAL INCOME WHICH HAS BEEN OFFERE D TO TAX SUBSEQUENTLY IN THE RETURN FILED AFTER SEARCH & SEIZURE PROCEEDINGS WERE AS UN DER :- ASST.YEAR AMOUNT 2002-03 21,00,000/- 2003-04 10,50,000/- 2004-05 21,00,000/- 2005-06 24,50,000/- 2006-07 5,00,000/- 2007-08 3,93,00,000/- 2008-09 4,00,00,000/- 8,75,00,000/- 3. NOTICE U/S 153C OF THE ACT WAS ISSUED ON 03.03. 09 FOR THE ASSESSMENT YEAR 2002-03 TO 2007-08. IN RESPONSE TO THE SAID NOTICE, THE ASS ESSEE FILED RETURN FOR THE ASSESSMENT YEAR 2002-03 TO 2007-08 ON 31/03/2009 DICLOSING RS. 4,75,00,000/- OUT OF THE SAID ADDITIONAL INCOME OF 8.75 CRORE. IT CAN BE SEEN FRO M THE BREAK-UP OF INCOME DISCLOSED THAT AFTER EXCLUDING RS.4 CRORES DECLARED IN AY 200 8-09, THE UNDISCLOSED INCOME DISCLOSED FOR AY 02-03 TO 07-08 WAS RS.4,75,00,000/ -. ASSESSMENT FOR THE SAID YEARS 3 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) WERE COMPLETED U/S 153C/143(3) OF THE ACT AT THE RE TURNED/REVISED INCOME. THE ABOVE FACTS HAVE BEEN SUMMARIZED IN THE FOLLOWING TABLE A.Y. RETURNED INOCME/REGULAR INCOME ADDITIONAL INCOME RETURNED U/S 153C ADL.INCOME OFFERED IN THE COURSE OF ASST.PROCEED. TOTAL INCOME OFFERED BY THE ASSESSEE AND INCOME ASSESSED. 2002-03 52,000/- 21,00,000/- NIL 21,52,000/- 2003-04 52,200/- 10,50,000/- NIL 11,02,200/- 2004-05 47,500/- 21,00,000/- NIL 21,47,500/- 2005-06 84,630/- 24,50,000/- NIL 25,34,630/- 2006-07 95,220/- 5,00,000/- NIL 5,95,220/- 2007-08 1,04,940/- 3,93,00,000/- NIL 3,94,04,940/- 2008-09 4,00,00,000/- N.A. 51,50,000/- 4,51,50,000/ - 4. ADDITIONAL INCOMES DISCLOSED FOR THE ASST.YEAR 2002-03 TO 2006-07 ARE NOT BASED ON ANY SEIZED DOCUMENTS OR ASSETS FOUND IN THE COUR SE OF SEARCH & SEIZURE OPERATION. THE INCOME DISCLOSED WAS PURELY VOLUNTARY TO CO-OPE RATE WITH THE DEPARTMENT AND TO BUY PEACE. IN THE ASST. YEAR 2007-08 ONLY INCOME OF RS.40 LACS IS ON THE BASIS OF PEAK BALANCE OF LOAN AS PER SEIZED DOCUMENTS AND BALANCE INCOME DISCLOSED OF RS.3,53,00,000/- IS VOLUNTARY INCOME DISCLOSED AND NOT BASED ON ANY SEIZED MATERIAL OR ASSET FOUND. THE A.O. HAS ALSO NOT FOUND/REFERRE D ANY SEIZED DOCUMENT OR ASSET TO CORROBORATE WITH THE SAID INCOME. 5. IT WAS THE PLEA OF THE ASSESSEE THAT AS PER THE PROVISIONS OF 153A OF THE INCOME TAX ACT, THE RETURN FILED U/S 153A WILL BE TREATED AS RETURN FILED U/S 139 AND ALL THE PROVISIONS OF THE ACT WILL APPLY THERE. SINCE THE R ETURNED INCOME HAS BEEN ACCEPTED , NO QUESTION OF PENALTY ARISES ON THE RETURNED INCOM E. PENALTY U/S 271(1)(C) READ WITH EXPLANATION 5A WILL APPLY TO THE ADDITIONS MADE BY THE AO BASED ON THE SEIZED DOCUMENTS OR ASSETS FOUND AND NOT ON THE INCOME RET URNED U/S 153A/139 OF THE INCOME TAX ACT. THE ASSESSEE ALSO SUBMITTED THAT THE FOLLOWING STATEMENTS WOULD SHOW THAT THE INCOME DISCLOSED FOR A.Y.2002-03 TO 2 007-08 HAS NOT BEEN UTILISED FOR ANY INVESTMENTS BASED ON THE SEIZED DOCUMENTS OR AS SETS FOUND EXCEPT RS.8,50,000/- 4 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) IN THE A.Y. 2004-05 AND RS.51,61,439/- IN THE A.Y. 2007-08. THE DETAILED WORKINGS ARE AS UNDER :- BREAK-UP OF THE INCOME DISCLOSED YEAR WISE AND CUMU LATIVE INCOME: ASST.YEAR ADDL.VOLUNTARY DISCLOSURE OF INCOME CUMULATIVE OF THE VOLUNTARY ADDL.INCOME 2002-03 21,00,000/- 21,00,000/- 2003-04 10,50,000/- 31,50,000/- 2004-05 21,00,000/- 52,50,000/- 2005-06 24,50,000/- 77,00,000/- 2006-07 5,00,000/- 82,00,000/- 2007-08 3,93,00,000/- 4,75,00,000/- 2008-09 4,51,50,000/- 9,26,50,000/- STATEMENT OF CASH IN HAND AVAILABLE AFTER CONSIDERA ING THE ADDITONAL INCOME DISCLOSED A.Y. MANOJ KR.JAIN(HUF) MANOJ KR.JAIN & OTHERS D.K.ENTERPRIS ES JAIN GROUP CASH BOOK TOTAL 2002-03 21,00,000/- --- ---- ---- 21,00,000/- 2003-04 31,50,000/- --- ---- ----- 31,50,000/- 2004-05 42,50,000/- 1,50,000/- ---- 44,00,000/- 2005-06 --- 94,75,280/- ---- ----- 94,75,280/- 2006-07 5,00,000/- 1,11,10,280/- 1,07,34,815/- ---- - 2,23,45,095/- 2007-08 1,88,59,516/- 41,73,880/- 1,80,35,165/- 12, 70,000/- 4,23,38,561/- 2008-09 2,07,69,151/- 11,73,880/- 5,86,815/- 12,74, 360/- 2,38,04,206/- STATEMENT OF UTILISATION OF ADDITONAL INCOME DISCLO SED BASED ON THE SEIZED DOCUMENTS : ASST.YEAR CUMULATIVE ADDITIONAL INCOME CASH IN HAND (CUMULATIVE) ADDITIONAL INCOME UTILISED ON THE BASIS OF SEIZED DOCUMENTS 2002-03 21,00,000/- 21,00,000/- ---- 2003-04 31,50,000/- 31,50,000/- NIL 2004-05 52,50,000/- 44,00,000/- 8,50,000/- 2005-06 77,00,000/- 94,75,280/- ---- 2006-07 82,00,000/- 2,23,45,095/- NIL 2007-08 4,75,00,000/- 4,23,38,561/- 51,61,439/- 5 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) 6. IT WAS ALSO THE PLEA OF THE ASSESSEE THAT ON AN ALYSIS OF THE INCOME DISCLOSED FOR THE ABOVE YEARS AND CASH BALANCE LYING UNUSED AT THE EN D OF THE RELEVANT FINANCIAL YEAR, IT WAS ONLY IN THE ASSESSMENT YEAR 2004-05 AND 07-08 ADDITIONAL INCOME HAS BEEN UTILISED TO THE EXTENT OF RS.8,50,000/- AND RS.51,6 1,439/- RESPECTIVELY FOR THE INVESTMENTS BASED ON THE SEIZED DOCUMENTS WHICH IS WORKED OUT BY REDUCING THE CASH IN HAND AVAILABLE FROM THE CUMULATIVE INCOME OF THA T YEAR. THEREFORE, ACCORDING TO THE ASSESSEE, THE INCOME OFFERED BY THE ASSESSEE IS PUR ELY VOLUNTARY. 7. IT WAS ALSO THE PLEA OF THE ASSESSEE THAT IN TH E COURSE OF SAID SEARCH & SEIZURE OPERATION FOLLOWING CASH, JEWELLERY AND OTHER ASSET S WERE FOUND AND PARTLY SEIZED. THE SAME ARE RELATED TO FINANCIAL YEAR 2007-08 RELEVANT TO ASST.YEAR 2008-09 AS UNDER : SL.NO. ADDRESS ITEMS FOUND SEIZED 1. HARI KUNJ, 4 TH FLOOR, 7, IRON SIDE ROAD, KOL-19 JEWELLERY RJ/1 TO 19 (RS.26,75,743/-) RJ/4,6,7,9,10&12 (RS.13,71,665/-) CASH RS.19,000/- NIL 2. FLAT NO.502, PREMLATA 5 TH FLOOR, 39, SHAKESPEARE SARANI, KOL-17 CASH RS.10,34,690/- RS.10,00,000/- 3. JANKI SADAN, ANCHAL ROAD, NEW BORROUGH OFFICE, SILIGURI CASH RS.5,05,600/- RS.5,00,000/- JEWELLERY SKJ/16 TO 20, SKJ/24,SKJ/28 TO 30(RS/.6,00,469/) SKJ/16 TO 20, SKJ/24,SKJ/28 TO 30 (RS.6,00,469/-) HENCE, NO ASSETS FOUND IN THE COURSE OF SEARCH ARE RELATING TO ASST YEAR 2002-03 TO 2007-08. 8. IN THE ORDERS OF THE AO FOR THE AY 2002-03 TO 2 007-08, IN THIS REGARD, THERE IS A REFERENCE TO VARIOUS ITEMS OF JEWELLERY, UNDISCLOSE D BANK ACCOUNTS AND SEIZED PAPERS/DOCUMENTS. THEREAFTER THERE IS A REFERENCE T O THE ASSESSEES OFFER TO TAX INCOME TO THE EXTENT MENTIONED ABOVE. THE AO HAS ACCEPTED SUCH OFFER TO TAX OF INCOME AND COMPLETED THE ASSESSMENT. THE ORDER OF ASSESSMENT M AKES A REFERENCE TO INITIATION OF PENALTY PROCEEDINGS AS FOLLOWS :- PENALTY PROCEEDINGS U/S 271(1)(C) IS INITIATED ACC ORDINGLY. 6 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) IT WAS THE PLEA OF THE ASSESSEE THAT IN THE LIGHT O F THE ABOVE FACTUAL POSITION WHICH EMANATES FROM RECORDS, IT CAN BE SAFELY CONCLUDED T HAT THE AO WAS NOT SATISFIED IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE WAS GUILTY OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTI CULARS OF INCOME. 9. THE AO ISSUED SHOW CAUSE NOTICE U/S 274 OF THE A CT FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT ON THE ASSESSEE AND IMPOSED PE NALTY ON THE ASSESSEE. ACCORDING TO THE AO BUT FOR THE SEARCH AND SEIZURE OPERATIONS AND DISCOVERY OF MATERIAL IN SUCH SEARCH, THE ASSESSEE WOULD NOT HAVE OFFERED INCOME TO TAX IN THE COURSE OF SEARCH PROCEEDINGS AND IN THE RETURN OF INCOME FILED AFTER THE SEARCH IN THE PROCEEDINGS U/S.153A OF THE ACT. THE AO IMPOSED PENALTY EQUAL TO 300% OF THE TAX SOUGHT TO BE EVADED. IN THE SHOW CAUSE NOTICE U/S 274 OF THE AC T ISSUED PRIOR TO THE PASSING OF THE ORDER U/S 271(1)(C) OF THE ACT IMPOSING PENALTY, TH E AO HAS NOT SPECIFIED AS TO WHETHER THE CHARGE AGAINST THE ASSESSEE IS FOR FURN ISHING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALING PARTICULARS OF INCOME. 10. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE A SSESSEE OFFERED EXPLANATION IN THE COURSE OF ASSESSMENT PROCEEDINGS WHILE OFFERING ADDITIONAL INCOME TO TAX AND SUCH OFFERING WAS ACCEPTED BY THE AO WITHOUT ANY MODIFIC ATION AND WITHOUT ANY FINDING WHATSOEVER AGAINST THE BONA FIDE OF THE WORKINGS SU BMITTED FOR THE ADDITIONAL DISCLOSURE. THE ASSESSEE ALSO RELIED ON CERTAIN JUD ICIAL PRONOUNCEMENTS IN SUPPORT OF ITS CLAIM THAT HE WAS ENTITLED TO IMMUNITY FROM IMP OSITION OF PENALTY. 11. CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD NO T FURNISHED ANY BONA FIDE EXPLANATION IN THE PENALTY PROCEEDINGS TO EXPLAIN T HE REASONS AS TO WHY HE HAD NOT ADMITTED THE ENTIRE INCOMES IN EACH OF THE RETURNS FILED U/S 139(1) OF THE ACT FOR THE RELEVANT AYS. IN QUESTION. HE ALSO HELD THAT UNDE R EXPLANATION 5A TO SEC. 271(1)(C) OF THE ACT, THAT PENALTY IS AUTOMATIC IN RESPECT OF INCOME DECLARED IN A RETURN OF INCOME FILED PURSUANT TO A SEARCH ON OR AFTER 1.6.2 007. THE CIT(A) HOWEVER HELD THAT 7 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) IMPOSITION OF PENALTY AT 300% OF THE TAX SOUGHT TO BE EVADED WAS WITHOUT RECORDING ANY REASONS OR BASIS FOR IMPOSING SUCH PENALTY. HE HELD THAT PENALTY OF 100% OF THE TAX SOUGHT TO BE EVADED WOULD BE JUST AND PROPER. 12. AGGRIEVED BY THE ORDER OF CIT(A) CONFIRMING IM POSITION OF PENALTY AT 100% OF TAX SOUGHT TO BE EVADED THE ASSESSEE IS IN APPEAL F OR THE TRIBUNAL. AGGRIEVED BY THE ORDER OF THE CIT(A) REDUCING THE QUANTUM OF PENALTY FROM 300% OF THE TAX SOUGHT TO BE EVADED TO 100% OF THE TAX SOUGHT TO BE EVADED, T HE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 13. THE ASSESSEE HAS IN HIS APPEALS FILED ADDITIONA L GROUND IN WHICH IT HAS RAISED AN ISSUE THAT THE AO HAS NOT RECORDED SATISFACTION IN THE ORDER OF ASSESSMENT THAT THE ASSESSEE IS GUILTY OF CONCEALING PARTICULARS OF INC OME AND THAT THE SHOW CAUSE NOTICE U/S.274 OF THE ACT BEFORE IMPOSING PENALTY U/S.271( 1)( C) OF THE ACT DOES NOT SPECIFY THE SPECIFIC CHARGE AGAINST THE ASSESSEE AND ON THA T GROUND THE PENALTY IMPOSED IS LIABLE TO BE CANCELLED. A COPY OF THE SHOW CAUSE N OTICE U/S.274 ISSUED IN ALL THE AYS INVOLVED IN THESE APPEALS IS GIVEN AS AN ANNEXURE T O THIS ORDER. 14. SINCE THE ADDITIONAL GROUND PROJECTS THE GRIEVA NCES OF THE ASSESSEE WHICH ARISES FROM THE ORDER OF CIT(A) AND FACTS AVAILABLE ON REC ORD, THE SAME IS ADMITTED FOR ADJUDICATION KEEPING IN VIEW THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO.LTD. VS CIT 2 29 ITR 383 WHEREIN THE HONBLE SUPREME COURT HELD THAT ADJUDICATION OF A LEGAL GRO UND BY WAY OF AN ADDITIONAL GROUND WHEN FACTS ARE AVAILABLE ON RECORD SHOULD BE PERMITTED. 15. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED CO UNSEL FOR THE ASSESSEE AND THE LEARNED DR. THE LEARNED COUNSEL FOR THE ASSESSEE A LSO SUBMITTED THAT NO PROPER SATISFACTION HAS BEEN RECORDED BY THE AO IN THE OR DER OF ASSESSMENT. IT WAS ALSO SUBMITTED THAT IN THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT, THE AO HAS NOT 8 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) STRUCK OFF THE IRRELEVANT PORTION. IN OTHER WORDS IT WAS SUBMITTED THAT THE SHOW CAUSE NOTICE U/S 274 OF THE ACT IS NOT CLEAR AS TO WHETHE R PENALTY IS BEING IMPOSED FOR CONCEALING PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THIS REGARD OUR ATTENTION WAS DRAWN TO THE DECISION OF ITAT KOLKATA BENCH IN THE CASE OF SATYANANDA ACHARIYA BISWAS VS DCIT IN ITA NO.05/ KOL/2010 FOR A.Y.2003-04 DATED 02.12.2015 WHEREIN IT WAS HELD THAT SUCH DEFE CT IN THE SHOW CAUSE NOTICE U/S.274 OF THE ACT RENDERS THE ORDER IMPOSING PENALTY ILLEG AL. THE LEARNED DR RELIED ON THE ORDER OF THE AO. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. AS FAR AS THE APPEALS FILED BY THE ASSESSEE ARE CONCERNED WE FIND THAT THE FACT S OF THE ASSESSEES CASE ARE IDENTICAL TO THE DECISION IN THE CASE OF SATYANANDA ACHARIYA BISWAS VS DCIT RENDERED BY ITAT KOLKATA BENCH (SUPRA). IN THE PRESENT CASE AS WELL AS IN THE CASE OF SATYANANDA ACHARIYA BISWAS (SUPRA), THE AO IN THE ORDER OF ASS ESSMENT ACCEPTED THE OFFER OF ADDITIONAL INCOME TO TAX AS DECLARED IN THE RETURN OF INCOME FILED U/S.153A OF THE ACT AND THERE IS NO SPECIFIC COMMENTS ON THE CONDUCT OF THE ASSESSEE. SO ALSO THE SHOW CAUSE NOTICE U/S.274 OF THE ACT DID NOT CONTAIN SPE CIFIC CHARGE AS TO WHETHER THE ASSESSEE WAS GUILTY OF FURNISHING INACCURATE PARTIC ULARS OF INCOME OR CONCEALING PARTICULARS OF INCOME. THE RULING IN THE CASE OF S ATYANANDA ACHARIYA BISWAS (SUPRA) WOULD THEREFORE APPLY TO THE PRESENT APPEALS BY THE ASSESSEE AS WELL. THE FOLLOWING WERE THE OBSERVATIONS OF THE TRIBUNAL IN THE CASE O F SATYANANDA ACHARIYA BISWAS (SUPRA) ON THE EFFECT OF NOT RECORDING SATISFACTION REGARDING CONCEALMENT IN THE ORDER OF ASSESSMENT AS WELL AS DEFECTIVE NOTICE U/S.274 O F THE ACT. : 6. WE SHALL NOW DEAL WITH THE QUESTION WHETHER PRO PER SATISFACTION WAS ARRIVED AT BY THE AO FOR INITIATING PENALTY PROCEEDINGS U/S .271(1)( C ) IN THE COURSE OF CONCLUDING THE ASSESSMENT PROCEEDINGS WHEREIN THE A DDITIONS IN RESPECT OF WHICH PENALTY WAS IMPOSED WERE MADE. 7. ON THE ABOVE ISSUE THE FIRST ASPECT WHICH WE NOT ICE IS THAT IN THE ORDER OF ASSESSMENT, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER, NOWHERE SPELLS OUT OR INDICATES THAT THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS G UILTY OF EITHER CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME. THE OFFER TO TAX OF INCOME BY THE ASSESSEE HAS JUST BEEN ACCEPTED. IT IS NO DOUB T TRUE THAT IT IS NOT THE REQUIREMENT OF THE LAW THAT THE SATISFACTION HAS TO BE RECORDED IN A PARTICULAR MANNER, ESPECIALLY AFTER 9 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) THE INTRODUCTION OF THE PROVISIONS OF SEC.271(1B) O F THE ACT WITH RETROSPECTIVE EFFECT FROM 1.4.1989. NEVERTHELESS, AS LAID DOWN BY THE H ONBLE DELHI HIGH COURT IN THE CASE OF MS.MADHUSHREE GUPTA (SUPRA), THE POSITION OF LA W BOTH PRE AND POST SEC.271(1B) OF THE ACT IS SIMILAR, INASMUCH, THE AO WILL HAVE TO A RRIVE AT A PRIMA FACIE SATISFACTION DURING THE COURSE OF PROCEEDINGS WITH REGARD TO THE ASSESSEE HAVING CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS, BEFORE HE INITIATES PENALTY PROCEEDINGS. PRIMA FACIE SATISFACTION OF THE AO THAT THE CASE MAY DESERVE THE IMPOSITION OF PENALTY SHOULD BE DISCERNIBLE FROM TH E ORDER PASSED DURING THE COURSE OF THE PROCEEDINGS. AT THE STAGE OF INITIATION OF PENA LTY PROCEEDING THE ORDER PASSED BY THE AO NEED NOT REFLECT SATISFACTION VIS-A-VIS EACH AND EVERY ITEM OF ADDITION OR DISALLOWANCE IF OVERALL SENSE GATHERED FROM THE ORD ER IS THAT A FURTHER PROGNOSIS IS CALLED FOR. THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF MAK DATA (P) LTD. (SUPRA) HAS TO BE UNDERSTOOD IN THE CONTEXT OF THE FACTS OF THE SAID CASE. THE RELEVANT PORTION OF THE JUDGMENT IN THE AFORESAID C ASE, READS THUS: 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN V IEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE A SSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOC UMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF A SSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESS MENT ORDERS AND BLANK SHARE TRANSFER 8 DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED I N THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2 003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED M ORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN TH E INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HA VE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERE D LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR T HAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY O F THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN TH E SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME A ND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCE EDINGS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT IN TO WRITING. 8. THE REVENUE PLACES RELIANCE ONLY ON THE S ENTENCE APPEARING IN PARA-10 OF THE JUDGMENT WITHOUT READING IT IN THE CONTEXT OF THE O BSERVATIONS IN THE LAST PORTION OF PARA-9 OF THE SAID JUDGMENT. THEREFORE EVEN THE HO NBLE SUPREME COURTS DECISION SUGGESTS THAT THE SATISFACTION NEED NOT BE RECORDED IN A PARTICULAR MANNER BUT FROM A READING OF THE ASSESSMENT ORDER AS A WHOLE SUCH SAT ISFACTION SHOULD BE CLEARLY DISCERNIBLE. IF THE AO ACCEPTS ALL THE CONTENTIONS OF THE ASSESSEE AND THE OFFER OF INCOME THAT HAS NOT BEEN DECLARED IN THE RETURN OF INCOME TO TAX WITHOUT INDICATING 10 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) EITHER DIRECTLY OR INDIRECTLY THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, IT CANN OT BE SAID THAT SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS IS DISCERNIBLE FR OM THE ORDER OF ASSESSMENT. IF THE ASSESSEE IN GOOD FAITH OFFERS INCOME TO TAX VOLUNTA RILY PRIOR TO ANY POSITIVE DETECTION BY THE AO, SUCH VOLUNTARY OFFER CANNOT BE TAKEN ADVANT AGE OF BY THE AO TO INITIATE PENALTY PROCEEDINGS AGAINST THE ASSESSSEE WITHOUT SPECIFYIN G THE REASONS WHY PENALTY PROCEEDINGS ARE INITIATED U/S.271(1) ( C) OF THE AC T. IN THE PRESENT CASE, WE HAVE READ THE ORDER OF ASSESSMENT AS A WHOLE AND ARE SATISFIE D THAT SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS IS NOT DISCERNIBLE FROM THE ORD ER OF ASSESSMENT. WE THEREFORE CONCUR WITH THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSSEE THAT INITIATION OF PENALTY PROCEEDINGS WAS NOT PROPER IN THE PRESENT C ASE AND ON THAT GROUND THE IMPOSITION OF PENALTY U/S.271(1)( C) OF THE ACT IS UNSUSTAINABLE. 9. THE NEXT ARGUMENT THAT THE SHOW CAUSE NOTI CE U/S.274 OF THE ACT WHICH IS IN A PRINTED FORM DOES NOT STRIKE OUT AS TO WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURATE PARTICULARS OF INCOME O R CONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SHOW C AUSE NOTICE U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THER EFORE NOT SPELT OUT AS TO WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FU RNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. 9.1. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HA S HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DO WN THAT CERTAIN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOUL D NOT SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PRO CEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 9.2. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN T HE 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 PROCEEDING S 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 PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CO NTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF T HE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF I T IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANAT ION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, I N FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE 11 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) 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 RIGH T TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF TH E DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A P RINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY 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 SPE CIFICALLY. OTHERWISE, 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 THE ASS ESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENC ES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CAS ES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF TH E PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDIN GS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM G UILTY 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 PROCEEDINGS SHOULD BE CONF INED 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 TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN T O THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PR OCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLE S OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROU ND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHI CH 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 ORDE R WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CA NNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL IN COME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIF FERENT. 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 PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME 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 HA S TO BE CLEAR AS TO THE LIMB FOR WHICH 12 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) IT IS LEVIED AND THE POSITION 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 T HE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOU T STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FO LLOWS:- 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 LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. 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 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 SECTION 271(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 BECAUSE O F DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SE CTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDI NGS 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 LIABILITY 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 PROC EEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, I T IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT H AS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND I F NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 13 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) 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 T HE EXPLANATION OFFERED IS NOT BONAFIDE, 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 BONAFIDE 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 IB TO 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 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 ASSESSING AU THORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY 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 MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO TH E ASSESSEE. 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 PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EM ANATE 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 MERITS. HOWEVER, TH E VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIE D, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) 14 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) 9 .3. IT IS CLEAR FROM THE AFORESAID DECISION THAT ON THE 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 IMPOSED. FOLL OWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HOLD THAT THE ORDERS IMPOS ING PENALTY IN ALL THE ASSESSMENT YEARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY P ENALTY IMPOSED IS CANCELLED. 9.4. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDER S IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. IN VIEW OF O UR ABOVE CONCLUSIONS ON THE ISSUE OF NOT RECORDING OF PROPER SATISFACTION AND THE DEFECT IN SHOW CAUSE NOTICE U/S.274 OF THE ACT, WE ARE NOT DEALING WITH THE OTHER ARGUMENTS MA DE ON MERITS OF THE ORDER IMPOSING PENALTY ON THE ASSESSSEE. 17. SINCE THE FACTS ARE IDENTICAL TO THE FACTS OF T HE AFORESAID CASE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL WE HOLD THAT PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS LIABLE TO BE CANCELLED ON THE GROUND THAT TH ERE WAS NO PROPER RECORDING OF SATISFACTION IN THE ORDER OF ASSESSMENT AND THAT TH E SHOW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT SATISFY THE SPECIFIC CHARGE AGAINST TH E ASSESSEE. CONSEQUENTLY THE ORDERS IMPOSING PENALTY FOR ALL THE FOUR ASSESSMENT YEARS ARE HELD TO BE INVALID AND ILLEGAL AND ARE HEREBY CANCELLED. SINCE THE ORDER IMPOSING PENALTY IS CANCELLED, THE REDUCTION OF THE QUANTUM OF PENALTY FROM 300% TO 100% OF THE TAX SOUGHT TO BE EVADED HAS BECOME ACADEMIC/INFRUCTUOUS AND THEREFORE THE APPEA LS FILED BY THE REVENUE ARE DISMISSED. 18. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLOW ED WHILE THE APPEALS BY THE REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE COURT ON 6.4.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6.4.2016. [RG PS] 15 ITA NO. 1238 TO 1243/KOL/2011 & ITA NOS. 1183 TO 11 87/KOL/2011 M/S.MANOJ KUMAR JAIN & SONS (HUF) COPY OF THE ORDER FORWARDED TO: 1.SHRI.MANOJ KUMAR JAIN & SONS (HUF) NO.39, SHAKESPEARE SARANI, 5 TH FLOOR, KOLKATA-17. 2. D.C.I.T., CENTRAL CIRCLE-IV, KOLKATA 3. CIT(A)-CENTRAL-II, KOLKATA 4. CIT-CENTRAL-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES