Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 9479 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 8 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-05-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
15-06-2016
Assessment Year
2002-2003
Appeal Filed On
29-08-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1645 /P U N/20 1 3 / ASSESSMENT YEAR: 20 0 2 - 0 3 THE ASST. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR . / APPELLANT VS. DR PRAKASH KANHAIYALAL KANKARIYA, SAI SURYA NETRA SEVA VARDHAMAN, MANIK CHOWK, AHMEDNAGAR 414 001. PAN: AGBPK5896R . / RESPONDENT / APPELLANT BY : SHRI ANIL CHAWARE / RESPONDENT BY : SHRI NARESH KUMAR . / ITA NO S . 16 94 TO 1699 /P U N/20 13 / ASSESSMENT YEAR S : 1999 - 2000 TO 2004 - 05 DR PRAKASH KANHAIYALAL KANKARIYA, SAI SURYA NETRA SEVA VARDHAMAN, MANIK CHOWK, AHMEDNAGAR 414 001. PAN: AGBPK5896R . / APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR . / RESPONDENT ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 2 / APPELLANT BY : SHRI NARESH KUMAR / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 21 . 0 3 .201 7 / DATE OF PRONOUNCEMENT: 26 . 0 5 .201 7 / ORDER PER SUSHMA CHOWLA, J M : OUT OF THIS BUNCH OF SEVEN APPEALS, SIX APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF CIT(A) - I, PUNE , ALL DATED 18.06.2013, RELATING TO ASSESSMENT YEARS 1999 - 2000 TO 2004 - 05 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE REVENUE IS ALSO IN APPEAL AGAINST THE ORDER OF CIT(A) - I, PUNE, DATED 18.06.2013, RELATING TO ASSESSMENT YEAR 2002 - 03 AGAINST DIRECTI ONS OF CIT(A) TO RE - COMPUTE PENALTY LEVIABLE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE FACTS AND ISSUE IN ALL THE APPEALS FILED BY THE ASSESSEE ARE SIMILAR AND IN ORDER TO ADJUDICATE THE ISSUE, WE MAKE REFERENCE TO THE GROUNDS OF APPEAL RAISED IN ASSESSMENT YEAR 200 2 - 0 3 , WHICH READS AS UNDER: - 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN GIVING ONLY A PARTIAL RELIEF IN RESPECT OF PENALTY U/S 271(1)(C) OUT OF TOTAL PENALTY OF RS.23,61,221. HE OUGHT TO HAVE DELETED THE ENTIRE PENALTY. HE FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE IN ITS PROPER PERSPECTIVE. THE LEARNED CIT(A) FURTHER FAILED TO APPRECIATE THE ARGUMENTS AND CONTENTIONS ADVANCED IN THIS BEHALF. 2. THE APPELLANT CRAVES LEAVE T O ADD, ALTER DELETE OR SUBSTITUTE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 3 3 . FURTHER, THE ASSESSEE HAS ALSO RAISED THE ADDITIONAL GROUNDS OF APPEAL, WHICH READ AS UNDER: - 3. ON FACTS AND IN LAW, THE HON'BLE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE AC TION OF THE LD AO IN LEVYING THE IMPUGNED PENALTY IN SPITE OF THE FACT THAT THE SHOW CAUSE NOTICE WAS A GENERAL PRINTED FORM WITHOUT SPECIFYING EXACTLY THE NATURE OF OFFENCE FOR WHICH THE PENALTY WAS INITIATED AND LEVIED. 4. ON FACTS AND IN LAW, THE HON'B LE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE LEVY OF PENALTY WHEN THE LD AO WAS NOT CLEAR WHETHER THE APPELLANT WAS GUILTY OF CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICULARS EITHER AT THE TIME OF ISSUANCE OF SHOW CAUSE OR IN THE DETAILED PENALTY OR DER. 5. ON FACTS AND IN LAW, THE HON'BLE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE LEVY OF PENALTY WHEN THE ADDITIONS WERE MADE BY THE LD AO ON THE ESTIMATED BASIS AND THE HONBLE ITAT HAS REDUCED THE ESTIMATE SUBSTANTIALLY. THE AFORESAID LEGAL GROUNDS OF APPEAL INADVERTENTLY REMAINED TO BE TAKEN AT THE TIME OF APPEAL. IT MAY BE MENTIONED THAT ALL THE FACTS NECESSARY TO DECIDE THE ADDITIONAL GROUNDS ARE ALREADY ON RECORD AND NO NEW EVIDENCE IS REQUIRED TO BE BROUGHT ON RECORD. I MOST HUMBLY WAN T TO SUBMIT THAT MY CASE IS FULLY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE ABSENCE OF NATIONAL POWER COMPANY LTD VS CIT (1998) 229 ITR 383 (SC), 4. THE REVENUE IN ITA NO.1645/PUN/2013, RELATING TO ASSESSMENT YEAR 2002 - 03 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE PENALTY U/S 271(1)(C) ON THE ADDITION OF THE SUPPRESSED PROFESSIONAL RECEIPTS AS WELL AS UNDISCLOSED INVESTMENTS AS CONFIRMED BY THE PUNE IT AT VIDE ORDER DATED 27/09/2012 INSTEAD OF CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER IN TOTO. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY EARED IN DIRECTING AS ABOVE IN THE OPERATIVE PART OF HER ORDER EVEN WHILE CATEGORICALLY STATING THAT THE SUBSEQUENT ADMISSION OF ADDITIONAL INCOME IN THE RETURNS OF INCOME FILED UNDER SECTION 153A CANNOT BE TREATED AS VOLUNTARY AND DOES NOT TAKE AWAY THE EFFECT OF WRONGFUL CONDUCT EARLIER DISPLAYED BY THE APPELLANT BY NOT OFFERING THE SAID INCOME IN THE ORIGINAL RETURN ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 4 4. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVE LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 5. THE PRELIMINARY ISSUE RAISED IN THE PRESENT BUNCH OF APPEALS IS AGAINST THE JURISDICTION EXERCISED BY THE ASSESSING OFFICER IN LEVYING THE PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. 6. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 01.09.2004. THEREAFTER, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE, IN RESPONSE T O WHICH THE ASSESSEE FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 56,41,369/ - . THE ASSESSEE IS AN OPHTHALMOLOGIST AND WAS RUNNING EYE CLINIC AND HOSPITAL IN THE NAME AND STYLE OF SAI - SURYA NETRA SEVA RESEARCH AND TRAINING ALONG WITH HIS WIF E MRS. DR. SUDHA P. KANKARIYA. THE ASSESSEE HAD DECLARED OPD RECEIPTS AND IPD RECEIPTS. THE OPD RECEIPTS WERE ON ACCOUNT OF CONSULTANCY CHARGES AND OTHER INVESTIGATION CHARGES AND IPD RECEIPTS WERE ON ACCOUNT OF OPERATION RECEIPTS. THE ASSESSEE WAS FOUN D TO BE MAINTAINING TWO SETS OF BOOKS OF ACCOUNT; ONE SET OF BOOKS WERE MAINTAINED AT THE COUNTER AND ANOTHER SET OF BOOKS WERE MAINTAINED WITH THE ACCOUNTANT. THE OPERATION CHARGES RECEIPTS WERE BEING SHARED IN THE RATIO OF 70 : 30 BETWEEN THE ASSESSEE A ND HIS WIFE. DURING THE COURSE OF SEARCH, OPERATION RECEIPT REGISTERS FOR THE ENTIRE PERIOD WERE NOT FOUND AND THE ASSESSEE CLAIMED THAT THEY MAY HAVE BEEN DISPOSED OF. IN VIEW OF THE EVIDENCE FOUND AND SEIZED, THE PROFESSIONAL INCOME WAS ESTIMATED IN THE HANDS OF ASSESSEE ON ACCOUNT OF DIFFERENCE BETWEEN REGISTERS MAINTAINED BY THE ACCOUNTANT AND ACTUAL RECEIPTS AS PER OPERATION RECEIPTS REGISTERS ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 5 MAINTAINED AT THE COUNTER. FURTHER, EVIDENCE WAS FOUND IN RESPECT OF CERTAIN LAND TRANSACTIONS WHICH WERE ACCEPTED BY THE ASSESSEE IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS CALCULATED THE RECEIPTS FOR EACH OF THE YEAR UNDER SEARCH AND ALSO TOOK NOTE OF THE UNDISCLOSED INVESTMENTS MADE BY THE ASSESSEE AND MADE THE FOLLOWING ADDITIONS IN THE RESPECTIVE YEARS: - AY ADDITION (RS.) 1999 - 2000 5,00,000 2000 - 01 27,40,885 2001 - 02 21,76,725 2002 - 03 14,30,225 + 10,22,850 2003 - 04 12,69,412 2004 - 05 11,04,743 7. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT ON THE INCOME ESTIMATED ON GROSS RECEIPTS AND ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN EACH OF THE YEARS. 8. THE CIT(A) NOTED THAT PEN ALTY WAS LEVIED ON THE BASIS OF INCRIMINATING EVIDENCES SHOWING INVESTMENTS IN THE FORM OF ADVANCE FOR PROPOSED LAND DEAL BY THE ASSESSEE AS WELL AS SUPPRESSION OF PROFESSIONAL RECEIPTS BY THE ASSESSEE. DURING THE COURSE OF SEARCH, DOCUMENTS SHOWING PAYME NT OF RS.40 LAKHS IN CASH ON 30.06.2001 TO SHRI CHANDUSETH RENAVIKAR WERE FOUND AND THE ASSESSEE CONFIRMED THAT HE PAID THE CASH AMOUNT. HE ALSO CONFIRMED THAT THE PAYMENT OF RS.40 LAKHS WAS NOT RECORDED IN REGULAR BOOKS OF ACCOUNT. THE ASSESSEE SUBSEQUENTLY, CLAIMED THAT IT HAD SUFFICIENT CASH BALANCE AND THE DEFICIT ON CERTAIN DATES TOTALING RS.29,77,150/ - WAS OFFERED FOR TAXATION WHICH WAS ACCEPTED BY THE ASSESSING OFFICER. THE CIT(A) ALSO NTOED THAT ON ACTU AL VERIFICATION OF THE RECEIPTS, REG ISTERS PERTAINING TO THE PERIOD FROM 16.08.2001 TO 29.03.2002 REVEALED THAT THE RECEIPTS TO THE EXTENT OF ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 6 RS.24,40,510/ - WERE SUPPRESSED IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED AND THE ASSESSEE OFFERED THE SAME TO TAX IN THE RETURN OF INCOME FILED IN RE SPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. HOWEVER, THE ASSESSING OFFICER MADE FURTHER ESTIMATION @ 20% TO ARRIVE AT THE GROSS FIGURE OF SUPPRESSED RECEIPTS OF RS.38,70,735/ - , THEREBY MAKING FURTHER ADDITION OF RS.14,30,225/ - . THE CONTENTION OF ASSESSEE BEFORE THE CIT(A) WAS THAT THE LEVY OF PENALTY ON THE ENTIRE AMOUNT OF RS.78,70,735/ - , COMPRISING OF RS.38,70,735/ - BEING SUPPRESSED RECEIPTS CALCULATED BY THE ASSESSING OFFICER AND RS.40 LAKHS TOWARDS UNEXPLAINED INVESTMENT WAS WITHOUT CONSIDE RING HIS CLAIM THAT PART OF INVESTMENT OF RS.40 LAKHS WOULD BE OUT OF SUPPRESSED PROFESSIONAL RECEIPTS. IT WAS FURTHER CONTENDED THAT LEVY OF PENALTY ON THE AMOUNTS ALREADY DECLARED BY THE ASSESSEE UNDER SECTION 153A OF THE ACT I.E. RS.29,77,150/ - ON ACCO UNT OF UNEXPLAINED INVESTMENT AND RS.24,40,510/ - ON ACCOUNT OF SUPPRESSED PROFESSIONAL RECEIPTS WAS NOT JUSTIFIED SINCE THE ASSESSING OFFICER IN ASSESSMENT YEAR 2004 - 05 HAS ACCEPTED THE DECLARATION UNDER SECTION 132(4) OF THE ACT AND LEVIED PENALTY ONLY IN RESPECT OF ADDITIONAL PROFESSIONAL RECEIPTS AS ESTIMATED BY HIM. THE ASSESSEE CLAIMED BEFORE THE CIT(A) THAT WHERE THE ASSESSING OFFICER HAD LEVIED PENALTY ON THE ESTIMATED ADDITION EXCLUDING THE QUANTUM DECLARED UNDER SECTION 153A OF THE ACT BY TAKING I NTO ACCOUNT, THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, HE WAS INCONSISTENT IN LEVYING PENALTY IN ASSESSMENT YEAR 2002 - 03. THE CIT(A) HELD THAT WHERE THE ASSESSEE HAD OFFERED ADDITIONAL RECEIPTS OF RS.24,40,510/ - IN THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE ACT , ON ACCOUNT OF ENTRIES FOUND AND WHERE THE ASSESSING OFFICER HAD EXTRAPOLATED GROSS RECEIPTS FOR THE ENTIRE PERIOD, WHICH APPROACH HAS BEEN ACCEPTED BY THE TRIBUNAL IN ITA NO.90/PN/2011 VIDE ORDER DATED 24.09.2012 VIDE PARAS 33 TO 40, THEN IT IS IL LOGICAL THAT THE PENALTY FOR CONCEALMENT IS TO BE LEVIED ON THE ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 7 ENTIRE AMOUNT AS EXTRAPOLATED FOR THE WHOLE YEAR. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED AT PAGES 21 TO 23 OF THE APPELLATE ORDER. THE TRIBUNAL HAD RESTRICTED THE ADDITION TO 10% AS AGAINS T 20% ESTIMATED BY THE ASSESSING OFFICER . V IS - - VIS UNEXPLAINED INVESTMENTS MADE BY THE ASSESSEE, FOR THE BALANCE SUM OF RS.10,22,850/ - , THE TRIBUNAL REJECTED THE CONTENTIONS OF ASSESSEE AND ALSO THE ALTERNATE CONTENTION TO ALLOW SET OFF OF CASH ADVANCE R EFUNDED BY ANOTHER VENDOR TO THE EXTENT OF RS.25 LAKHS FOR MAKING CASH PAYMENTS FOR THE IMPUGNED YEAR. THE TRIBUNAL ALSO HELD THAT THE ASSESSEE HAD NOT SUBSTANTIALLY PROVED THE SOURCE OF TRANSACTION AND HAD ALSO NOT ACCEPTED THE CONTENTION OF ASSESSEE THA T THE BOOKS OF ACCOUNT ACTUALLY REFLECT THE SURPLUS CASH AVAILABILITY OF RS.10,22,850/ - . THE CIT(A) OBSERVED THAT WHERE THE TRIBUNAL HAS DECLINED TO ACCEPT THE CONTENTION OF ASSESSEE FOR SET OFF OF CASH REFUND OR SET OFF OF SUPPRESSED PROFESSIONAL RECEIPT S FOR EARLIER YEARS, THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE TO THE EXTENT OF RS.24,40,510/ - ON ACCOUNT OF SUPPRESSED PROFESSIONAL RECEIPTS AND RS.29,77,150/ - ON ACCOUNT OF CASH DEFICIT TOWARDS UNEXPLAINED INVESTMENTS WERE ALSO NOT OFFERED SUO MOTO . IT WAS ONLY AFTER SEARCH, WHEREIN CLEAR - CUT EVIDENCES WERE FOUND IN THE FORM OF SECOND SET / DUPLICATE SET OF OPERATION RECEIPTS, REGISTERS BEING MAINTAINED BY THE ASSESSEE THAT THE ASSESSEE CAME FORWARD TO SHOW RECEIPTS TO THE EXTENT OF RS.24,40,510/ - . 9. THE CIT(A) ALSO REJECTED THE PLEA OF ASSESSEE TO ALLOW THE BENEFIT OF IMMUNITY PROVIDED UNDER CLAUSE (2) TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE CLAIM OF ASSESSEE WAS THAT SINCE HE HAD MADE DECLARATION UNDER SECTION 132(4) OF THE ACT AND THE DECLARATION WAS ADHERED TO BY ADMITTING THE SAME AS INCOME IN THE RETURN OF INCOME FILED, HE WAS ENTITLED TO THE BENEFIT OF IMMUNITY AS PER CLAUSE (2) TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 8 THE CIT(A) HELD THAT THE CLAIM OF ASSESSEE WAS NOT TE NABLE IN LAW. REFERRING TO CLAUSE (2) TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, IT WAS POINTED OUT THAT IT WAS INTENDED TO COVER ONLY SUCH SITUATIONS WHERE TIME LIMIT SPECIFIED IN SECTION 139(1) OF THE ACT HAD NOT EXPIRED AS ON THE DATE OF SEARCH. HOWEVER, IN THE CASE OF ASSESSEE, DECLARATION OF INCOME WAS MADE FOR EARLIER YEARS FOR WHICH THE DUE DATE OF FILING THE RETURN OF INCOME HAD ALREADY EXPIRED PRIOR TO THE DATE OF SEARCH. IT WAS ALSO POINTED OUT THAT THE ASSESSEE HAD NOT DECLARED UNEXPLAI NED INVESTMENT AND OTHER ITEMS OF INCOME IN THE RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT, BEFORE THE DATE OF SEARCH. FURTHER, THE CIT(A) REFERRED TO THE ORDER OF ASSESSING OFFICER, WHEREIN IT WAS POINTED OUT THAT THE ASSESSEE HAD NOT SPECIFI ED THE MANNER IN WHICH SUCH INCOME REPRESENTING THE IMPUGNED RECEIPTS WERE DERIVED. REFERENCE WAS MADE TO THE QUESTION NOS.19 TO 21 OF THE STATEMENT RECORDED OF THE ASSESSEE UNDER SECTION 132(4) OF THE ACT. THE FINDING OF CIT(A) IN THIS REGARD WAS THAT THE STATEMENT OF ASSESSEE WAS TOO VAGUE AND GENERAL AND DID NOT SPECIFY THE AMOUNT OF UNDISCLOSED INCOME UNDER DIFFERENT HEADS PROPOSED TO BE ADMITTED BY THE ASSES SEE. IT WAS THUS, HELD THAT THE ASSESSEE WAS NOT ENTITLED TO THE BENEFIT OF IMMUNITY PROVIDED UNDER CLAUSE (2) TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED UPON BY THE ASSESSEE ON TRIBUNALS ORDER FOR ASSESSMENT YEAR 2004 - 05, WHE REIN PENALTY WAS LEVIED ONLY IN RESPECT OF ADDITIONAL ESTIMATED PROFESSIONAL RECEIPTS WAS ALSO HELD TO BE MISPLACED. THE CIT(A) NOTED THAT FOR ASSESSMENT YEAR 2004 - 05, THE ASSESSING OFFICER HAD PERHAPS CONSIDERED EXPLANATION 5 IN IMPOSING PENALTY SINCE AS PER THE PROVISIONS OF THE ACT, THE RETURN OF INCOME FOR CURRENT YEAR I.E. SEARCH YEAR HAD NOT BECOME DUE I.E. TIME SPECIFIED UNDER SECTION 139(1) OF THE ACT HAD NOT EXPIRED. ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 9 10 . THE NEXT CONTENTION OF ASSESSEE THAT RESIDUAL AMOUNT OF RS.14,30,225/ - WAS ONLY BASED ON ESTIMATED ADDITIONS WITHOUT ANY SUPPORTING INCRIMINATING DOCUMENTS WAS ALSO NOT ACCEPTED, IN VIEW OF THE EVIDENCES FOUND FOR THE PART OF YEAR. THE CIT(A) NOTED THAT BOOKS OF ACCOUNT WERE NOT MAINTAINED AS PER THE ACTUAL PROFESSIONAL RECEIPTS AND THE ASSESSEE ON ITS OWN MOTION HAD OFFERED ADDITIONAL RECEIPTS IN ASSESSMENT YEAR 2002 - 03 AT RS.24,40,510/ - AND IN ASSESSMENT YEAR 2003 - 04 AT RS.18,32,000/ - AND IN ASSESSMENT YEAR 2004 - 05 AT RS.40,68,215/ - . 1 1 . THE NEXT CONTENTION OF THE ASSESSEE WAS THAT CONCEALMENT PENALTY COULD NOT BE LEVIED ON MERE ESTIMATION OF INCOME AND RELIANCE IN THIS REGARD WAS PLACED UPON ON VARIOUS DECISIONS. THE CIT(A) REFERRED TO SEVERAL DECISIONS OF THE HON'BLE SUPREME COURT AND HONBLE BOMBAY HIGH COURT, WHEREIN THE C OURTS HAD UPHELD THE LEVY OF PENALTY FOR CONCEALMENT IN CASES WHERE UNDISCLOSED INCOME ON EITHER BE ASSESSED OR ESTIMATED ON THE BASIS OF EVIDENCES SEIZED DURING THE COURSE OF SEARCH OPERATIONS. THE SAID DECISIONS ARE REFERRED AT PAGES 30 AND 31 OF THE AP PELLATE ORDER. THE CIT(A) CONCLUDED BY HOLDING THAT WHERE THE ADDITIONS HAVE BEEN UPHELD IN THE HANDS OF ASSESSEE ON THE BASIS OF SEIZED DOCUMENTS I.E. AGREEMENT TO SELL WITH SHRI CHANDUSETH RENAVIKAR ALONG WITH ACKNOWLEDGED RECEIPT OF CASH PAYMENT OF RS.40 LAKHS WAS SUFFICIENT GROUND TO HOLD THAT THE ASSESSEE HAD CONCEALED INVESTMENTS AND NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT, WHICH HAVE BEEN EARNED FROM INCOME NOT DISCLOSED WITH THE DEPARTMEN T. THE CIT(A) ALSO NOTED THAT AFTER SEARCH ACTION UNDER SECTION 132(1) OF THE ACT, PROCEEDINGS UNDER SECTION 153A OF THE ACT WERE INITIATED AND IN RESPONSE THERETO, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME FOR ALL THE YEARS UNDER CONSIDERATION ADMI TTING ENHANCED INCOME IN ADDITION TO THE PROFESSIONAL ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 10 INCOME ADMITTED IN THE ORIGINAL RETURN OF INCOME FILED PRIOR TO THE DATE OF SEARCH, AS DETAILED BELOW: - A.Y. TOTAL PROFESSIONAL INCOME DECLARED IN THE ORIGINAL RETURN BEFORE THE SEARCH (RS.) ADDITIONA L PROF. RECEIPTS / UNDISCLOSED INVESTMENTS DISCLOSED U/S. 153A (RS.) ADDITION MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT(A) (RS.) CONFIRMED BY ITAT (RS.) 1999 - 00 43,24,905 NIL 5,00,000 5,00,000 2000 - 01 51,95,123 5,04,600 32,45,485 14,95,400 2001 - 02 30,12,938 NIL 21,76,725 9,67,433 2002 - 03 41,66,563 54,17,660 78,70,735 13,56,087 2003 - 04 32,14,934 18,32,000 31,01,412 0 2004 - 05 61,53,481 40,68,215 51,72,958 11,04,743 1 2 . THE ASSESSING OFFICER RECORDED SATISFACTION AND INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT UNDER EXPLANATION (1) BEING INITIATED SEPARATELY FOR CONCEALMENT OF INCOME / FILING INACCURATE PARTICULARS OF INCOME FOR RS.38,70,735/ - . FURTHER, PENALTY PROCEEDINGS WERE ALSO INITIATED FOR ADDITION OF RS.10, 22,850/ - ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE UNDER SECTION 271(1)(C) OF THE ACT UNDER EXPLANATION (1) FOR CONCEALMENT OF INCOME / FILING OF INACCURATE PARTICULARS OF INCOME FOR RS.40 LAKHS. IT MAY BE NOTED HEREIN THAT THE ASSESSING OFFICER HAS REFE RRED TO THE ADDITIONS IN EACH OF THE YEAR BY WAY OF CONSOLIDATED ORDER AND HAS THEN WHILE MAKING THE ADDITION IN RESPECT OF EACH OF THE YEAR INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT UNDER EXPLANATION (1) FOR CONCEALMENT / FILING INA CCURATE PARTICULARS FOR EACH OF THE ADDITIONS. HOWEVER, WHILE FINALIZING THE ASSESSMENT ORDER FOR EACH OF THE YEAR IN CONCLUSION, THE ASSESSING OFFICER REFERS TO THE AMOUNT OF ADDITIONAL INCOME ADDED TO THE TOTAL INCOME OF ASSESSEE IN EACH OF THE RESPECTI VE YEARS AND INITIATES THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT UNDER EXPLANATION (1) SEPARATELY FOR CONCEALMENT OF INCOME. IN ASSESSMENT YEAR 2002 - 03, FINAL PART OF THE ORDER OF ASSESSING OFFICER READS AS UNDER: - ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 11 PENALTY PROCEEDINGS U/ S 271(1)(C) UNDER EXPLANATION 1 ARE INITIATED SEPARATELY FOR CONCEALMENT OF INCOME OF RS.78,70,735/ - 1 3 . THEREAFTER, NOTICE WAS ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WHERE THE ASSESSEE CLAIMS THAT INAPPROPRIATE PART WAS NOT STRUCK OFF, THE ASSESSING OFFICER WHILE LEVYING PENALTY HAS RECORDED SATISFACTION THAT THE ASSESSEE HAS WITHOUT ANY REASONABLE CAUSE CONCEALED ITS INCOME TO THE EXTENT OF RS.78,70,735/ - AND COMMITTED DEFAULT WITHIN MEANING OF SECTION 271(1)(C) OF THE ACT. THEREFORE, MIN IMUM PENALTY OF RS.23,61,221/ - WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 1 4 . THE CIT(A) HELD AS UNDER: - 3.18.3 AS COULD BE SEEN FROM THE ABOVE TABLE, THE APPELLANT HAS NOT DISCLOSED THE ADDITIONAL INCOME, IN RESPECT OF WHICH PENALTY HAS ALSO BEEN LEVIED, IN THE ORDINAL RETURN OF INCOME FILED PRIOR TO THE ACTION UNDER SEC. 132A FOR ALL THE ASSESSMENT YEARS UNDER CON SIDERATION. IT WAS FOUND DURING THE SEARCH THAT THE APPELLANT HAS BEEN MAINTAINING DUPLICATE BOOKS OF A/C FOR HIS SOURCES OF INCOME AND THE INCOME WAS BEING DECLARED ON ARBITRARY AND NOT ACTUAL BASIS. IN FACT, IN THE STATEMENT RECORDED U/S 131 OF THE I.T. ACT ON 4.9.2004, THE APPELLANT VIDE ANSWER TO Q. NO.19, 20 & 21 OF THE STATEMENT, HAS ADMITTED THAT SOME OF THE ACTUAL RECEIPTS SEIZED DURING THE COURSE OF SEARCH WERE NOT ENTERED INTO THE OPERATION RECEIPT REGISTER AS PREPARED BY THE ACCOUNTANT AND THERE EXISTS DISCREPANCY BETWEEN THE ACTUAL RECEIPTS AND THE RECEIPTS ENTERED INTO REGISTERS. THE ADDITIONAL INCOME WAS DISCLOSED ONLY AFTER THE APPELLANT WAS CONFRONTED WITH THE INCRIMINATING EVIDENCES FOUND DURING THE ACTION UNDER SEC. 132 IN THE FORM OF SECON D SET OF BOOKS AND OPERATION REGISTERS, AND INVESTMENT IN IMMOVABLE PROPERTIES. THE ADDITIONAL INCOME DECLARED BY THE APPELLANT IN THE STATEMENT RECORDED ON 4.9.2004 AND SUBSEQUENTLY IN THE RETURNS FILED UNDER SEC. 153A REPRESENTS INCOME FROM PROFESSIONAL RECEIPTS NOT DISCLOSED SO FAR AND INVESTMENT IN IMMOVABLE PROPERTIES. THUS, THE APPELLANT CONCEALED THE PARTICULARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF DIFFERENT SOURCES OF INCOME AS UNEARTHED DURING THE ACTION U/S. 132. THE SUBSEQUENT ADMISSION OF ADDITIONAL INCOME IN THE RETURNS OF INCOME FILED UNDER SEC. 153A CANNOT BE TREATED AS VOLUNTARY AND DOES NOT TAKE AWAY THE EFFECT OF WRONGFUL CONDUCT EARLIER DISPLAYED BY THE APPELLANT BY NOT OFFERING THE SAID IN COME IN THE ORIGINAL RETURN. THUS, THE APPELLANT IS GUILTY OF CONTUMACIOUS CONDUCT AND CONCEALMENT OF INCOME UNDER THE MAIN PART OF THE PROVISIONS OF SEC. 271(1)(C) AS THE APPELLANT HAS CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE P ARTICULARS OF INCOME IN THE ORIGINAL RETURNS. IN THIS REGARD, REFERENCE CAN BE MADE TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K. P. MADHUSUDHAN VS CI T 251 ITR 99 AND THE RECENT DECISION IN DHARMENDRA TEXTILE PROCESSORS LTD. AS R EPORTED IN 306 ITR 277. THE APEX CO URT IN THE LATTER DECISION HELD THAT MENS REA IS NOT AN ESSENTIAL INGREDIENT OF SEC. 271(1)(C) AND THERE IS NO DISCRETION WITH THE AUTHORITY COMPETENT TO IMPOSE PENALTY BELOW THE PRESCRIBED MINIMUM. C ONSEQUENTLY, GROUNDS NO. 1 TO 3 ARE TREATED AS PARTLY A LLOWED. THE ASSESSING OF FICER IS DIRECTED TO RECOMPUTE ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 12 THE PENALTY U/S 271(1)(C) ON THE ADDITION OF THE SUPPRESSED PROFESSIONAL RECEIPTS AS WELL AS UNDISCLOSED INVESTMENTS AS CONFIRMED BY THE PUNE ITAT BENCH VIDE ORDER DATED 24.9.2012. 1 5 . THE CIT(A) HE LD THE ASSESSEE GUILTY OF CONTUMACIOUS CONDUCT AND CONCEALMENT OF INCOME UNDER THE MAIN PART OF THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT AS THE APPELLANT HAS CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME IN THE ORIGIN AL RETURN OF INCOME. 1 6 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) AND THE REVENUE IS ALSO IN APPEAL FOR ASSESSMENT YEAR 2002 - 03 AGAINST THE DIRECTIONS OF CIT(A) TO THE ASSESSING OFFICER TO RE - COMPUTE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITION OF SUPPRESSED PROFESSIONAL RECEIPTS AS WELL AS UNDISCLOSED INVESTMENTS AS CONFIRMED BY THE PUNE BENCH OF TRIBUNAL VIDE ORDER DATED 24.09.2012 . THE GRIEVANCE OF THE REVENUE IS THAT PENALTY SHOULD BE LEVIED ON TOTAL AMOUNT OF CONCEAL ED INCOME. 1 7 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRING TO THE ADDITIONAL GROUNDS OF APPEAL POINTED OUT THAT THE SAME MAY BE ADMITTED AS NO FACTUAL ASPECTS NEEDS TO BE LOOKED INTO. THE FIRST ISSUE RAISED BY WAY OF ADDITIONAL GROUN D OF APPEAL NO.3 IS AGAINST LEVY OF PENALTY, WHEREIN SHOW CAUSE NOTICE ISSUED WAS A GENERAL PRINTED FORM WITHOUT SPECIFYING EXACTLY THE NATURE OF OFFENCE FOR WHICH PENALTY WAS INITIATED AND LEVIED. THE SAID ADDITIONAL GROUND OF APPEAL REQUIRES THE APPRECI ATION OF FACTUAL ASPECTS OF THE SHOW CAUSE NOTICE BEING ISSUED IN A PARTICULAR FORM OR NOT AND HENCE, CAN NOT BE ADMITTED AT THIS STAGE. EVEN OTHERWISE, THE SAID ISSUE WAS CONSIDERED BY 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, ORDER DATED 30.11.2016 AND WE SHALL REFER TO THE SAME IN THE PARAS HEREIN BELOW. ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 13 1 8 . THE SECOND ISSUE BY WAY OF ADDITIONAL GROUND OF APPEAL NO.4 IS AGAINST THE SATISFACTION WHEN THE ASSESSING OFFICER WAS NOT CLEAR AS TO WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OR OF FURNISHING INACCURATE PARTICULARS EITHER AT THE TIME OF ISSUANCE OF SHOW CAUSE NOTICE OR IN THE DETAILED PENALTY ORDER. THE SAID ISSUE BEING PURELY LEGAL, WE ADMIT THE SAME AND WE SHALL DEAL WITH THE SAME WHILE DECIDING THE APPEAL. 1 9 . THE NEXT ADDITIONAL GROUND OF APPEAL NO.5 IS AGAINST THE SUSTENANCE OF PENALTY WHERE ADDITIONS WERE MADE BY THE ASSESSING OFFICER ON ESTIMATE BASIS AND WHERE THE TRIBUNAL HAD REDUCED THE ESTIMATE SUBSTANTIALLY. THE SAID GROUND OF APPEAL IS ALSO ADMITTED BEING PURELY LEGAL IN NATURE. 20 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRONGLY PLACED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN BUNCH OF A PPEALS WITH LEAD ORDER IN GAIKWAD ASSOCIATES VS. DCIT IN ITA 2090/PUN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 20.01.2017 AND POINTED OUT THAT THE FACTS OF PRESENT CASE ARE IDENTICAL AND HENCE, WHERE THE ASSESSING OFFICER HAD INITIATED PENALT Y BOTH FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THEN THE SAID PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT MERITS TO BE CANCELLED. FURTHER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN CIT & ANR. VS. M/S. SSAS EMERALD MEADOWS IN PETITION FOR SPECIAL LEAVE TO APPEAL IN CC NO.11486/2016, JUDGMENT DATED 05.08.2016 AND POINTED OUT THAT THE ISSUE IS NOW SETTLED BY THE HON'BLE SUPREME COURT AND WHER E NON - APPLICABLE PORTION OF THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF, THEN SUCH NOTICE IS INVALID. HE THEN REFERRED TO THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN MISS ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 14 KAMLA KHUSHALDAS T E CHCHANDANI VS. O.D. MOHINDRA & ORS. (1999) 240 ITR 79 6 (BOM) AND POINTED OUT THAT WHERE THE ISSUE HAS BEEN DECIDED BY THE HON'BLE SUPREME COURT, THEN IT IS THE LAW OF LAND. HE ALSO REFERRED TO THE DECISIONS OF OTHER BENCHES OF TRIBUNAL WITH SPECIAL REFERENCE TO THE ORDER OF MUMBAI BENCH OF TRIBUNAL IN M/S. PRINCE CONSULTANCY P. LTD. VS. DCIT IN ITA NO.6068/MUM/2016, RELATING TO ASSESSMENT YEAR 2012 - 13, ORDER DATED 13.01.2017 . HE VEHEMENTLY ARGUED THAT IN THE PRESENT FACTS OF THE CASE, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 2 1 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW AND STRESSED THAT THE ASSESSING OFFICER WHILE CONCLUDING FOR THE INDIVIDUAL ASSESSMENT YEARS HAD REFERRED TO THE ADDITION MAD E AND HAD SPECIFICALLY INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. HE STRESSED THAT WHERE THE ASSESSING OFFICER HAS CORRECTLY RECORDED SATISFACTION FOR INITIATING PENALTY PROCEEDINGS FOR A PARTICULAR LIMB, T HEN MERELY BECAUSE WHILE MAKING THE ADDITION, THE ASSESSING OFFICER HAD OBSERVED THAT PENALTY PROCEEDINGS ARE INITIATED FOR BOTH THE LIMBS, THEN THE CONCLUDING PART WHERE SATISFACTION HAS BEEN RECORDED IN RESPECT OF ADDITION MADE SEPARATELY IN EACH OF THE ASSESSMENT ORDER, THEN THE SAME WOULD PREVAIL. HE STRESSED THAT WHERE THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF INCOME IN RESPECT OF ADDITIONS MADE IN THE HANDS OF ASSESSEE IN THE RESPECTIVE YEARS, THEN SINCE THE ASSESSEE HAS NOT DECLARED HIS INCOME CORRECTLY, THEN HE IS LIABLE TO PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. HE TOOK US THROUGH THE ORDERS OF ASSESSING OFFICER AND CIT(A) IN THIS REGARD. IN RESPECT OF ASSESSMENT YEAR 2002 - 03, HE POINTED OUT THAT THE REVENUE IS IN APPEAL AGAINST FINAL DIRECTIONS OF THE CIT(A), WHEREIN IN THE INITIAL PARAS , THE CIT(A) ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 15 CONSIDERED IT FIT TO LEVY THE PENALTY ON WHOLE OF THE CONCEALED INCOME BUT LATER ON RESTRICTS THE PENALTY TO THE ADDITIONS CONFIRMED BY THE TRIBUNAL. 2 2 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS WITH REGARD TO LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. IN THE FACTS OF THE CASE BEFORE US, SEARCH AND SEIZURE ACT ION WAS CONDUCTED AT THE PREMISES OF ASSESSEE UNDER SECTION 132 OF THE ACT ON 01.09.2004. THE ASSESSEE IS AN OPHTHALMOLOGIST AND WAS RUNNING EYE CLINIC AND HOSPITAL ALONG WITH HIS WIFE. DURING THE COURSE OF SEARCH, INCRIMINATING DOCUMENTS WERE FOUND, WHE REIN IT WAS DETECTED THAT THE ASSESSEE WAS MAINTAINING TWO SETS OF BOOKS OF ACCOUNT I.E. ONE AT THE COUNTER AND THE OTHER WHICH WAS MAINTAINED BY THE ACCOUNTANT. THE ASSESSEE WAS NOT DECLARING ITS TOTAL OPD RECEIPTS AND IPD RECEIPTS IN THE BOOKS OF ACCOUN T WHICH WAS MAINTAINED WITH THE ACCOUNTANT . I N ADDITION , INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF CERTAIN LAND TRANSACTIONS, WHEREIN CASH PAYMENTS WERE MADE BY THE ASSESSEE. DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 132(4) OF THE AC T, THE ASSESSEE ADMITTED AND ACCEPTED THE CASH TRANSACTIONS IN RESPECT OF VARIOUS INVESTMENTS MADE IN PURCHASE OF LAND FROM YEAR TO YEAR. THE ASSESSEE IN THE RETURN OF INCOME DISCLOSED THE CASH PAYMENTS FOR PURCHASE OF PLOT IN ASSESSMENT YEAR 1999 - 2000. HOWEVER, FURTHER CASH PAYMENT WAS MADE IN OTHER YEARS ALSO I.E. RS.20 LAKHS IN ASSESSMENT YEAR 2000 - 01, RS.40 LAKHS IN ASSESSMENT YEAR 2001 - 02 AND RS.40 LAKHS AGAIN IN ASSESSMENT YEAR 2002 - 03. HOWEVER, THESE CASH INVESTMENTS MADE BY THE ASSESSEE FOR PURCH ASE OF PLOT OF LAND IN THE RESPECTIVE YEARS, WERE NOT DECLARED IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE RESPECTIVE YEARS. IN RESPECT OF UNDISCLOSED PROFESSIONAL RECEIPTS FOR WHICH EVIDENCE WAS FOUND FOR PART OF THE YEARS, THE ASSESSEE ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 16 MADE DE CLARATION OF ADDITIONAL INCOME ON THE BASIS OF EVIDENCE FOUND. THE ASSESSEE ALSO CLAIMED THAT IN VIEW OF ADDITIONAL PROFESSIONAL RECEIPTS DECLARED BY IT, THE SAME EXPLAINS THE SOURCE OF CASH INVESTMENTS IN PURCHASE OF LAND. THE ASSESSING OFFICER ON THE OTHER HAND, EXTRAPOLATED AND CALCULATED UNDISCLOSED PROFESSIONAL RECEIPTS OF THE ASSESSEE IN EACH OF THE YEARS, EXCEPT FOR ASSESSMENT YEAR 1999 - 2000 . THE ADDITION MADE IN ASSESSMENT YEAR 2000 - 01 ON ACCOUNT OF ADDITIONAL PROFESSIONAL RECEIPTS HAS BEEN DELE TED BY THE TRIBUNAL IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND. HOWEVER, IN RESPECT OF EACH OF THE OTHER YEARS, THE TRIBUNAL HAS ESTIMATED INCOME ON GROSS PROFESSIONAL INCOME DETERMINED AFTER EXTRAPOLATION AND APPLIED GP RATE OF 10% AS AGAINST GP RATE OF 20% APPLIED BY THE ASSESSING OFFICER. THE TRIBUNAL HAS GIVEN FINDING IN RESPECT THEREOF, T HAT NO SET OFF IS TO BE ALLOWED AGAINST CASH PAYMENTS MADE FOR PURCHASE OF PLOTS OUT OF UNDISCLOSED PROFESSIONAL RECEIPTS. THE TRIBUNAL THUS, UPHELD THE AD DITION ON ACCOUNT OF INVESTMENTS IN PLOT /S OF LAND. 2 3 . THE ASSESSEE HAS PLACED ON RECORD THE COPY OF ORDER OF HONBLE BOMBAY HIGH COURT IN ASSESSEES CASE WITH LEAD ORDER IN INCOME TAX APPEAL NO. 498 OF 2013, JUDGMENT DATED 16.03.2015. THE HONBLE BOMB AY HIGH COURT HAS REFERRED TO THE FACTS IN ASSESSMENT YEAR 2002 - 03 AND NOTED THAT IN THE COURSE OF SEARCH, AGREEMENT WAS FOUND UNDER WHICH AN AMOUNT OF RS.40 LAKHS WAS PAID TO SHRI RENAVIKAR , WHICH PAYMENT WAS ADMITTEDLY NOT ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT. THE CASH BALANCE IN ASSESSEES BOOKS WAS TO THE EXTENT OF RS.10,22,850/ - AND THE ASSESSEE OFFERED THE BALANCE AMOUNT OF RS.29,77,150/ - TO TAX AS UN ACCOUNTED INVESTMENT. THE FIRST ISSUE WHICH WAS RAISED B EFORE THE HONBLE BOMBAY HIGH COURT WAS THE REJECTION OF ASSESSEES PLEA OF SET OFF BY THE ASSESSING OFFICER ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 17 AND ADDITION OF RS.10,22,850/ - . THE SECOND PLEA RAISED WAS THE ADDITION ON ACCOUNT OF ESTIMATION OF UNDISCLOSED IN COME OVER AND ABOVE THE FIGURE DISCLOSED BY THE ASSESSEE. THE HONBLE BOMBAY HIGH COURT HELD THAT THE ASSESSEE HAS NOT DISCHARGED THE BURDEN CAST UPON IT THAT THE CASH AVAILABLE WITH HIM WAS UTILIZED FOR MAKING THE PAYMENT TO SHRI R ENAVIKAR AND TO THAT E XTENT, THE SET OFF OF THE AMOUNT BE GIVEN. THE HONBLE HIGH COURT NOTED THAT IT WAS NOT THE CASE THAT THERE WAS NO TRANSACTION AFTER 30.06.2001 I.E. ON THE DATE OF WHICH, HE CLAIMS THAT HE HAD CASH BALANCE OF RS.10,22,850/ - . THE SECOND PLEA OF ASSESSEE T HAT IT HAD CASH AVAILABLE FROM THE TRANSACTION OF DOKE BROTHERS THAT THE AMOUNTS ADVANCED TO HIM WERE RETURNED, WAS NOT ACCEPTED IN THE ABSENCE OF ANY SUPPORTING EVIDENCE. ACCORDINGLY, THE ADDITION OF RS.10,22,850/ - MADE BY THE ASSESSING OFFICER WAS UPHEL D. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE ASSESSEE HAD ALREADY VOLUNTARILY OFFERED RS.29,75,150/ - TOWARDS UNACCOUNTED INVESTMENT MAKING THE TOTAL AT RS.40 LAKHS. IN RESPECT OF SECOND ADDITION OF SUPPRESSED PROFESSIONAL RECEIPTS OF RS.14,30,225/ - , W HEREIN THE ASSESSEE HAD OFFERED ADDITIONAL INCOME OF RS.24,40,510/ - IN ITS RETURN OF INCOME ON ACCOUNT OF EVIDENCE FOUND FROM HIS POSSESSION, THE HONBLE HIGH COURT UPHELD THE FINDINGS OF THE TRIBUNAL TO ESTIMATE PROFESSIONAL RECEIPTS AT 10% AND IT ALSO HELD THAT IN THE PRESENT CASE, WE DO NOT FIND THAT ANY SUCH ARBITRARINESS HAS BEEN DEMONSTRATED. IT THUS, HELD THAT WHERE THE TRIBUNAL DID NOT UPHELD THE ENTIRE ADDITION AS MADE BY THE ASSESSING OFFICER, BUT SUSTAINED IT TO THE EXTENT OF 10%, THEN IN SUCH FACTUAL BACKGROUND, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATION AND CONSIDERATION. HENCE THE APPEAL OF ASSESSEE WAS DISMISSED FOR ASSESSMENT YEAR 2002 - 03 . THE HONBLE HIGH COURT ALSO HELD THAT SAME WOULD BE THE OUTCOME FOR OTHER YEARS. ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 1 8 24. AFTER THE SAID ORDER PASSED BY THE HONBLE HIGH COURT, THE ADDITIONS HAVE BEEN UPHELD IN THE HANDS OF ASSESSEE ON TWO ACCOUNTS (A) CASH PAYMENT FOR PURCHASE OF PLOT WHICH IS OUTSIDE BOOKS OF ACCOUNT, (B) ESTIMATED PROFESSIONAL INCOME @ 10% ON GROSS P ROFESSIONAL RECEIPTS, EXTRAPOLATED IN THE HANDS OF ASSESSEE IN THE RESPECTIVE YEARS, ON THE BASIS OF EVIDENCE FOUND FOR PART OF THE YEAR. THE ASSESSEE HAD OFFERED CERTAIN PART OF PROFESSIONAL RECEIPTS IN ITS HANDS BUT THE ASSESSING OFFICER HAD EXTRAPOLATE D THE RECEIPTS FOR EACH OF THE YEAR AND APPLIED THE RATE OF 20% TO WORK OUT THE INCOME, WHICH WAS REDUCED TO 10% BY THE TRIBUNAL. 25. THE FIRST QUESTION WHICH ARISES IS ON ADDITION OF ESTIMATED PROFESSIONAL RECEIPTS IN THE HANDS OF ASSESSEE, WHEREIN THE ASSESSEE CLAIMS THAT THE INCOME WHICH HAS BEEN OFFERED BY HIM THE RETURN OF INCOME FILED PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT IS NOT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN RESPECT OF BALANCE INCOME WHICH HAS BEEN ESTIMATED IN THE HANDS OF ASSESSEE, THE CASE OF ASSESSEE IS THAT SINCE IT IS ESTIMATE OF INCOME, THEN IT IS NOT CASE OF CONCEALMENT AND HENCE, NO PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE SECOND SET OF ADDITION IN THE HANDS OF ASSESSEE IS ON ACCOUNT OF INVESTMENT IN PURCHASE OF PLOT, WHEREIN THE ASSESSEE CLAIMS THAT SINCE IT HAD AVAILABLE CASH ON ACCOUNT OF PROFESSIONAL RECEIPTS, THE SOURCE IS EXPLAINED WHICH HAS NOT BEEN ACCEPTED BY THE AUTHORITIES BUT THAT ITSELF WOULD NOT ATTRACT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 2 6 . WE MAY FIRST TAKE THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE THAT THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT IS ATTRACTED AND ALSO HAS FAILED TO STRIKE OFF NON - APPLICABLE ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 19 PORTION OF NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT AND HENCE, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE TRIBUNAL HAS ALREADY ELABO RATELY DISCUSSED THE ISSUE OF RECORDING OF SATISFACTION BY THE ASSESSING OFFICER AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN SERIES OF CASES WITH LEAD ORDER 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 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 SPECIFIED 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 COUR SE OF ANY PROCEEDINGS UNDER THE ACT, THAT THE PERSON HAS CONCEALED THE PARTICULARS 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. 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 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. SIMILAR LY, 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 S ATISFACTION 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 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 CONCERNED OFFICE R, 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, SATISFACTION AND NOTICE THEREON SHOULD SPECIFY EXACT CHARGE AGAINST THE ASSESSEE. THE CHARGE HAS TO BE FURTHER SPECIFIED WHILE COMPLETING PENALTY PROCEEDINGS AND THE ASSESSING OF FICER HAS TO COME TO A CONCLUSION AS TO WHETHER IT IS CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE QUESTION WHICH FURTHER ARISES WHERE THE SATISFACTION RECORDED BY THE ASSESSING OFFICER AND THE NOTICE ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 20 ISSUED THEREAF TER IS WITHOUT APPLICATION OF MIND, THEN CAN THE SUBSEQUENT ORDER PASSED LEVYING 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 SECTIO N 274 OF THE ACT FOR THE PURPOSE OF LEVYING PENALTY FOR CONCEALMENT AND OBSERVED 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 RECORD S 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 CONTAINS THE SATISFACTION OF THE AUTHOR ITY 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 AR E IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED 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 OPPORTUNITY 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 COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICU LARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PE NALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SEC TION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS 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 GROUN DS. 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 TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IM POSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH 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 ON 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 PE NALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 21 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 NOT 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 TH ERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THA T 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 [2007] 292 ITR 11 (SC) 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 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 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 THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE 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 PROCEEDINGS THAT THERE IS EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME UNDER CLAUSE (C) TO SECTION 2 71(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 CONCLU SION 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), WHE REIN AT PAGE 19 IT WAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATION. APPLYING THE SAID PROPOSITION, IT WAS HELD THAT WHERE THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEAL MENT, 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 NON - APPLICATION OF MI ND. 16. FURTHER, THE HONBLE KARNATAKA HIGH COURT IN CIT 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. 2 71(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 RELIED ON DECISION OF DIVISION BENCH OF THE COURT RENDERED IN CIT & ANR. VS. MANJUNATHA COT TON AND GINNING FACTORY (SUPRA). THE HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS (SUPRA) HAS DISMISSED THE 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 EITHER OF LIMBS, THEN NOTICE ISSUED ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 22 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, WHEREI N THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOME WITHOUT STRIKING INAPPROPRIATE WORDS OR ANY PARTS OF 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 INVALID. 19. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY KOLKATA BENCH OF TRIBUNAL IN SHRI DEEPAK KUMAR PA TWARI 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 THAT THE PROVISIONS OF SECTION 292B OF THE ACT CANNOT CURE THE BASIC DEFECT IN ASSUMPTION OF JURISDICTION AN D 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 A ND 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 FO R 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 CASE 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 WAS 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 AMBIGUITY WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF ASSESSEE OF REASONABLE OPPORTUNITY OF BEIN G HEARD. THE JURISDICTIONAL HIGH COURT DELIBERATED UPON THE PROVISIONS OF SECTION 274 OF THE ACT WHICH CONTAINED 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 OF INAPPROPRIATE PORTION COULD NOT ITSELF BE INVALIDATED THE NOTICE. IT WAS HELD THAT THE ENTIRE FACTUAL BACKGROUND WOULD FALL FOR CONSIDERATION 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 DEMONSTRATE NON - APPLICATION OF MIND BY THE AUTHORITY AND / OR ULTIMATE PREJUDICE TO THE RIGHT OF OPPORTUNI TY 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 NOT ICE 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 NOTICE CLEARLY DEMONSTRATED NON - APPLICATION OF MIND ON THE PART OF ASSESSING OFFICER. THE VAGUENESS AND AMB IGUITY 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, ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 23 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 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 GROUP OF CONCERNS ON 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 CUMULATIVELY FOR RS.13.99 CRORES AS ADDITIONAL INCOME. THE INCOME WAS DECLARED ON ACCOUNT OF ON - MONEY ON SALE OF PL OTS, 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 T HE ASSESSMENT PROCEEDINGS HAD TO BE SATISFIED THAT THE ASSESSEE HAD EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE 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 IS SUED 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 ASSESSING 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 CONCEALED THE INCOME. THE ONLY SOURCE OF ADDITION IN THE HANDS OF ASSESSEE IS ADDITIONAL INCOME OFFERED BY THE A SSESSEE PURSUANT TO SEARCH OPERATIONS. IN SUCH CIRCUMSTANCES, IT IS CATEGORICALLY A CASE OF CONCEALMENT. HOWEVER, THE ASSESSING OFFICER REFERS TO BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT AND THE SATISFACTION RECORDED IN THIS CASE SUFFERS FROM INFIR MITY. 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 O F 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 PROCEEDINGS I.E. RECORDING OF SATISFACTION A ND 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 CIT & 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 PROCEEDINGS BOTH FOR CONCEALMENT OF INCOME AND FURNISHING OF PARTICULARS OF INCOME AGAINST ADDITIONAL INCOME OFFERE D 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 ASSESSEE 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 NOTICE ACCORDINGLY. ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 24 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 UNDER 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 INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT HAD ALSO UPHELD THE QUASHING OF PENALTY PROCEEDIN GS 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 AWARE OF EXACT CHARGE OF THE DEPARTMENT AGAINST HIM, THEN TECHNICAL NON - ST RIKING 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 B E 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. CIT (SUPRA) HAD HELD AS UNDER: - 23. SE CTION 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 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 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 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 NOT 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 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 OPPO RTUNITY 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 ASSES SEE 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. 27. NOW, COMING TO THE MERITS OF CASE, THE ASSESSEE HAD OFFERED ADDITIONAL INCOM E ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS. THE ASSESSING OFFICER HAD ACCEPTED THE SAME AND HAD INITIATED PENALTY PROCEEDINGS UNDER SECTION ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 25 271(1)(C) OF THE ACT. THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS RELATING TO SECTION 271(1)(C) OF THE AC T 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 DOCUMENTS AND COMES TO CONCLUSION THAT LOANS WERE RECEIVED FROM RATANLAL BAFN A, 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 CONCEALMENT VARIES. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN LEVY OF PENALTY U NDER 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 APPEAL RAISED BY THE ASSESSEE AND ADDITIONAL GROUND OF APPEAL RAISE D BY THE ASS ESSEE ARE ALLOWED. 2 7 . THE PUNE BENCH OF TRIBUNAL HAS FURTHER IN BUNCH OF CASES IN NANASAHEB SHANKARRAO GAIKWAD IN ITA NOS.2095 TO 2098/PUN/2013, RELATING TO ASSESSMENT YEARS 2004 - 05 TO 2007 - 08, ORDER DATED 20.01.2017 HAS HELD AS UNDER: - 9. 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 TAXMANN.COM 241 (KAR), WHEREIN THE ISSUES RAISED BEFORE THE HONBLE HIGH COURT WERE AS UNDER: - (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS 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 AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? 10. THE HONBLE HIGH COURT HAD ALLOWED THE CLAIM OF ASSESSEE WHERE THE ASSESSING OFFICER HAD NOT EXPLICITLY MENTIONED THAT AS T O 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 APEX COURT HAS DISMISSED THE SLP FILED BY THE DEPARTMENT. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS STRESSED THAT IN VIEW OF THE PROVISIONS OF SECTION 271(1)(1B) OF THE ACT, WHERE ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 26 THE ORDER CONTAINS DIRECTIONS FOR INITIAT ION 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). THE SAID OBJECTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS ALSO BEEN TAKEN NOTE OF BY THE HONBLE HIGH COURT IN CIT VS. SSAS EMERALD MEADOWS (SUPRA) BY WAY OF QUESTION NO.2 WHICH HAS BEEN DECIDED AGAINST THE REVENUE. 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 IN THE FIRST YEAR I.E. ASSESSMENT YEAR 2004 - 05 HAS RECORDED SATIS FACTION FOR INITIATING PENALTY PROCEEDINGS ON ACCOUNT OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, PENALTY FOR CONCEALMENT IS LEVIABLE WHERE THE ASSESSEE HAS FULFILLED E ITHER 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 NOT ICE IN THIS REGARD. HOWEVER, IN THE FACTS OF THE 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 V ALID FOR NON - RECORDING OF SATISFACTION BY THE ASSESSING 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 A ND CONSEQUENTLY, NOTICE ISSUED UNDER SECTION 274 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 A ND FURNISHING OF INACCURATE PARTICULARS OF INCOME, 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 CO URT OF KARNATAKA IN CIT & ANR. VS. MANJUNATHA COTTON 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 CONCEALMENT IN THE RESPECTIVE YEARS. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 2 8 . AT THIS JUNCTURE, WE MAY ALSO CONSIDER THE REFERENCE OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE TO THE DECISION OF HON'BLE SUPREME COURT IN CIT & ANR. VS. M/S. SSAS EMERALD MEADOWS (SUPRA) . THE HON'BLE SUPREME COURT HAD DISMISSED THE SPECIAL LEAVE PETITION HOLDING THAT THEY DO NOT FIND ANY MERIT IN THE PETITION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT WHERE THE HON'BLE SUPREME COURT HAS DECIDED THE ISSUE THEN THE SAME IS TO BE APPLIED. THE HONBLE BOMBAY HIGH COURT IN MISS KAMLA KHUSHALDAS TECKCHANDANI VS. O.D. ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 27 MOHINDRA & ORS. (SUPRA) HAD REFERRED TO THE EXERCISE OF POWERS BY THE HON'BLE SUPREME COURT WHILE DISMISSING THE SPECIAL LEAVE PETITION BY WAY OF SPEAKING ORDER OR NON - SPEAKING ORDER AND HAD OBSERVED AS UNDER: - 12.. .....THE SUPREME COURT WHILE DISMISSING THE SPECIAL LEAVE PETITION PREFERRED AGAINST THAT JUDGMENT HAS OBSERVED THAT THE SUPREME COURT AGREES WITH THE REASONS AND CONCLUSION REACHED IN THE JUDGMENT. ARTICLE 141 OF THE CONSTITUTION OF INDIA LAYS DOWN THAT T HE LAW DECLARED BY THE SUPREME COURT SHALL BE BINDING ON ALL COURTS WITHIN THE TERRITORY OF INDIA. IT IS NOW SETTLED LAW THAT WHEN THE SUPREME COURT DISMISSES A SPECIAL LEAVE PETITION AGAINST THE JUDGMENT OF A HIGH COURT BY A NON - SPEAKING ORDER, THE ORDER OF THE SUPREME COURT DOES NOT AMOUNT TO A LAW DECLARED BY THE SUPREME COURT. HOWEVER, WHEN THE SUPREME COURT WHILE DISMISSING THE SPECIAL LEAVE PETITION PASSES A SPEAKING ORDER AND GIVES REASONS FOR DISMISSING THE SPECIAL LEAVE PETITION, THEN IT AMOUNTS TO THE LAW DECLARED BY THE SUPREME COURT IN UNION OF INDIA V. ALL INDIA SERVICES PENSIONERS ASSOCIATION, AIR 1988 SC 501. THE SUPREME COURT IN PARAGRAPH 6 AT PAGE 504 OF ITS JUDGMENT IN THE CASE OF ALL INDIA SERVICES PENSIONERS ASSOCIATION, REFERRED TO ABOVE , HAS OBSERVED THUS : THE FIRST GROUND RELIED ON BY THE TRIBUNAL NOT TO FOLLOW THE SAID DECISION IS THAT IT HAD BEEN RENDERED BY THIS COURT WHILE DISMISSING SOME SPECIAL LEAVE PETITIONS. THIS IS A WHOLLY UNTENABLE GROUND. THE SPECIAL LEAVE PETITIONS WERE NOT DISMISSED WITHOUT REASONS. THIS COURT HAD GIVEN REASONS FOR DISMISSING THE SPECIAL LEAVE PETITIONS. WHEN SUCH REASONS ARE GIVEN THE DECISION BECOMES ONE WHICH ATTRACTS ARTICLE 141 OF THE CONSTITUTION WHICH PROVIDES THAT THE LAW DECLARED BY THE SUPREME COURT SHALL BE BINDING ON ALL THE COURTS WITHIN THE TERRITORY OF INDIA. 2 9 . IN THE CASE OF CIT & ANR. VS. M/S. SSAS EMERALD MEADOWS (SUPRA), SPECIAL LEAVE PETITION HAS BEEN DISMISSED AGAINST THE JUDGMENT OF THE HONBLE HIGH COURT AND WHERE IT IS NOT A SPEAKING ORDER, THEN IT CANNOT BE SAID TO HAVE DECLARED A LAW ON THE ISSUE. APPLYING THE RATIO LAI D DOWN BY THE HONBLE BOMBAY HIGH COURT, WE FIND NO MERIT IN THE PLEA OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD AND THE SAME IS DISMISSED. 30 . NOW, COMING TO THE FACTS OF THE PRESENT CASE, WHEREIN WE HAVE REFERRED TO THE ORDER O F ASSESSING OFFICER IN THE QUANTUM AND PENALTY PROCEEDINGS AND THE ORDER OF CIT(A) AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ELABORATELY IN THE PARAS HEREINABOVE. THE ASSESSING OFFICER HAS PASSED A ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 28 CONSOLIDATED ORDER AND HAS REFERRED TO TH E FACTS OF EACH OF THE CASES IN ASSESSMENT YEARS 1999 - 2000 TO 2004 - 05 AND HAS INDIVIDUALLY DEALT WITH THE QUANTUM OF ADDITIONS TO BE MADE ON EITHER OF ACCOUNTS IN THE RESPECTIVE YEARS OR ON BOTH THE ACCOUNTS IN THE RESPECTIVE YEARS IN THE SAID CONSOLIDATED ORDER ITSELF. WHILE DECIDING THE QUANTUM OF ADDITIONS TO BE MADE, THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS UNDOUBTEDLY, FOR CONCEALMENT OF INCOME / FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOWEVER, IN THE FINAL ANALYSIS WHEN THE AS SESSING OFFICER PASSES SEPARATE ORDERS FOR EACH OF THE YEARS, SATISFACTION OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS CONCEALED ITS INCOME UNDER EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT AND BY REFERRING TO THE QUANTUM OF ADDITIONS PENALTY PRO CEEDINGS WERE SO INITIATED UNDER SECTION 271(1)(C) OF THE ACT. THEREAFTER, THE ASSESSING OFFICER HAS DIRECTED THE ISSUE OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT. THE GRIEVANCE OF THE ASSESSEE IN THE FIRST INSTANCE IS MISPLACED TO THE EXTEN T THAT WHERE THE ASSESSING OFFICER HAS RECORDED SATISFACTION AT FINAL STAGE ON ACCOUNT OF CONCEALMENT OF INCOME ONLY, THEN SUCH SATISFACTION RECORDED CANNOT BE SAID TO BE INCORRECT AND / OR CANNOT BE FAULTED WITH. WE FIND NO MERIT IN THE SUBMISSIONS OF AS SESSEE IN THIS REGARD, WHERE THE ASSESSING OFFICER HAS COME TO A FINDING AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT IS ATTRACTED IN THE CASE OF ASSESSEE, THEN THE ASSESSING OFFICER HAS PUT THE ASSESSEE TO NOTICE TO EXPLAIN ITS CASE OF LEVY OF PENALTY FOR CONCEALMENT FOR CONCEALING ITS INCOME, UNDER SECTION 271(1)(C) OF THE ACT. IN VIEW THEREOF, WE FIND NO MERIT IN THE PLEA OF ASSESSEE IN THIS REGARD AND THE SAME IS REJECTED. THE ASSESSING OFFICER HAS CORRECTLY INITIATED PENALTY PROCEEDINGS FOR CONCE ALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT. MERELY BECAUSE ONE OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT ARE NOT STRUCK OFF IN THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT WOULD NOT ESTABLISH THE CASE OF ASSESSEE ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 29 THAT THE ASSESSING OFFICER H AS NOT RECORDED CORRECT SATISFACTION TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT IS ATTRACTED. IN THIS REGARD, WE PLACE RELIANCE ON THE CELEBRATED DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA & ORS. (1995) 216 ITR 660 (BOM) , WHICH HAS BEEN REFERRED TO AND DISCUSSED IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD HAS PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN M/S. PRINCE CONSULTANCY P LTD. VS. DCIT (SUPR A) BUT IN VIEW OF THE ISSUE BEING SETTLED BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA & ORS (SUPRA), WE FIND NO MERIT IN THE SAID PLEA OF ASSESSEE. ONCE THE ASSESSING OFFICER AT THE TIME OF FINALIZING THE ASSESSMENT HAS APPLIED HIS MIND AN D RECORDED SATISFACTION TO THE EFFECT THAT THE ASSESSEE HAS CONCEALED ITS INCOME AS PER EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT, THE ASSESSEE IS PUT TO NOTICE AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT NEEDS TO BE EXPLAINED / SATISFIED AND IN SUCH CIRCUMSTANCES, WE HOLD THAT THE ASSESSING OFFICER HAS PUT THE ASSESSEE TO THE CHARGE FOR WHICH PENALTY PROCEEDINGS WERE INITIATED AND IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND FOR INITIATING PENALTY PROCEEDINGS. IN RESPEC T OF THE ISSUE OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT, WE MAY REFER TO OUR REASONING IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA) ON THIS ASPECT, WHICH READ AS UNDER: - 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 CASE 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 WAS NON - STRIKING OF INACCURATE PORTION, THE HONBLE HIGH COURT HE LD 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 AMBIGUITY WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF ASSESSEE OF REASONABLE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIGH COURT ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 30 DELIBERATED UPON THE PROVISIONS OF SECTION 274 OF THE ACT WHICH CONTAINED 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 OF INAPPROPRIATE PORTION COULD NOT ITSELF BE INVALIDATED THE NOTICE. IT WAS HELD THAT THE ENTIRE FACTUAL BACKGROUND WOULD FALL FOR CONSIDERATION IN THE MATTER AND NO ONE ASPECT WOULD BE DECISIVE. 2 1. 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 DEMONSTRATE NON - APPLICATION OF MIND BY THE AUTHORITY AND / OR UL TIMATE 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 CHAR GE 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 NOTICE 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 ASSESSMEN T 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 WHE RE 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. 31. NOW, COMING TO THE MERITS OF LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AT THE PREMISES OF ASSESSEE ON 01.09.2004. THE ASSESSMENT HAS BEEN C OMPLETED IN THE CASE OF ASSESSEE UNDER SECTION 143(3) R.W.S. 153A OF THE ACT. AT THE RELEVANT TIME, THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WERE APPLICABLE, WHEREIN AS PER THE SAID EXPLANATION WHERE IN THE COURSE OF SEARCH, THE ASS ESSEE WAS FOUND TO BE OWN ER OF MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING WHOLLY OR IN PART HIS INCOME, FOR (A) ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE D ATE OF SEARCH BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED OR WHERE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH , THEN ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 31 NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, DEEMED TO HAVE CONCEALED PARTICULARS OF HIS I NCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE EXPLANATION FURTHER PROVIDES THE CONDITIONS UNDER WHICH NO PENALTY FOR CONCEALMENT IS TO BE LEVIED I.E. AS PER CLAUSE (1) UNDER EXPLANATION 5, WHERE SUCH INCOME IS , OR THE TRANSACTION S RESULTING IN SUCH INCOME ARE RECORDED, - (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE DATE OF THE SEARCH; AND (II) IN A CASE FALLING UNDER CLAUSE (B), ON OR BEFORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCO ME IS OTHERWISE DISCLOSED BEFORE THE SAID DATE; OR WHERE IN THE COURSE OF SEARCH, HE MAKES A STATEMENT UNDER SUB - SECTION 132(4) OF THE ACT THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE EXPIRY OF TIME SPECIFIED IN SECTION 139(1) OF THE ACT AND ALSO SPECIFIE S IN THE STATEMENT, THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. THE FIRST STEP FOR APPLICATION OF EXPLANATION 5 IS THAT THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION , JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND THEREAFTER, THE CONDITIONS LAID DOWN IN THE SAID EXPLANATION 5 ARE ATTRACTED AND ARE TO BE APPLIED. WE HAVE ALREADY REFERRED TO THE ADDITIONS MADE IN THE CASE OF ASSESSEE I.E. ON ACCOUNT OF CASH INVESTMEN TS IN PURCHASE OF LANDS IN DIFFERENT YEARS OVER AND ABOVE THE REGISTERED SALE DOCUMENT AND THE PROFESSIONAL RECEIPTS WHICH WERE WORKED OUT ON THE BASIS OF INCRIMINATING EVIDENCE FOUND DURING THE COURSE OF SEARCH . T HE ADDITIONS HAVE NOT BEEN MADE ON ACCOUN T OF ANY MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE OR THING FOUND FROM THE POSSESSION OF ASSESSEE. HENCE, ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 32 EXCEPTION CLAUSES PROVIDED IN EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED IN THE PRESENT CASE. VARIOUS ARGUMENTS RAISED BY T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ARE THUS, DISMISSED. EVEN OTHERWISE, T HERE IS NO MERIT IN THE PLEA OF ASSESSEE THAT PART OF THE AMOUNT WAS DISCLOSED DURING THE COURSE OF SEARCH, WHERE IN THE STATEMENT RECORDED DURING THE COURSE OF SE ARCH, THE ASSESSEE HAS NOT EVEN EXPLAINED THE MANNER IN WHICH THE INCOME WAS EARNED. THE ASSESSEE IS ALSO AGGRIEVED BY LEVY OF PENALTY ON ESTIMATED PROFESSIONAL RECEIPTS. HOWEVER, IN THE FACTS OF THE PRESENT CASE, THE GROSS RECEIPTS WERE DETECTED ON THE BASIS OF INCRIMINATING EVIDENCE FOUND DURING THE COURSE OF SEARCH AND ESTIMATION WAS ONLY VIS - - VIS RATE TO BE APPLIED. HENCE, WE FIND NO MERIT IN THE PLEA OF ASSESSEE IN THIS REGARD AND THE SAME IS REJECTED. ACCORDINGLY, THERE IS NO MERIT IN THE PLEA OF ASSESSEE IN TAKING THE SHELTER UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. ADMITTEDLY, IN THE CASE OF ASSESSEE DURING THE COURSE OF SEARCH, INCRIMINATING EVIDENCE WAS FOUND AS TO THE ASSESSEE HAVING MADE CASH INVESTMENT FOR PURCHASE OF PLOT OF L AND OVER AND ABOVE DECLARED VALUE OF INVESTMENT AND ALSO UNDISCLOSED PROFESSIONAL RECEIPTS WHICH HAVE NOT BEEN DECLARED BY THE ASSESSEE , WHICH WERE ADMITTED BY THE ASSESSEE AS HIS ADDITIONAL INCOME IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT AND PART OF WHICH WERE DECLARED AND THE BALANCE AMOUNT WAS WORKED OUT BY THE ASSESSING OFFICER AND INCOME WAS ESTIMATED BY THE ASSESSING OFFICER THEREON AND UPHELD BY THE TRIBUNAL AND CONFIRMED BY THE HONBLE BOMBAY HIGH COURT . IN VIEW OF THE ORDER OF HON BLE BOMBAY HIGH COURT IN THE CASE OF ASSESSEE, THE ADDITIONS HAVE BEEN CONFIRMED IN THE HANDS OF ASSESSEE AND THE EXPLANATION OF ASSESSEE THAT IT HAD SUFFICIENT CASH AVAILABLE HAS NOT BEEN ACCEPTED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS TIME AND AGAIN TRIED TO BUILD UP HIS CASE OF AVAILABILITY OF CASH BALANCE, WHICH IS ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 33 WITHOUT ANY BASIS AND HENCE, THE SAME IS DISMISSED. THE ADDITIONS ON ACCOUNT OF UNEXPLAINED PAYMENTS FOR PURCHASE OF PLOTS, WHICH WERE OVER AND ABOVE THE INVESTMENTS DE CLARED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT HAS BEEN CONFIRMED IN THE HANDS OF ASSESSEE AND PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IS SQUARELY LEVIABLE. THE SECOND PLEA OF THE ASSESSEE THAT THE SUPPRESSED PROFESSIONAL INCOME WAS EST IMATED FOR THE PERIOD FOR WHICH NO INCRIMINATING DOCUMENT WAS FOUND DOES NOT STAND WHERE ADMITTEDLY, THE ASSESSEE HIMSELF HAD DECLARED THE ADDITIONAL INCOME WHILE FILING THE RETURN OF INCOME UNDER SECTION 153A OF THE ACT. ACCORDINGLY , THE ASSESSEE IS EXIG IBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE HOLD SO. THE ONLY QUESTION WHICH REMAINS IS THE DETERMINATION OF PENALTY LEVIABLE WHICH SHALL BE CALCULATED BY THE ASSESSING OFFICER IN THE RESPECTIVE YEARS ON THE BASIS OF FINAL INCOME ADDED IN THE HANDS OF ASSESSEE IN EACH OF THE YEARS. THE ORIGINAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. ONE MORE STAND TAKEN BY THE ASSESSEE THAT IN ASSESSMENT YEA R 2004 - 05, THE ASSESSING OFFICER HIMSELF HAS LEVIED PENALTY ONLY ON THE ADDITIONAL INCOME ASSESSED IN THE HANDS OF ASSESSEE AND THE SAME SHOULD BE APPLIED IN ALL THE YEARS. WE FIND NO MERIT IN THE PLEA OF ASSESSEE WHERE THE ADDITIONAL INCOME HAS BEEN CONF IRMED IN THE HANDS OF ASSESSEE EVEN THOUGH PART OF IT WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE ACT BUT THAT DOES NOT EXONERATE THE ASSESSEE FROM LEVY OF PENALTY, WHEREIN THE ASSESSEE HAS FAILED TO EXPLAIN THE MANNER IN WHICH THE INCOME WAS EARNED FOR SUCH INVESTMENTS. ACCORDINGLY, WE HOLD SO. 32 . THE REVENUE IS IN APPEAL ON THE DIRECTIONS OF CIT(A) TO THE ASSESSING OFFICER IN RE - COMPUTING PENALTY ON THE BASIS OF ADDITIONS MADE. WE FIND NO ITA NO. 1645 & 1694 TO 1699 /PUN/2013 DR PRAKASH KANHAIYALAL KANKARIYA 34 MERIT IN THE APPEAL FILED BY THE REVENUE SINCE PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IS TO BE LEVI ED ONLY ON FINAL ADDITIONS MADE IN THE HANDS OF ASSESSEE ON THE BASIS OF ORDER OF TRIBUNAL . I N THE CASE OF ASSESSEE , THE HONBLE HIGH COURT HAS DISMISSED T HE APPEAL OF ASSESSEE. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ALL THE APPEALS ARE DISMISSED INCLUDING THE ADDITIONAL GROUNDS OF APPEAL. 33. IN THE RESULT, APPEAL OF REVENUE AND ALL THE APPEALS OF ASSESSEE ARE DISMISSED. ORDER P RONOUNCED ON THIS 26 TH DAY OF MA Y , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 26 TH MA Y , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 , PUNE ; 4. / THE CIT I, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE
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