DEPUY MEDICAL P.LTD, MUMBAI V. ASST CIT RG 6(2), MUMBAI

ITA 1453/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0202 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice; Depreciation; Opportunity of being heard; Principle of natural justice; Question of law; Initiation of penalty proceedings; Reasonable cause; Corroborative evidences; Assessment record
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 1378 / MUM/ 20 1 5 ( / ASSESSMENT YEAR: 2 006 - 07 ) ASSTT. COMMISSIONER OF INCOM E TAX, CIRCLE 6(2) (1) , ROOM NO.563/ - , AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S DEPUY MEDICAL PVT LTD., - 64 - 66 JOHNSON HOUSE, SENAPATI BAPAT MARG, MAHIM MUMBAI - 400016 (FORMERLY JOHNSON AND JOHNSON LTD.) ( / APPELLANT) : ( / RESPONDENT ) ITA NO. 1453 / MUM/ 2015 ( / ASSESSMENT YEAR: 2006 - 07 ) M/S DEPUY MEDICAL PVT LTD., - 64 - 66 JOHNSON HOUSE, SENAPATI BAPAT MARG, MAHIM , MUMBAI - 400016 (FORMERLY JOHNSON AND JOHNSON LTD. ) / VS. ASSTT.COMMISSIONER OF INCO ME TAX, RANGE 6(2), MUMBAI. ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : AACCD4595J ( / APPELLANT) : ( / RESPONDENT ) / REVENUE BY : SHRI AARSI PRASAD / ASSESSEE BY : SHRI RAJAN VORA AND SHRI PRANAY GANDHI / DATE OF HEARING : 19 .6. .2017 / DATE OF PRONOUNCEMENT : 29. 6 . 201 7 2 ITA NO. 1378 AND 1453 /MUM/2015 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED ARE CROSS - APPEAL S BY THE REVENUE AND ASSESSEE PER TAINING TO ASSESSMENT YEAR 20 06 - 07 . THE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 1 2 , MUMBAI , DATED 17.12.2014 WHICH IN TURN HAS ARISE N FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 30.10.2009 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 19 61(IN SHORT THE ACT). ITA NO.1378/MUM/2015 2 . GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER : A.Y.2006 - 07 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE PENALTY LEVIED U/S271(1) ( C) FOR FAILING TO SUBSTANTIATE THE CLAIM OF SALES PROMOTION AND ADVERTISEMENT EXPENSES OF RS. 78,24,986/ - .' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THE FACTUAL POSITION THAT THE ASSESSEE HAS MADE AN INCORRECT CLAIM OF EXPENSES, AND THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE IT WITH ADEQUATE DETAILS AND SUPPORTING EVIDENCES. ' 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ADDITIONS WERE CONFIRMED IN FIRST APPEAL SINCE THE ASSESSEE CLAIMED THAT THE EXPENSE WAS DEBITED ON ESTIMATED BASIS AND NO BILLS WERE AVAILABLE AT THAT POINT. ' 3 ITA NO. 1378 AND 1453 /MUM/2015 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE TO THE FILE OF THE AO OR CONFIRM THE ORDER OF THE AO. ITA NO.1453/MUM/2015 3 . GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, DEPUY MEDICAL PRIVATE LIMITED (NOW MERGED WITH 'JOHNSON & JOHNSON PRI VATE LIMITED') (HEREINAFTER REFERRED TO AS THE 'APPELLANT') CRAVES LEAVE TO PREFER AN APPEAL AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS)12, MUMBAI [HEREINAFTER REFERRED TO AS THE 'LEARNED CIT(A)'], IN PURSUANCE TO PENALTY ORDER PAS SED BY THE ASSISTANT COMMISSIONER OF INCOME TAX .CIRCLE - 6(2),MUMBAI (HEREINAFTER REFERRED TO AS THE 'AO') ON THE FOLLOWING GROUNDS, EACH OF WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEA RNED CIT (A) ON FACT AND IN LAW HAS: 1. ERRED IN PARTLY CONFIRMING PENALTY OF RS.2,S6,S1,73S/ - WITHOUT APPRECIATING THE APPELLANT HAS NEITHER FURNISHED INACCURATE PARTICULARS OF INCOME NOR CONCEALED THE INCOME; PENALTY ON DISALLOWANCE OF SELLING AND DI STRIBUTION EXPENSES OF RS.7,53,67,556 / - 2. ERRED IN UPHOLDING THE PENALTY ON DISALLOWANCE OF RS.7,53,67,556/ - OF SELLING AND DISTRIBUTION EXPENSES BEING COST OF INSTRUMENTS DISTRIBUTED FREE OF COST TO DOCTORS/HOSPITALS BY TREATING IT AS CAPITAL EXPENDIT URE; 3. WITHOUT PREJUDICE TO ABOVE, PENALTY IF ANY SHOULD BE LEVIED ON NET DISALLOWANCE THAT IS DISALLOWANCE OF COST OF INSTRUMENTS LESS DEPRECIATION ALLOWED ON THE SAME, PENALTY LEVIED ON DISALLOWANCE OF PAYMENTS OF RS.8,40,807/ - 4 ITA NO. 1378 AND 1453 /MUM/2015 4. ERRED IN UPHOLDING PENALTY ON ADDITION ON ACCOUNT OF EXPENSES WRONGLY DEBITED TO THE PROFIT & LOSS ACCOUNT TO THE EXTENT OF RS.8,40,807/ - 5. FAILED TO APPRECIATE THAT THE APPELLANT HAS WRONGLY DEBITED THE AMOUNT TO THE ACCOUNT OF APPELLANT INSTEAD OF J&J SRI LANKA AND THE APPELLANT SUO - MOTO REVERSED, AND OFFERED TO TAX THE SAID AMOUNT IN SUBSEQUENT AY IE. AY 2007 - 08 AND HENCE NO PENALTY IS LEVIABLE ON THE SAME. THE APPELLANT CRAVES, TO CONSIDER EACH OF THE ABOVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER AND CRAVE S, LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 4 . THE ASSESSEE ALSO RAISED ADDITIONAL GROUND WHICH READS AS UNDER : BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, DEPUY MEDICAL PRIVATE LIMITED (NOW MERGED WITH 'J OHNSON & JOHNSON PRIVATE LIMITED') (HEREINAFTER REFERRED TO AS THE 'APPELLANT') CRAVES LEAVE TO PREFER AN APPEAL AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALSL) - 12. MUMBAI [HEREINAFTER REFERRED TO AS THE 'CIT(A)'] IN PURSUANCE TO PENA LTY ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 6(2), MUMBAI (HEREINAFTER REFERRED TO AS THE 'AO') ON THE FOLLOWING GROUNDS, EACH OF WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A), ON FACT AND IN LAW HAS: INITIATION OF PENALTY PROCEEDINGS IS NOT VALID 6. FAILED TO APPRECIATE THE FACT THAT THE LEARNED AO HAD NOT STRUCK - OFF THE INAPPROPRIATE PORTION OF THE NOTICE ISSUED UNDER SECTION 274 R.W.S 271.(1.)(C ) OF THE INCOME - TAX ACT, 1961 AND THEREBY, THE AO HAS NOT INDICATED THE GROUND ON WHICH PENALTY PROCEEDINGS HAVE BEEN INITIATED IN CASE OF THE APPELLANT, AND HENCE THE PENALTY PROCEEDINGS UNDERTAKEN BY LEARNED AO ARE BAD IN LAW AND PENALTY ORDER PASSED IN PURSUANCE OF THAT OUGHT TO BE QUASHED. 5 ITA NO. 1378 AND 1453 /MUM/2015 THE ASSESSEE CRAVES, TO CONSIDER EACH OF THE ABOVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER AND CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 5 . FIRST WE WOULD L IKE TO DEAL WITH AND DISPOSE OFF THE ADDITIONAL GROUND WHICH IS LEGAL AND TECHNICAL ONE QUA THE AO NOT STR IKING OFF ONE OF THE TWO LIMB ON WHICH THE PENALTY IS PROPOSED TO BE LEVIED IN THE NOTICE ISSUED U/S 271(1)( C ) OF THE ACT . 6 . THE LD. AR VEHEME NTLY SUBMITTED THAT THE GROUND RAISED BY WAY OF TECHNICAL AND LEGAL ISSUE AS AN ADDITIONAL GROUND WAS NOT RAISED BEFORE EITHER BEFORE THE AO OR LD.CIT(A) AND FOR THE FIRST TIME IS BEING TAKEN BEFORE THIS TRIBUNAL . THE LD.AR PRAYED BEFORE THE BENCH THAT THE ISSUE BEING RAISED IS BEING TECHNICAL AND LEGAL ARIS ING OUT OF THE ASSESSMENT RECORD AVAILABLE BEFORE THE AUTHORITIES BELOW. THE ASSESSEE IS WITHIN ITS RIGHT TO RAISE THE SAID ISSUE AND THEREFORE THE SAME SHOULD BE ADMITTED AND ADJUDICATED AS PER TH E LAW . 7 . THE LD. DR OBJECTED TO THE ADMISSION OF THE ADDITIONAL GROUND AS FILED BY THE LD.AR ON THE GROUND THIS GROUND WAS NOT RAISED BEFORE THE AUTHORITIES BELOW AND HENCE AT THIS BELATED STAGE THE ASSESSEE SHOULD NOT BE TO RAISE AS THE SAME WAS AN AFT ER THOUGHT. 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS ON THE ISSUE OF ADMISSION OF ADDITIONAL GROUND RAISED BY THE ASSESSEE. WE FIND THAT THE 6 ITA NO. 1378 AND 1453 /MUM/2015 ISSUE RAISED BY THE ASSESSEE IS PURELY TECHNICAL AND LEGAL ONE AND IS ARISING OUT OF ASSESSMENT RECO RDS WHICH WERE BEFORE THE AUTHORITIES BELOW. IN OUR OPINION, THE ISSUE RAISED BY THE ASSESSEE GOES TO THE ROOT OF THE PENALTY AS IMPOSED U/S 271(1) ( C ) OF THE ACT . DURING THE COURSE OF HEARING THE LD.AR INVITED OUR ATTENTION TO THE CASE LAW, WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE HAS EVERY RIGHT TO PLACE ANY GROUND FOR ADJUDICATION IN THE APPEAL PROCEEDINGS WHICH GOES TO ROOT OF THE MATTER NAMELY (I) NATIONAL THERMAL POWER CO.LTD (229 ITR 383 (SC) ,( II)JUTE CORPORATION OF INDIA LTD (187 ITR 688(SC) AND (III ) AHMEDABAD ELECTRICITY CO.LTD (199 ITR 351 (BOM) FB. AFTER PERUSING THE RATIO LAID DOWN IN THESE DECISIONS , WE FIND THAT IN ALL THE ABOVE CASE, IT HAS BEEN HELD THAT THE ASSESSEE CAN RAISE AND RECOUP THE ISSUE LEGALLY ARISING FROM THE ASSESSMENT ORDER BEFORE THE TRIBUNAL FOR THE FIRST TIME. ACCORDINGLY, WE ADMIT THE ISSUE RAISED BY THE ASSESSEE FOR ADJUDICATION. 9 . THE LD. AR VEHEMENTLY ARGUED BEFORE US WHILE REFER R ING TO THE NOTICE ISSUED U/S 271(1)( C ) OF THE ACT DATED 3.10.2009 AS FI LED AT PAGE 259 - 260 OF THE PAPER BOOK SUBMITTED THAT THE NOTICE HAS BEEN ISSUED BY THE AO MECHANICALLY AND WITHOUT APPLICATION OF MIND AS THE AO HAS NOT STRUCK OFF ONE OF THE TWO LIMBS I.E. WHETHER THE PENALTY ON WHICH THE PENALTY WA S BEING LEVIED AND T HEREFORE THE NOTICE ISSUED BY THE AO FOR IMPOSING THE 7 ITA NO. 1378 AND 1453 /MUM/2015 PENALTY WAS A INVALID NOTICE AND CONSEQUENT ORDER PASSED BY THE AO U/S 271(1)( C ) WAS ALSO INVALID AND DESERVED TO BE QUASHED. THE LD. AR POINTED OUT THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) OF T HE ACT VIDE ORDER DATED 30.10.2009, THE AO INITIATED THE PENALTY PROCEEDINGS FOR CONCEALMENT OF TAXABLE INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND WHILE PASSING THE ORDER U/S 271(1) ( C ), THE AO HAS ONLY MENTIONED THAT IT IS FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)( C ) OF THE ACT AND THEREFORE THERE WAS COMPLETE LACK OF APPLICATION OF MIND ON THE PART OF THE AO. IN VIEW OF THESE FACTS, THE LD.AR PRAYED THAT THE ORDER PASSED BY THE AO U/S 271(1)( C ) SHOULD BE QUASHED . 1 0 . ON THE OTHER HAND, THE LD. DR VEHEMENTLY OPPOSED THE ARGUMENTS OF THE LD.AR BY SUBMITTING THAT THE AO WHILE PASSING THE PENALTY ORDER HAVE TAKEN INTO CONSIDERATION BOTH THE PARTS I.E. CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF THE INCOME AND ACCORDINGLY NOTICE WAS ISSUED U/S 271(1 ) ( C ) DATED 30.10.2009 AND PENALTY WAS IMPOSED. THE AO HAS CONSIDERED ALL MATERIAL FACTS WHICH LEAD TO INITIATION OF PENALTY AND IMPOSITION THEREOF U/S 271(1 )( C ) OF THE ACT AND HENCE PRAYED THA T THE ORDER OF THE AO BE CONFIRMED BY UPHOLDING THE CIT(A) ORDER. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND REUSED THE RELEVANT MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND 8 ITA NO. 1378 AND 1453 /MUM/2015 CASE LAWS AS CITED BY THE ASSESSEE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE AO HAS INITIATED PENALTY PROCEEDINGS WHILE FRAMING THE ASSESSMENT BY STATING THAT THE PENALTY PROCEEDINGS WAS BEING INITIATED FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREAFTER NOTICE U/S 271(1)( C ) DATED 30.10.2009 WAS ISSUED WITHOUT STRIKING OFF ONE OF THE TWO LIMBS ACCORDING TO WHICH PENALTY TO BE LEVIED. IN OTHER WORDS, THE AO DID NOT MENTION THAT WHETHER THE PENALTY PROPOSED TO BE LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME . THE ISSUE OF NOTICE IN STANDARD FORM AT SHOW COMPLETE LACK OF APPLICATION OF MIND ON THE PART OF THE AO WHILE FRAMING THE ASSESSMENT ORDER AS WELL AS WHILE ISSUING PENALTY NOTICE.T HE AO HAS AGAIN FAILED TO MENTION ONE OF THE LIMB ON WHICH PENALTY WAS TO BE LEVIED. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE IN AGREEMENT WITH THE TECHNICAL AND LEGAL ISSUE RAISED BY THE LD.AR THAT THE PENALTY U/S 271(1)( C ) IS WITHOUT APPLICATION OF MIND AND DESERVED TO BE D ELETED. THE LD. AR IN SUPPORT OF HIS CONTENTION CITED NUMBER OF DECISIONS ONE OF THE DECISION IS THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF P K JOSHUA V/S INCOME TAX OFFICER - IN ITA NOS.4487 TO 4491/MUM/2014 (AYS 2001 - 2002 TO 200 5 - 06) ORDER DATED 7.6.2017, 9 ITA NO. 1378 AND 1453 /MUM/2015 (WHEREIN BOTH OF US ARE PARTY). THE TRIBUNAL VIDE PARA 8 OF THE TRIBUNAL ORDER HAS OBSERVED AND HELD AS UNDER : 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE OR DERS OF AUTHORITIES BELOW AND CASE LAW RELIED UPON BY THE PARTIES. THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAS ONLY STATED THAT THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY WITHOUT SPECIFYING OR MENTIONING ANY SPECIFIC CHARGE UNDER WHICH THE ASSESSEE IS BEING PROPOSED TO BE PENALIZED I.E. WHETHER THE ASSESSEE HAS CONCEALED A PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WE ALSO FIND FROM THE SHOW CAUSE NOTICE DATED 28.12.2007 ISSUED UNDER SECTION 271(1) (C) R.W.S.274 OF THE ACT EXTRACTED HEREINBELOW, THE AO DID NOT MENTION OR STRUCK OFF THE ONE OF THE TWO LIMBS UNDER WHICH THE PENALTY WAS BEING PROPOSED TO BE IMPOSED. THE SHOW NOTICE ISSUED U.S 271(1) OF THE ACT IS EXTRACTED BELOW FOR THE SAKE OF READY REFERENCE AND CONVENIENCE: - NOTICE U/S 274 R.W.S.271 OFTHE INCOME TAX ACT, 1961. OFFICE OF T H E INCOME TAX , 28( 2)( 3) , MUMBAI DATE: 28.12.2007 TO, SHRI P K JOSHUA, NAVI MUMBAI. PAN:AAAC15902J WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2005 - 06 IT APPEARS TO ME THAT YOU: - *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SECTION 22(1) / 22(2) / 34 OF THE INDIA N INCOME TAX ACT,1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) OR BY A 10 ITA NO. 1378 AND 1453 /MUM/2015 NOTICE GIVEN UNDER SECTION 139(2) / 148 OF THE INCOME TAX ACT, 1961, NO. --- ---------------- DATED --------------- OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED TO BY THE SAID SECTION 139(1) OR BY SUCH NOTICE. HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 22(4) / 23(2) OF THE I NDIAN INCOME TAX ACT, 1922 OR UNDER SECTION 142 (1 )/143(2) OF THE INCOME TAX ACT , 1961. *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME - OR ----- ---- ------------- FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT A.M. /P.M. ON *****20____ AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER - SECTION - 271 OF THE INCOME TAX ACT , 1961. I F YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE, YOU MAY SNOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERE D BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271(1)(C) **** WITHIN 07 DAYS FROM THE RECEIPT OF THIS NOTICE. (INCOME TAX OFFICER 28(2)(3), MUMBAI . FINALLY , T HE AO IMPOSED THE PENALTY AFTER REJECTING THE CONTENTIONS AND SUBMISSIONS AS RAISED BY THE ASSESSEE AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EVADED ON 7,35,728/ - WHICH IS RS.2,45,472/ - WITHOUT POINTING OUT THE SPECIFIC LIMB UNDER WHICH THE PENALTY WAS L EVIED AS IS APPARENT FROM THE HIGHLIGHTED PORTION OF NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT. IN THE APPELLATE PROCEEDING CHALLENGING THE PENALTY , THE FAA PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. NOW FIRST W E WILL DECIDE THE TECHNICAL GROUND NO 2 RAISED IN THE ADDITIONAL GROUNDS OF APPEAL BY THE ASSESSEE. WE FIND FROM THE NOTICE THAT IT WAS ISSUED IN STANDARD FORMAT WITHOUT STRIKING OFF ANY OF THE TWO LIMBS I.E. FOR CONCEALING THE PARTICULARS OF INCOME OR FUR NISHING INACCURATE PARTICULARS OF INCOME OF SUCH INCOME UNDER WHICH THE PENALTY WAS INITIATED AGAINST THE ASSESSEE. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT THE AO LACKED APPLICATION OF MIND IN INITIATING PENALTY PROCEEDINGS WHILE FRAMING ASSESSMENT AND ALSO WHILE ISSUING THE NOTICE INITIATING PENALTY PROCEEDINGS U/S 274 R.W.S 271(1)(C) OF THE ACT WHICH WOULD GO TO THE ROOT OF THE ORDER AND IS NOT CURABLE. 11 ITA NO. 1378 AND 1453 /MUM/2015 IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY(SUPRA), THE HON'BLE KARNATAKA HIGH COURT HAS H ELD AS UNDER : 'NOTICE UNDER SECTION 274 SHOULD SPECIFICALLY 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. SENDING PRINTED FORM, WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED, WOULD NOT SATISFY REQUIREMENT OF LAW. THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. [PARA 63]' IN THE CASE OF CIT VS. SSA 'S EMERALD MEADOWS ITA 380 OF 2015, THE HONBLE KARNATKA HIGH COURT HAS ALSO DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASS ESSEE BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW AROSE FOR DETERMINATION IN THIS APPEAL WHICH WAS FILED AGAINST THE ORDER OF THE TRIBUNAL WHEREIN THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE BY QUASHING THE PENALTY PROCEEDINGS AND CONSEQUENT ORDER W HERE THE AO DID ITA NOS.4487 TO 4491/MUM/2014 NOT SPECIFY THE UNDER WHICH LIMB THE PENALTY HAD BEEN INITIATED BY FOLLOWING AND RELYING ON THE DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (2013)359ITR 565. THE REVENUE FILED SLP AGAIN ST THE DECISION OF KARNATKA HIGH COURT IN THE ABOVE DECISION WHICH HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT 05.08.2016. IN THE CASE OF CIT V/S SAMSON PERINCHERY IN INCOME TAX APPEAL NO. 1154 OF 2014(BOM) ORDER DATED 5.1.2017 THE HON'BLE BOMBAY HIGH COURT HAS BEEN HELD AS UNDER: '6 THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] - WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING 12 ITA NO. 1378 AND 1453 /MUM/2015 OFFICE R WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7. THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT - ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (S UPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA).' 9. WE ARE THEREFORE RESPECTFULLY FOLLOWING THE RATIO LAID D OWN BY THE HON'BLE HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT AND SUPREME COURT HOLD THAT THE ORDER OF THE CT(A) UPHOLDING THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WHERE THE AO HAD NOT SPECIFIED OR MENTIONED THE CHARGE ON WHICH THE PENAL TY HAS BEEN IMPOSED IS NOT CORRECT AND CANNOT BE SUSTAINED. IN VIEW OF THE FOREGOING DISCUSSION WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)( C ) OF THE ACT. 10. IN THE REMAINING APPEALS I.E ITA NOS.4487 TO 449 0/MUM/2014 (ASSESSMENT YEAR S: 2001 - 2002 TO 2004 - 05) THE LEGAL ISSUE TAKEN BY THE ASSESSEE ARE IDENTICAL AND HENCE THE DECISION TAKEN IN ITA NO.4491/MUM/2014 DELETING THE PENALTY WOULD MUTATIS MUTANDIS APPLY TO THESE APPEALS AS WELL. ACCORDINGLY, THESE APP EALS ARE ALSO ALLOWED. 12. S INCE WE HAVE TAKEN A DECISION IN FAVOUR OF ASSESSEE IN AFORE MENTIONED CASE AND MAINTAINING THE CONSISTENCY WITH OUR OWN DECISION TAKEN EARLIER AND ALSO RESPECTFULLY FOLLOWING THE DECISIONS OF HONBLE HIGH 13 ITA NO. 1378 AND 1453 /MUM/2015 COURTS AND SUPREME CO URT, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)( C ) OF THE ACT. 1 3 . RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 1 4 . SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON TECHNICAL AND LEG AL GROUND, THE APPEAL OF THE REVENUE STANDS INFRUCTUOUS HENCE DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH JUNE , 2017. SD SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMB AI ; DATED : 29. 6 .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRA R) , / ITAT, MUMBAI