ITO, Aurangabad V. Mr MIRZA ATIKULLAH BAIG, Aurangabad

ITA 1521/PUN/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7117 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 31-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL CHAWARE
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Additional evidence; Initiation of penalty proceedings; Documents seized
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! , $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NO.1521/PUN/2013 & & / ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER, WARD-2(3), JEEVAN SUMAN, 2 ND FLOOR, LIC BUILDING, N-5, CIDCO, AURANGABAD, 431003 . / APPELLANT VS. MR. MIRZA ATIKULLAH BAIG, MIRZA FAZIULLAH BAIG, H.NO.1-18-20, TOTI KI MAJID, CHELIPURA, AURANGABAD. PAN : AOHPM5688P . RESPONDENT / APPELLANT BY : SHRI S.N. PURANIK / RESPONDENT BY : SHRI ANIL CHAWARE DATE OF HEARING : 23.02.2017 / DATE OF PRONOUNCEMENT: 23.02.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A), AURANGABAD DATED 17.05.2013 RELATING TO ASSESSMENT YEAR 2005-06 AGAINST ORDER PASSED 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN DELETING PENALTY LEVIED U/S.271(1)(C) OF THE ACT , AT RS.13,40,462/-. ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E WHETHER THE CIT(A) WAS JUSTIFIED IN ALLOWING ASSESSEES APPEAL ESPECIA LLY WHEN THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE DECISION HONB LE HIGH COURT IN THE CASE OF WESTERN AUTOMOBILE (INDIA) VS. CIT (1978) I TR 1048 (BOM.) 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A), AURANGABAD ERRED IN NOT PROPERLY APPRECIATING THE F ACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE O F PENALTY PROCEEDINGS AS WELL AS THROUGH REMAND REPORT, IN IT S RIGHT SPIRITS. 4. THE ORDER OF THE ASSESSING OFFICER BE RESTORED A ND THAT OF THE CIT(A) BE VACATED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY GROUNDS OF APPEAL. 3. THE ONLY GROUND RAISED BY THE REVENUE IS GROUND OF APPEAL NO.1. 4. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE SOUGHT PERMISSION OF THE BENCH TO RAISE JURISDICTIONAL ISSUE UNDER RU LE 27 OF THE ITAT RULES, 1961. HE POINTED OUT THAT THE ORDER OF THE ASSESSING OFFI CER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT SUFFERS FROM INFIRMITI ES, I.E. THERE IS LACK OF SATISFACTION RECORDED WHILE INITIATING PENALTY PROC EEDINGS AND ALSO LACK OF NOTICE BEING ISSUED IN MAKING THE ASSESSEE AWARE OF EXACT CHARGE AGAINST HIM. HE FURTHER POINTED OUT THAT THE SAID PLEA BEING RAISED BY THE ASSESSEE WAS IN RESPECT OF THE ORDER PASSED BY THE CIT(A) IN CANCEL LING PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. HE ADMITTED THAT THE ASSESSEE HAD NOT FILED ANY APPEAL AGAINST THE ORDER OF CIT(A), EVEN THEN GROUN D DECIDED AGAINST THE ASSESSEE BY THE CIT(A) COULD BE SUPPORTED. 5. THE NEXT PLEA RAISED BY THE ASSESSEE WAS THAT TH E ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE EARLIER O RDERS OF THE TRIBUNAL. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 3 7. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE RECORD. THE ISSUE RAISED BY WAY OF APPLICATION UNDER RULE 27 OF THE I TAT RULES IS AGAINST NON- RECORDING OF PROPER SATISFACTION FOR INITIATING PEN ALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, WHILE COMPLETING ASSESSMENT I N THE HANDS OF ASSESSEE. THE ASSESSEE IS FURTHER AGGRIEVED BY THE NOTICE ISS UED IN THE CASE, WHEREIN INAPPROPRIATE PORTION HAS NOT BEEN STRUCK OFF. FUR THER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT EV EN WHILE PASSING THE ORDER LEVYING PENALTY FOR CONCEALMENT, THE ASSESSING OFFI CER HAS NOT COME TO A FINDING THAT AS TO WHICH LIMB OF SAID SECTION IS AP PLICABLE TO THE FACTS OF THE CASE AND THE ASSESSING OFFICER HAS LEVIED PENALTY ON THE GROUND THAT THERE IS CONCEALMENT OF INCOME BY FURNISHING INACCURATE PART ICULARS. WE ADMIT THE PLEA RAISED BY ASSESSEE. 8. BRIEFLY IN THE FACTS OF THE CASE THE ORIGINAL AS SESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT BY ASSESSING THE LONG TER M CAPITAL GAIN AT RS.33,42,620/-. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. HOWEVER, THE TRIBUNAL SET-ASIDE THE MATTER TO THE FILE OF TH E ASSESSING OFFICER BASED ON THE ADDITIONAL EVIDENCE PLACED BY THE ASSESSEE BEFO RE IT. THEREAFTER THE ASSESSING OFFICER PASSED THE ORDER UNDER SECTION 14 3(3) READ WITH SECTION 254 OF THE ACT COMPUTING THE INCOME FROM LONG TERM CAPI TAL GAINS IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER VIDE PARA 9 OF THE ASSESSMENT ORDER NOTED THAT THE ASSESSEE HAD CONCEALED AND FURNISHED INACCURATE PARTICULARS OF INCOME, I.E. LONG TERM CAPITAL GAIN, PENALTY PROCEE DINGS UNDER SECTION 271(1)(C) OF THE ACT, WERE INITIATED. FURTHER VIDE PARA 11 T HE ASSESSING OFFICER DIRECTED ISSUE OF NOTICE UNDER SECTION 271(1)(C) FOR CONCEAL MENT AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED IN WHICH INAPPLICABLE PORTION WAS NOT STRUCK OFF AND THE ASSESSING OFFICER WHILE LEVYING PENALTY ON BOTH ACC OUNTS HAD HELD THE ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 4 ASSESSEE TO HAVE CONCEALED BY FURNISHING INACCURATE PARTICULARS OF INCOME AND WITHIN MEANING OF SECTION 271(1)(C) READ WITH EXPLA NATION (1B) OF THE ACT AND CONSEQUENTLY PENALTY WAS LEVIED AT RS.13,40,462/-. THE CIT(A) HAD UPHELD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 9. THE FIRST ISSUE WHICH HAS ARISEN FOR ADJUDICATIO N IS NON-RECORDING OF PROPER SATISFACTION BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THOUGH THE ASS ESSING OFFICER MENTIONS THAT PENALTY PROCEEDINGS NEEDS TO BE INITIATED AND EVENTUALLY DIRECTS ISSUANCE OF NOTICE UNDER SECTION 271(1)(C) OF THE ACT, BUT N O SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER AS TO WHICH LIMB OF SAID SECTION IS ATTRACTED JUSTIFYING LEVY OF PENALTY FOR CONCEALMENT UNDER SE CTION 271(1)(C) OF THE ACT. THE PLEA OF THE ASSESSEE BEFORE US IS THAT IN THE A BSENCE OF ANY PROPER SATISFACTION RECORDED BY THE ASSESSING OFFICER, THE ISSUE ARISING IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN B Y THE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT IN ITA NOS .1201 TO 1205/PN/2014, RELATING TO ASSESSMENT YEARS 2003-04 TO 2007-08, OR DER DATED 30.11.2016 AND IN NANDKISHOR TULSIDAS KATORE VS. ACIT IN ITA NOS.2 174 TO 2180/PN/2014, RELATING TO ASSESSMENT YEAR 2002-03 TO 2008-09, ORD ER DATED 14.12.2016. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT EVEN IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1 )(C) OF THE ACT, INAPPROPRIATE PORTION IS NOT STRUCK OFF, HENCE NO PROPER SHOW CAU SE NOTICE HAS BEEN GIVEN TO THE ASSESSEE BEFORE INITIATING AND LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HAS FINALLY LEVIED PENA LTY UNDER SECTION 271(1)(C) OF THE ACT ON BOTH THE LIMBS I.E. CONCEALMENT OF INCOM E AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ON ACCOUNT OF EACH ADDITION. ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 5 10. WE FIND THE ISSUE OF RECORDING OF SATISFACTION BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AROSE BEFORE T HE TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA), WHEREIN IT WAS HELD AS UN DER:- 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS JURISDIC TIONAL ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE REQUIREMEN T OF SECTION IS THAT 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, TH EN HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY THE AMOUNTS AS S PECIFIED 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 RECO RD SATISFACTION IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, THAT THE PERSON H AS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS O F HIS INCOME. AFTER RECORDING THE SATISFACTION, DURING THE COURSE OF PENALTY PROC EEDINGS ALSO, THE CONCERNED OFFICER HAS COME TO A FINDING THAT AS TO WHETHER TH E PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME AND THEREAFTER, LEVY THE PENALTY ACCORDINGLY. THE WORD USED BETWEEN THE TWO ACTS I.E. CONCEALMENT OF PARTICULARS OF INCOME AND FURNI SHING OF INACCURATE PARTICULARS OF SUCH INCOME IS OR. SO 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 PARTIC ULARS OF INCOME IN PARTICULAR CIRCUMSTANCES, THEN THE ASSESSING OFFICE R MAY RECORD SATISFACTION TO THAT EFFECT AND INITIATE PENALTY PROCEEDINGS AND TH EREAFTER ON FIXATION OF CHARGE, LEVY THE PENALTY FOR SUCH ACT OF CONCEALING THE PAR TICULARS OF INCOME. SIMILARLY, IN CASES WHERE THE ASSESSEE CONCERNED HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN SIMILAR EXERCISE HAS TO BE CARRIE D 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 PROCEEDIN GS. SO, WHERE THE ASSESSMENT PROCEEDINGS ARE PENDING, THEN THE ASSESS ING OFFICER HAS TO APPLY HIS MIND AND ON BEING SATISFIED, HE HAS TO GIVE A F INDING THAT THE ASSESSEE BEFORE HIM HAS EITHER CONCEALED THE PARTICULARS 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 C ONCERNED OFFICER, WHEREIN IT SHOULD BE CLEAR THAT THE ASSESSEE HAS TO JUSTIFY IT S CASE EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. THERE MAY BE CASES WHERE THERE IS ISSUE OF BOTH CONCEALMENT OF I NCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME, BASED ON THE NATU RE OF ADDITIONS, THEN IN SUCH CASES, SATISFACTION AND NOTICE THEREON SHOULD SPECI FY EXACT CHARGE AGAINST THE ASSESSEE. THE CHARGE HAS TO BE FURTHER SPECIFIED W HILE COMPLETING PENALTY PROCEEDINGS AND THE ASSESSING OFFICER HAS TO COME T O A CONCLUSION AS TO WHETHER IT IS CASE OF CONCEALMENT OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME. THE QUESTION WHICH FURTHER ARISES WHERE THE SATISFACTION RECORDED BY THE ASSESSING OFFICER AND THE NOTICE IS SUED THEREAFTER IS WITHOUT APPLICATION OF MIND, THEN CAN THE SUBSEQUENT ORDER PASSED LEVYING PENALTY BE HELD TO BE VALID?. THE HONBLE KARNATAKA HIGH COUR T IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD D EALT UPON THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT FOR THE PURPOSE OF LEVYING PENALTY FOR CONCEALMENT AND OBSERVED AS UNDER:- ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 6 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDIN GS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDI NGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COU LD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION O F THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE O F CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HI M AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CON TEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEE T THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALT Y. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE GRO UND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT 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 B E HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD S ATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY OTHERWISE, PRINCI PLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON T HE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASS ESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRA CT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PE NALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENAL TY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOT HER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT B E 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 QU A NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONF INED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE G ROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CL AIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GRO UNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHOR ITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS O THER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FIN AL 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 ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDE NTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PE NALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERM INED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS O F THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASS ED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, W AS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COU RSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 7 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 COUR T IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAG E 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COUR T IN THE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 122 ITR 3 06 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKET ING P. LTD. REPORTED IN [2008] 171 TAXMAN 156, HAS HELD THAT LEVY OF PEN ALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSIT ION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASS ESSING 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. THE STANDARD PROFORMA WITHOU T STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NO N-APPLICATION OF MIND . 15. THE HONBLE KARNATAKA HIGH COURT HAS LAID DOWN THE PROPOSITION THAT THE ASSESSING OFFICER IS TO BE SATISFIED IN THE COU RSE OF PROCEEDINGS THAT THERE IS EITHER CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME UNDER CLAUSE (C) TO SECTION 271(1) OF THE AC T. IT HAS BEEN CATEGORICALLY HELD THAT CONCEALMENT OF INCOME AND FURNISHING OF I NACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THE HONBLE HIGH COURT HAS T HUS, 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 FURNISH ING 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 CO NNOTATION. APPLYING THE SAID PROPOSITION, IT WAS HELD THAT WHERE THE ASSESSING O FFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS T O BE APPROPRIATELY MARKED. SIMILARLY, FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THE STANDARD PROFORMA WITHOUT STRIKING OF RELEVANT CLAUSES, AS PER THE HO NBLE HIGH COURT WOULD LEAD TO INFERENCE AS TO NON-APPLICATION OF MIND. 16. FURTHER, THE HONBLE KARNATAKA HIGH COURT IN CI T VS. SSAS EMERALD MEADOWS (SUPRA) HAS DISMISSED THE APPEAL OF REVENUE , 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 IT HAS BEEN INITIATED THE HONBLE HIGH COURT HAD RELI ED ON DECISION OF DIVISION BENCH OF THE COURT RENDERED IN CIT & ANR. VS. MANJU NATHA COTTON AND GINNING FACTORY (SUPRA). THE HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS (SUPRA) HAS DISMISSED THE SPECIAL LEAVE PET ITION. 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 EITHER OF LIMBS, THEN NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS INVALID AND SUB SEQUENT 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 I SSUE, WHEREIN THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS FOR CONCE ALMENT OF PARTICULARS OF INCOME WITHOUT STRIKING INAPPROPRIATE WORDS OR ANY PARTS OF NOTICE AND PROCEEDED TO LEVY PENALTY FOR CONCEALMENT, THEN FOL LOWING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT, THE TRIBUNAL HELD THAT NOTICE ISSUED FOR INITIATING PENALTY PROCEEDINGS WERE INVALID AND CON SEQUENTLY PENALTY PROCEEDINGS WERE INVALID. ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 8 19. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY KOLKA TA BENCH OF TRIBUNAL IN SHRI DEEPAK KUMAR PATWARI VS. ACIT IN ITA NOS.616 T O 618/KOL/2013, RELATING TO ASSESSMENT YEARS 2007-08 TO 2009-10, ORDER DATED 03.02.2016 AND IT HAS BEEN FURTHER HELD THAT THE PROVISIONS OF SECTION 29 2B OF THE ACT CANNOT CURE THE BASIC DEFECT IN ASSUMPTION OF JURISDICTION AND COUL D ONLY CURE THE MISTAKE, DEFECT OR OMISSION IN THE RETURN OF INCOME, ASSESSM ENT, NOTICE OR THE PROCEEDINGS. THE TRIBUNAL FURTHER HELD THAT SHOW C AUSE NOTICE AND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE WERE PART OF PRO CESS OF NATURAL JUSTICE AND THE DEFECT IN SUCH NOTICE COULD NOT BE OVERLOOKED. SIMILAR PROPOSITION HAS FURTHER BEEN LAID DOWN IN OTHER DECISIONS OF VARIOU S 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 HONBL E BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA). IN THE FACTS OF THE CA SE BEFORE THE HONBLE BOMBAY HIGH COURT, THE HONBLE HIGH COURT QUASHED T HE PENALTY LEVIED FOR ASSESSMENT YEAR 1967-68 AS THE SAME WAS IMPOSED WIT HOUT AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN RESPECT OF OTHER TWO YEARS WHERE THERE WAS NON-STRIKING OF INACCURATE PO RTION, THE HONBLE HIGH COURT HELD THAT THE SAME WOULD NOT INVALIDATE THE N OTICE ISSUED UNDER SECTION 274 OF THE ACT. IT WAS FURTHER HELD THAT THE ASSES SMENT 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 TH E 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 AMBIGUITY WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RI GHT OF ASSESSEE OF REASONABLE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIG H COURT DELIBERATED UPON THE PROVISIONS OF SECTION 274 OF THE ACT WHICH CONTAINE D PRINCIPLE OF NATURAL JUSTICE OF THE ASSESSEE BEING HEARD BEFORE LEVYING PENALTY. IT ALSO HELD THAT MERE MISTAKE IN THE LANGUAGE USED OR MERE NON-STRIKING O F INAPPROPRIATE PORTION COULD NOT ITSELF BE INVALIDATED THE NOTICE. IT WAS HELD THAT THE ENTIRE FACTUAL BACKGROUND WOULD FALL FOR CONSIDERATION IN THE MATT ER AND NO ONE ASPECT WOULD BE DECISIVE. 21. IN RESPECT OF ASSESSMENT YEAR 1967-68, THE HON BLE HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA) ACKNOWLEDGED THAT THERE COULD EXIST A CASE WHERE VAGUENESS AND AMBIGUITY IN THE NOTICE COULD DEMONST RATE NON-APPLICATION OF MIND BY THE AUTHORITY AND / OR ULTIMATE PREJUDICE T O 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 EXA CT CHARGE OF DEPARTMENT AGAINST HIM AS IN THE NOTICE NOT ONLY TH ERE WAS USE OF WORD OR BETWEEN THE GROUP OF CASES BUT THERE WAS USE OF WOR D DELIBERATELY ALSO. THE HONBLE HIGH COURT HELD THAT NOTICE CLEARLY DEMONST RATED NON-APPLICATION OF MIND ON THE PART OF ASSESSING OFFICER. THE VAGUENE SS 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 FA CE. IN THIS BACKGROUND, QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967-68 WAS HELD TO BE JUSTIFIED. APPLYING THE SAID PRINCIPLE LAID DOWN B Y 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 HEARING 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 GRO UP OF CONCERNS ON 22.08.2008 AND DECLARATION OF RS.11.44 CRORES WAS M ADE 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 FI LED THE RETURN OF INCOME FOR THE ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 9 RESPECTIVE YEARS AND CUMULATIVELY FOR RS.13.99 CROR ES AS ADDITIONAL INCOME. THE INCOME WAS DECLARED ON ACCOUNT OF ON-MONEY ON S ALE OF PLOTS, WHICH WAS DETECTED FROM THE DOCUMENTS SEIZED DURING THE COURS E OF SEARCH. ADMITTEDLY, EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS A TTRACTED IN SUCH CASES. HOWEVER, THE CASE OF ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT PROCEEDINGS HAD TO BE SAT ISFIED THAT THE ASSESSEE HAD EITHER CONCEALED THE INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME AND IS LIABLE 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 ASSESSE E UNDER SECTION 274 OF THE ACT. BEFORE ISSUING SUCH NOTICE, SATISFACTION HAS TO COME OUT FROM THE PROCEEDINGS GOING ON BEFORE THE ASSESSING OFFICER. THE PERUSAL OF ASSESSMENT ORDER PASSED IN THE PRESENT CASE REFLECT S THAT THE ASSESSING OFFICER WHILE INITIATING PROCEEDINGS HAS RECORDED S ATISFACTION AS TO THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS ALSO CONCEALED THE INCOME. THE ONLY SOURCE OF ADDITION IN THE HANDS O F ASSESSEE IS ADDITIONAL INCOME OFFERED BY THE ASSESSEE PURSUANT TO SEARCH O PERATIONS. IN SUCH CIRCUMSTANCES, IT IS CATEGORICALLY A CASE OF CONCEA LMENT. HOWEVER, THE ASSESSING OFFICER REFERS TO BOTH THE LIMBS OF SECTI ON 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, IRRELEV ANT PART HAS NOT BEEN STRUCK OFF. WHILE COMPLETING PENALTY PROCEEDINGS ALSO, TH E ASSESSING OFFICER MAKES REFERENCE TO BOTH THE LIMBS I.E. CONCEALMENT OF INC OME 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 BY WAY OF ADDITIONAL GROUND OF APPEAL IS ROOT OF START OF THE PROCEEDING S I.E. RECORDING OF SATISFACTION AND THE ISSUE OF NOTICE, WHICH HAS BEEN CHALLENGED BY THE ASSESSEE TO BE INVALID. APPLYING THE RATIO LAID DOWN BY THE HONB LE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA) AND CIT VS. SSAS EMERALD MEADOWS (SUPRA) AND IN VIEW OF SLP BE ING DISMISSED, WE FIND MERIT IN THE PLEA OF ASSESSEE THAT THE SATISFACTION RECORDED IN THE PRESENT CASE TO INITIATE PENALTY PROCEEDINGS BOTH FOR CONCEALMEN T OF INCOME AND FURNISHING OF PARTICULARS OF INCOME AGAINST ADDITIONAL INCOME OFF ERED BY THE ASSESSEE IS INCORRECT. FURTHER, WHERE THE ASSESSEE IS NOT AWAR E OF EXACT CHARGE AGAINST HIM, THE AMBIGUITY IN THE NOTICE ISSUED UNDER SECTI ON 274 R.W.S. 271(1)(C) OF THE ACT BY NOT STRIKING OF PORTION WHICH IS NOT APPLICA BLE, PREJUDICE THE RIGHT OF REASONABLE OPPORTUNITY TO THE ASSESSEE, AS HE WAS N OT MADE AWARE OF EXACT CHARGE HE HAD TO FACE. IT IS A CLEAR-CUT CASE OF C ONCEALMENT SINCE THE ASSESSEE HAD OFFERED ADDITIONAL INCOME PURSUANT TO SEARCH CARRIED OUT AT ITS PREMISES. IT IS NOT THE CASE OF FURNISHING OF INAC CURATE PARTICULARS OF INCOME AND HENCE, THE ASSESSING OFFICER SHOULD HAVE RECORD ED THE SATISFACTION ACCORDINGLY AND ISSUED THE NOTICE 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 ASSESSIN G OFFICER HAS TO MAKE THE ASSESSEE FULLY AWARE OF EXACT CHARGE OF THE DEPARTM ENT AGAINST HIM. AS POINTED OUT, IN PRESENT CASE, IN THE ASSESSMENT ORD ER ITSELF WHILE RECORDING SATISFACTION FOR INITIATING PROCEEDINGS UNDER SECTI ON 271(1)(C) OF THE ACT, EXACT CHARGE OF THE DEPARTMENT AGAINST THE ASSESSEE IS NO T CLEAR. THE ASSESSING OFFICER RECORDS THE SATISFACTION FOR INITIATING PEN ALTY PROCEEDINGS ON BOTH THE COUNTS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT HAD ALSO UPH ELD 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 THAT WHERE THE ASSESSEE WAS FULLY AWAR E 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 ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 10 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 TO BE QUASHED. 25. THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. C IT (SUPRA) HAD HELD AS UNDER:- 23. SECTION 271(1)(C) REMAINS A PENAL STATUTE. TH E RULE OF STRICT CONSTRUCTION SHALL APPLY THERETO. THE INGREDIENTS FOR IMPOSING PENALTY REMAIN THE SAME. THE PURPOSE OF THE LEGISLATURE TH AT IT IS MEANT TO BE A DETERRENT TO TAX EVASION IS EVIDENCED BY THE INCR EASE 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 INAC CURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEAL MENT 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 I NACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT CONNOTATIONS, THEN AS P ER PROVISIONS OF THE ACT, THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OF FICER BEFORE INITIATING PENALTY PROCEEDINGS AS TO UNDER WHICH LIMB THE CASE OF ASSESSEE FALLS. IN THE PRESENT SET OF FACTS, THE SATISFACTION AS RECORDED BY THE ASSESSING OFFICER WHICH IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF DOES NO T ESTABLISH THE CASE OF REVENUE AGAINST THE ASSESSEE THAT IT IS LIABLE FOR LEVY OF PENALTY FOR CONCEALMENT UNDER WHICH LIMB I.E. FOR CONCEALMENT O F INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE NOTICE IS SUED UNDER SECTION 274 OF THE ACT BY THE ASSESSING OFFICER ALSO DOES NOT SHOW CAU SE 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 OPPORTU NITY 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 SUFFERS 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 I S QUASHED. THE PENALTY PROCEEDINGS COMPLETED PURSUANT TO SUCH NOTICE ARE V ITIATED AND THE SAME ARE HELD TO BE INVALID. 27. NOW, COMING TO THE MERITS OF CASE, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON ACCOUNT OF ON-MONEY ON SALE OF PLOTS. TH E ASSESSING OFFICER HAD ACCEPTED THE SAME AND HAD INITIATED PENALTY PROCEED INGS UNDER 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 ENH ANCEMENT NOTICE TO THE ASSESSEE. THEREAFTER, HE HAD GONE THROUGH THE SEIZ ED DOCUMENTS AND ELABORATELY REFERRED TO THEM AND EVEN REPRODUCED TH E SCANNED COPIES OF SUCH DOCUMENTS AND COMES TO CONCLUSION THAT LOANS WERE R ECEIVED FROM RATANLAL BAFNA, BUT STILL UPHOLDS THE PENALTY LEVIED UNDER S ECTION 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 CAS ES WHERE PENALTY PROCEEDINGS HAVE BEEN INITIATED ON A DIFFERENT FOOT ING 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 CONCEALMENT 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. THU S, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND ADDITIONAL GROUND OF APP EAL RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 11 11. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE P UNE BENCH OF TRIBUNAL IN NANDKISHOR TULSIDAS KATORE VS. ACIT (SUPRA). 12. IN THE FACTS OF THE PRESENT CASE AS ALSO IN THE FACTS BEFORE THE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT ( SUPRA), THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT HAD RECORDED A SATISFACTION THAT THE ASSESSEE HAS CONCEALED AND FURNISHED INACCURATE PAR TICULARS OF INCOME, I.E. IN RESPECT OF INCOME FROM LONG TERM CAPITAL GAINS FOR WHICH PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. THE ASSESSING OFFICER THEREAFTER DIRECTED ISSUE OF NOTICE UNDER SECTION 2 71(1)(C) FOR CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E ASSESSING OFFICER HAD FAILED TO GIVE SATISFACTION AS TO WHICH LIMB OF THE SAID S ECTION HAS NOT BEEN COMPLIED WITH BY THE ASSESSEE. IN THE ABSENCE OF SAME THE P ROCEEDINGS INITIATED IN THE CASE BY ISSUE OF NOTICE, IN WHICH INAPPROPRIATE POR TION WAS NOT STRUCK OFF, ARE VITIATED. CONSEQUENTLY, THE PENALTY ORDER PASSED I N THE CASE IS INVALID AND BAD IN LAW. ACCORDINGLY, WE HOLD SO. THE PLEA RAISED BY THE ASSESSEE BY WAY OF APPLICATION UNDER RULE 27 OF ITAT RULES IS THUS ALL OWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF FEBRUARY, 2017. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; DATED : 23 RD FEBRUARY, 2017. SATISH ITA NO.1521/PUN/2013 MIRZA ATIKULLAH BAIG 12 ( )*+ ,+ / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ' () THE CIT(A), AURANGABAD ' / THE CIT, AURANGABAD % ((), ), / DR A, ITAT, PUNE; . / GUARD FILE. / BY ORDER % ( // TRUE COPY // / ASSISTANT REGISTRAR, ) , / ITAT, PUNE