DCIT, Circle-1, Nashik V. M/s. Anilkumar Construction Co., Nashik

ITA 1660/PUN/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0366 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings; Revised return; Documents seized
• Section: 143(3); 133A; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 660 /PN/20 1 3 / ASSESSMENT YEAR: 200 9 - 1 0 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1 , NASHIK . / APPELLANT VS. M/S. ANILKUMAR CONSTRUCTION CO., 1 ST FLOOR, SHRINIWAS APPTT., NEHRU GARDEN, PATEL COLONY, NASHIK 422001 . / RESPONDENT PAN: AA EFA0488Q PAN: AA EFA0488Q / APPELLANT BY : SHRI ANIL KUMAR CHAWARE / RESPOND ENT BY : SHRI KISHORE PHADKE / DATE OF HEARING : 19 .0 9 .201 6 / DATE OF PRONOUNCEMENT: 14 . 12 .201 6 / / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST ORDER OF CIT (A) - I , NASHIK , DATED 07 . 0 6 .201 3 RELATING TO ASSESSMENT YEAR 200 9 - 1 0 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 2 1 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED TO HOLD THAT IMPOSITION OF PENALTY ON THE AMOUNT OF RS.1,32,00,000/ - U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, WAS NOT JUSTIFIED, DESPITE THE FACT THAT HAD THE CASE OF THE ASSESSEE NOT BEEN COVERED UNDER SURVEY ACTION, HE NEITHER WOULD HAVE DECLARED OF ADDITIONAL INCOME OF RS.1.32 CRORES NOR WOUL D HAVE REVISED THE RETURN OF INCOME DECLARING CORRECT COMPUTATION OF INCOME. 2. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 3. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE HIS CASE. 3. THE ISSUE ARISING IN THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST DELETION OF PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT AT RS.1.32 CRORES. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF ROAD AND ITS ALLIED ACTIVITIES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.45,53,980/ - . SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF ASSESSEE ON 03.03.2010. THE ASSESSEE OF FERED ADDITIONAL INCOME OF RS.1.32 CRORES ON ACCOUNT OF UNDISCLOSED DEBTORS DURING THE COURSE OF SURVEY. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 31.08.2010 DECLARING TOTAL INCOME OF RS.1,77,53,980/ - . THE ASSESSMENT IN THE CASE WAS COMP LETED UNDER SECTION 143(3) OF THE ACT AT RS.1,93,19,520/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, UNDISCLOSED DEBTORS OF RS. 26,21,033/ - WERE FOUND, OUT OF WHICH THE ASSESSEE DISCLOSED SUM OF RS.12,55,496/ - FOR POSSIBLE ERRORS AND OMISSIONS AND AFTER SET OFF , THE BALANCE OF RS.13,65,537/ - WAS ADDED TO THE REVISED INCOME DECLARED BY THE ASSESSEE. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. THE ASSESSEE STRESSED THAT WHERE THE ASSESSEE AGREES FOR ADDITION IN THE COURSE OF AS SESSMENT TO PURCHASE PEACE OF MIND AND TO AVOID PROTRACTED LITIGATION, PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT ATTRACTED. ANOTHER CONTENTION WAS RAISED BY THE ASSESSEE WAS THAT NO PENALTY WAS LEVIABLE ON THE INCOME WHICH WAS DECLARED IN THE REVI SED RETURN OF INCOME, FOR WHICH RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 3 SUDARSHAN SILK & SAREES VS. CIT REPORTED IN 300 ITR 205 (SC) . THE ASSESSING OFFICER NOTED THAT THE ASSESSMENT IN THE CASE OF ASSESSEE WAS DONE ON THE BASIS OF INCRIMINATING DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY, WHEREIN THE ASSESSEE HAD PREPARED THE LEDGER ACCOUNTS WITH THE HELP OF IMPOUNDED BOOKS AND QUANTIFIED THE MAXIMUM OUTSTANDING BALANCE OF DEBTORS, ON THE BASIS OF WHICH THE ADDITIONS WERE MADE. THEREFORE, THE CONTENTION OF ASSESSEE WAS HELD TO BE NOT ACCEPTABLE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD FILED REVISED RETURN OF INCOME ONLY AFTER THE SURVEY ACTION, WHEREIN IRREGULARITIES WERE FOUND WITH THE HELP OF INCRIMINATING DOCUMENTS. THIS ACT OF THE ASSESSEE AS PER THE ASSESSING OFFICER, SHOWS THAT THE ASSESSEE HAD CONCEALED THE INCOME OF RS.1.32 CRORES AND CONSEQUENTLY, THE ASSESSEE WAS HELD TO BE LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WITH REGARD TO OTHER ADDITION OF RS.13,65,537/ - ALSO, THE ASSESSEE WAS HELD TO BE LIABLE FOR LEVY OF PENALTY WITHIN THE MEANING OF SECTION 271(1)(C) READ WITH EXPLANATION (1) OF THE ACT . THE ASSESSING OFFICER THUS, LEVIED PENALTY OF RS.49,50,830/ - UNDER SECTION 271( 1)(C) OF THE ACT. 5. THE CIT(A) DELETED THE PENALTY ON THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE OF RS.1,32, 00, 000/ - , SINCE THE ASSESSEE HAD FILED REVISED RETURN OF INCOME VOLUNTARILY, IN WHICH IT HAD DECLARED THE ADDITIONAL INCOME. THE SAID RETURN O F INCOME WAS FILED BEFORE COMMENCEMENT OF SCRUTINY ASSESSMENT. HOWEVER, IN RESPECT OF BALANCE ADDITION OF RS.13,65,537/ - , PENALTY WAS CONFIRMED BY THE CIT(A). 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN DELETING PENALTY ON THE ADDITION O F ADDITIONAL INCOME OF RS.1.32 CRORES. 7. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST PENALTY CONFIRMED BY THE CIT(A) ON ADDITION OF RS.13,65,537/ - . ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 4 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE ADDITIONAL INCOME OFFE RED BY THE ASSESSEE WAS BASED ON INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SURVEY. THE ASSESSEE HAD FILED THE REVIDED RETURN OF INCOME AFTER DECLARING THE ADDITIONAL INCOME OF RS.1.32 CRORES. THE ASSESSING OFFICER HAS ACCEPTED THE ADDITIONAL INC OME AND ALSO MADE OTHER ADDITION. HOWEVER, THE CIT(A) HAS DELETED THE PENALTY ON ADDITIONAL INCOME OF RS.1.32 CRORES BUT HAD UPHELD ON OTHER ADDITION. HE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN MAK DATA P. LTD. VS. CIT IN C IVIL APPEAL NO.9772 OF 2013 , JUDGMENT DATED 30.10.2013 AND THE HONBLE HIGH COURT OF DELHI IN CIT VS. ZOOM COMMUNICATION (P.) LTD. (2010) 327 ITR 510 (DEL) . 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND POINTED OUT THAT DURIN G THE COURSE OF SURVEY, CERTAIN LISTS OF SUNDRY CREDITORS AND DEBTORS WERE FOUND. THE ASSESSEE ADMITTED THAT THE TRANSACTIONS WERE OUTSIDE THE BOOKS OF ACCOUNT AND THE AMOUNT WAS DECLARED IN THE COURSE OF SURVEY. OUR ATTENTION WAS DRAWN TO THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT AND IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE JURISDICTION FOR INITIATING OF PENALTY PROCEEDINGS WAS ONLY FOR RS.13,65,537/ - . HE FURTHER POINTED OUT THAT NO DOUBT, T HER E WAS DECLARATION OF INCOME BY THE ASSESSEE BUT THE ASSESSEE OFFERED PEAK AND ALSO OFFERED TOP UP OF PEAK. HE FURTHER STRESSED THAT WHERE THE LIST OF SUNDRY DEBTORS AND CREDITORS WAS FOUND BUT THE SAME WAS NOT INCOME OF THE ASSESSEE, HOWEVER, COMPLETE AMOUNTS WERE OFFERED TO TAX. OUR ATTENTION WAS ALSO DRAWN TO THE BALANCE SHEET PLACED AT PAGE 6 OF THE PAPER BOOK, WHEREIN THE CURRENT LIABILITIES WERE TO THE TUNE OF RS.2.31 CRORES AND THE REAL CURRENT ASSETS WHICH INCLUDED THE DEBTORS WAS RS.2.80 CRORES . HE FURTHER STATED THAT THE FACTS IN MAK DATA P. LTD. VS. CIT (SUPRA) WERE DIFFERENT, WHERE ADDITIONAL INCOME WAS DETECTED BUT NO DECLARATION W AS MADE BY THE ASSESSEE THEREIN, THE SAID RATIO WAS NOT APPLICABLE. HOWEVER, THE ASSESSEE ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 5 OFFERED THE INCOME A T THE FIRST INSTANCE. HE REFERRED TO THE THREE JUDGES DECISION OF HONBLE SUPREME COURT IN CIT VS. SURESH CHANDRA MITTAL (2001) 251 ITR 9 (SC), WHICH WAS EARLIER DECISION. HE STRESSED THAT ONCE DECLARATION WAS MADE IN THE REVISED RETURN OF INCOME, THEREA FTER, PENALTY FOR CONCEALMENT HAS TO BE ON THE INCOME DETECTED BY THE ASSESSING OFFICER. HE POINTED OUT THAT IN CASE OF SEARCH, WHEREIN ADDITIONAL INCOME IS OFFERED, THEN PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IS ATTRACTED AS PER EXPLA NATION 5 THEREUNDER. HOWEVER, LAW IN ITS WISDOM HAS ONLY LOOKED INTO THE STATUTE CONSEQUENT TO SEARCH; BUT IN CASE OF SURVEY WHERE THE ASSESSEE FILES REVISED RETURN OF INCOME AND THE SAME IS ACCEPTED , NO PENALTY FOR CONCEALMENT IS TO BE LEVIED. 10. THE NEXT ISSUE RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER FOR INITIATING THE PENALTY FOR CONCEALMENT A GAINST THE ADDITIONAL INCOME OFFERED OF RS.1.32 CRORES. HE REFERRED TO THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT, WHEREIN THE SATISFACTION WAS RECORDED FOR SECOND LIMB I.E. FURNISHING OF INACCURATE PARTICULARS OF INCOME VIS - - VIS THE ADDITION OF RS. 13,65,537/ - . H E THEN REFERRED TO THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS UNDER EXPLANATION 1, WHICH IS AVAILABLE FOR CONCEALMENT OF INCOME. HE STRESSED THAT WHERE THERE WAS MISMATCH BETWEEN SATISFACTION OF THE ASSESSING OFFICER DURING INITIATI O N OF PENALTY PROCEEDINGS AND THE LEVY O F PENALTY, THEN THE SAME DOES NOT STAND. IN THIS REGARD, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATH A COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR) AND REFERRED TO THE PUNE BENCH OF TRIB UNAL IN SANJOG TARACHAND LODHA VS. ITO IN ITA NOS.688 & 689/PN/2014, RELATING TO ASSESSMENT YEARS 2007 - 08 & 2008 - 09, ORDER DATED 31.08.2015. ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 6 1 1 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES FOR ADJUDICATION IS AGAINS T LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSEE HAD FURNISHED THE ORIGINAL RETURN OF INCOME ON 29.09.2009 DECLARING TOTAL INCOME OF RS.45,53,980/ - . SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF ASSESSEE ON 03.03.2010. DURING THE COURSE OF SURVEY, CERTAIN BOOKS OF ACCOUNT WERE IMPOUNDED, AGAINST WHICH THE ASSESSEE EXPLAINED THAT THERE WERE CERTAIN SALES AND PURCHASES WHICH WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSEE WAS MAINTAINING LEDGER REGISTERS CONTAINING UNRECORDED DEBTORS OF THE ASSESSEE. THE ASSESSEE OFFERED SUM OF RS.1.32 CRORES AS ADDITIONAL INCOME DURING THE COURSE OF SURVEY. THE SAID AMOUNT WAS INCLUDED IN THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE ON 31.08.2010, UNDER WHICH HE DECLARED TOTAL INCOME AT RS. 1,77,53,980/ - . THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY. THE ASSESSING OFFICER ACCEPTED THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE BUT MADE FURTHER ADDI TION OF RS.13,65,537/ - . THE ASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT ON 19.08.2010 AND WAS COMPLETED VIDE ORDER DATED 16.12.2011. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THE DISCUSSION ON IMPOUNDED DO CUMENTS ITEM NO.B5 AND B6 AND THE ASSESSEE WAS ASKED TO EXPLAIN THE PEAK AMOUNT OF RS.99,70,519/ - . THE ASSESSEE EXPLAINED THAT IT HAD OFFERED RS.1.32 CRORES AS ADDITIONAL INCOME, WHICH INCLUDED THE SAID PEAK. HOWEVER, THE ASSESSEE IN ITS SUBMISSIONS ITSE LF POINTED OUT THAT IT WAS READY TO DECLARE ADDITIONAL INCOME OF RS.13,65,537/ - . THE ASSESSING OFFICER MADE AN ADDITION OF RS.13,65,537/ - ON ACCOUNT OF UNDISCLOSED DEBTORS. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS A RESULT OF SURVEY, THE ASSESSEE H AD DISCLOSED SUM OF RS.1.32 CRORES, WHICH WAS INCORPORATED IN THE REVISED RETURN OF INCOME. HE FURTHER POINTED OUT THAT IN VIEW OF THE ABOVE DISCUSSION, ADDITION OF RS.13,65,537/ - WAS MADE ON ACCOUNT OF UNDISCLOSED DEBTORS, FOR WHICH THE ASSESSEE HAD AGRE ED. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 7 WERE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. ANOTHER ADDITION WAS MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE OF RS.2 LAKHS. HOWEVER, N O PENALTY PROCEEDINGS WERE INITIATED FOR THIS. 1 2 . THE CASE OF ASSESSEE BEFORE US IS TWO - FOLD; THAT WHERE THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY HAS BEEN ADDED IN HIS HANDS IN THE REVISED RETURN OF INCOME, THEN NO PENALT Y PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IS TO BE LEVIED, WHERE THE SAID REVISED INCOME IS ACCEPTED. HE FURTHER POINTS OUT THAT IT IS CASE OF SURVEY AND HENCE, THE DEEMING PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT ARE NOT TO BE APPLIED. ANOTHER FACET WHICH HAS BEEN ARGUED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT AGAINST THE ADDITION OF RS.13,65,537/ - . AS PER HIM, THE SATISFACTION RE CORDED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER WAS ONLY IN RESPECT OF ADDITION OF RS. 13,65,357/ - . ANOTHER ISSUE RAISED BY THE ASSESSEE IN THIS REGARD WAS THAT SATISFACTION, IF ANY, RECORDED IN THE CASE IS NOT PROPER AS THE ASSESSING OF FICER HAD INITIATED PENALTY PROCEEDINGS FOR BOTH THE LIMBS OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME , WHEREAS THE REQUIREMENT OF THE ACT IS TO GIVE A FINDING AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT IS SATISF IED IN THE CASE OF ASSESSEE. HE FURTHER POINTS OUT THAT THE ASSESSING OFFICER WHILE LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS RECORDED SATISFACTION THAT THE ASSESSEE HAS CONCEALED THE INCOME WITHIN THE MEANING OF SECTION 271(1)(C) READ WITH EXPLANA TION 1 OF THE ACT THAT MEANS THE SATISFACTION OF ONE OF THE LIMBS AND THE PENALTY HAS BEEN LEVIED ON BOTH THE ADDITIONS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS STRESSED THAT WHERE THE SATISFACTION RECORDED BY THE ASSESSING OFFICER WHIL E INITIATING PENALTY PROCEEDINGS WERE ON TWO LIMBS AND EVEN IF THE ASSESSING OFFICER HAD ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 8 LEVIED THE PENALTY ON ONE OF THE LIMBS, THEN ALSO THE ORDER PASSED BY THE ASSESSING OFFICER SUFFERS FROM INFIRMITY, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE KARNA TAKA HIGH COURT IN CIT & ANR. VS. MANJUNATH A COTTON AND GINNING FACTORY (SUPRA) AND OTHER DECISIONS. FURTHER, OBJECTIONS WERE ALSO RAISED ON MERITS OF ADDITION MADE AND WHETHER ANY PENALTY IS TO BE LEVIED FOR CONCEALMENT ON SUCH ADDITIONS. 13. WE FIRST PROCEED TO DECIDE THE TECHNICAL ISSUE RAISED BY THE ASSESSEE IN THIS REGARD. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, HAS STRONGLY OPPOSED THE ORDER OF CIT(A) IN DELETING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 14. THE FIRST LIMB OF THE SUBMISSIONS MADE BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IS WHETHER IN A CASE OF SURVEY, WHERE ADDITIONAL INCOME WAS OFFERED AND THE SAME WAS INCLUDED FOR TAXATION PURPOSES IN THE REVISED RETURN OF INCOME FILED B Y THE ASSESSEE, CAN ANY PENALTY UNDER SECTION 271(1)(C) OF THE ACT BE LEVIED? ADMITTEDLY, IN THE FACTS OF THE PRESENT CASE, THE ADDITIONAL INCOME WAS OFFERED PURSUANT TO SURVEY AND NOT SEARCH PROCEEDINGS CARRIED OUT IN THE CASE OF ASSESSEE. THE DEEMING P ROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AGAINST ADDITIONAL INCOME OFFERED PURSUANT TO SEARCH OPERATIONS ARE ATTRACTED. SINCE THE CASE BEFORE US IS OF SURVEY AND NOT SEARCH, HENCE, THOSE DEEMING PROVISIONS ARE NOT APPLICABLE. THE CASE OF ASSESSEE BEFORE US IS THAT WHERE HE HAS VOLUNTARILY INCLUDED THE ADDITIONAL INCOME IN THE REVISED RETURN OF INCOME, WHICH IN TURN, HAS BEEN ACCEPTED BY THE ASSESSING OFFICER, THEN NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS ATTRACTED. IN THIS REGA RD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. SAS PHARMACEUTICALS REPORTED IN 335 ITR 259 (DEL) , WHEREIN IT HAS BEEN HELD AS UNDER: - ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 9 12. AFTER CONSIDERING THE RESPECTIVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE VIEW THAT THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE HAS TO PREVAIL AS IT CARRIED SUBSTANTIAL WEIGHT. IT IS TO BE KEPT IN MIND THAT S. 271(1)(C) OF THE ACT IS A PENAL PROVISION AND SUCH A PROVISION HAS TO BE STRICTLY CONSTR UED. UNLESS THE CASE FALLS WITHIN THE FOUR CORNERS OF THE SAID PROVISION, PENALTY CANNOT BE IMPOSED. SUB - S. (1) OF S. 271 STIPULATES CERTAIN CONTINGENCIES ON THE HAPPENING WHEREOF THE AO OR THE CIT(A) MAY DIRECT PAYMENT OF PENALTY BY THE ASSESSEE. WE ARE C ONCERNED HEREWITH THE FUNDAMENTALITY PROVIDED IN CL. (C) OF S. 271(1) OF THE ACT, WHICH AUTHORIZES IMPOSITION OF PENALTY WHEN THE AO IS SATISFIED THAT THE ASSESSEE HAS EITHER : A) CONCEALED THE PARTICULARS OF HIS INCOME; OR (B) FURNISHED INACCURATE PART ICULARS OF SUCH INCOME. 13. IT IS NOT THE CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME, AS IN THE IT RETURN, PARTICULARS OF INCOME HAVE BEEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLECTED IN THE IT RETURN. THE QUESTION IS W HETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT. IT WOULD DEPEND UPON THE ISSUE AS TO WHETHER THIS CONCEALMENT HAS REFERENCE TO THE IT RETURN FILED BY THE ASSESSEE, VIZ., WHETHER CONCEALMENT IS TO BE FOUND IN THE IT RETURN. 14. WE MAY, FIRST OF ALL, REJECT THE CONTENTION OF THE LEARNED COUNSEL FOR THE REVENUE RELYING UPON THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT OCCURRING IN SUB - S. (1) OF S. 271 OF THE ACT AND CONTENDING THAT EVEN DURING SURVEY WHEN IT WAS FO UND THAT THE ASSESSEE HAD CONCEALED THE PARTICULAR OF HIS INCOME, IT WOULD AMOUNT TO CONCEALMENT IN THE COURSE OF ANY PROCEEDINGS. THE WORDS IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT ARE PREFACED BY THE SATISFACTION OF THE AO OR THE CIT(A). WHEN THE SURVEY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF SATISFACTION OF AO OR THE CIT(A) OR THE CIT DOES NOT ARISE. WE HAVE TO KEEP IN MIND THAT IT IS THE AO WHO INITIATED THE PENALTY PROCEEDINGS AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED A NY SATISFACTION DURING AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED A NY SATISFACTION DURING THE COURSE OF SURVEY. DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING ASSESSMENT ORDER. IT IS, THUS, OBVIOUS THAT THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT CANNOT HAVE THE REFERENCE TO SURVEY PR OCEEDINGS IN THIS CASE. 15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME BY THE ASSESSEE HAS TO BE IN THE IT RETURN FILED BY IT. THERE IS SUFFICIENT INDICATION OF THIS IN THE JUDGMENT O F THIS COURT IN THE CASES OF CIT VS. MOHAN DAS HASSA NAND (1983) 34 CTR (DEL) 361 : (1983) 141 ITR 203 (DEL) AND IN RELIANCE PETROPRODUCTS (P) LTD. (SUPRA), THE SUPREME COURT HAS CLINCHED THIS ASPECT, VIZ., THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOM E IN HIS RETURN AND EVERYTHING WOULD DEPEND UPON THE IT RETURN FILED BY THE ASSESSEE. THIS VIEW GETS SUPPORTED BY EXPLNS. 4 AS WELL AS 5 AND 5A OF S. 271 OF THE ACT AS CONTENDED BY THE LEARNED COUNSEL FOR THE RESPONDENT. 16. NO DOUBT, THE DISCREPANCIES W ERE FOUND DURING THE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMOUNT SURRENDERED BY THE ASSESSEE. PRESENTLY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION IS AS TO WHETHER THIS WOULD ATTRACT PENALTY UPON THE ASSESSEE UNDER THE PROVISIONS OF S. 271(1)(C) OF THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND POSSIBILITIES. SEC. 271(1)(C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND THAT THERE IS ACTUALLY A CONCEALMENT OR NON - DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON - DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE IT RETURN AND OFFERED THE SURRENDERED AMOUNT FOR THE PURPOSES OF TAX. ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 10 17. WE, THUS , ANSWER THE QUESTIONS AS FORMULATED ABOVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE FINDING NO FAULT WITH THE DECISIONS OF THE CIT(A) AS WELL AS THE TRIBUNAL. AS A RESULT, THIS APPEAL IS DISMISSED. 15. THE BANGALORE BENCH OF TRIBUNAL UNDER SIMI LAR CIRCUMSTANCES IN SHRI MUNINAGA REDDY VS. ACIT IN ITA NO.1488/BANG/2012 RELATING TO ASSESSMENT YEAR 2008 - 09, ORDER DATED 14.08.2013 HAS HELD AS UNDER: - AS FAR AS IMPOSITION OF PENALTY ON THE INCOME OFFERED IN THE RETURN OF INCOME BY THE ASSESSEE IS CON CERNED, WE ARE OF THE VIEW THAT THERE CANNOT BE ANY PENALTY ON INCOME WHICH IS DECLARED IN A RETURN OF INCOME, ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. PENALTY U/S. 271(1)(C) OF THE ACT IS IMPOSED FOR CONCEALING PARTICULARS OF INCOME OR FURNIS HING INACCURATE PARTICULARS OF INCOME. WHEN AN INCOME WHICH IS ULTIMATELY BROUGHT TO TAX IS DECLARED IN A RETURN OF INCOME, THERE CAN BE NO QUESTION OF TREATING THE ASSESSEE AS HAVING CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS O F INCOME. THE STARTING POINT OF DETERMINING CONCEALMENT FOR IMPOSING PENALTY IS THE RETURN OF INCOME. IF THE RETURN OF INCOME DECLARES INCOME WHICH IS ULTIMATELY BROUGHT TO TAX THERE CAN BE NO COMPLAINT BY THE REVENUE THAT THE ASSESSEE IS GUILTY OF CON CEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 16. APPLYING THE ABOVE SAID PRI NCIPLE LAID DOWN BY THE HONBLE DELHI HIGH COURT (SUPRA) TO THE FACTS OF PRESENT CASE, SINCE THE ADDITIONAL INCOME HAS BEEN OFFERED BY THE ASSE SSEE PURSUANT TO THE SURVEY OPERATION AND THE SAME HAVING BEEN BY THE ASSE SSEE PURSUANT TO THE SURVEY OPERATION AND THE SAME HAVING BEEN ACCEPTED DOES NOT WARRANT LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. 17. ANOTHER FACET WHICH HAS TO BE CONSIDERED IS THAT THE ADDITIONAL INCOME WAS OFFERED DURING THE COURSE OF SURVEY, WHICH WAS CONDUCTED AT THE PREMISES OF ASSESSEE . H OWEVER, IT WAS THE ASSESSING OFFICER WHO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE AND LEVIED THE SAME. THE HONBLE DELHI HIGH COURT HAS CATEGORICALLY LAID DOWN THAT WHERE THE A SSESSING OFFICER HAD NOT RECORDED ANY SATISFACTION DURING THE COURSE OF SURVEY, THE DECISION TO INITIATE PENALTY PROCEEDINGS BEING TAKEN WHILE MAKING THE ASSESSMENT ORDER, THEN IT WAS HELD THUS, THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS A CT COULD NOT HAVE THE REFERENCE TO SURVEY PROCEEDINGS, IN THIS CASE. SINCE THE ASSESSEE HAD MADE COMPLETE DISCLOSURE IN THE RETURN AND SURRENDERED THE AMOUNT FOR THE ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 11 PURPOSE OF TAX, THE HONBLE HIGH COURT HELD THAT THERE WAS NO SUCH CONCEALMENT OF NON - DI SCLOSURE AND THE ASSESSEE WAS HELD TO BE NOT LIABLE FOR LEVY OF PENALTY. APPLYING THE SAID PROPOSITION TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO LEVY OF PENALTY ON THE ADDITIONAL INCOME WHICH WAS DECLARED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND WAS OFFERED TO TAX IN THE REVISED RETURN OF INCOME FILED AFTER THE SURVEY. 18. ANOTHER FACET OF PENALTY PROCEEDINGS COMPLETED AGAINST THE ASSESSEE ARE THAT WHILE COMPLETING ASSESSMENT PROCEEDINGS, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO RECORD SATISFACTION AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN ORDER TO INITIATE PENALTY PROCEEDINGS. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THE ASSESSING OFFICER REFERS TO THE ADDITION OF RS.13,65,537/ - WHICH WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED DEBTORS, WHICH WAS OVER AND ABOVE THE DISCLOSED SUM OF RS.1.32 CRORES. THE ASSESSING OFFICER NOTES THAT AS A RESULT OF SURVEY, THE ASSESSEE HAD DISCLOSED RS.1.32 CRORES WHICH WAS INCORPORATED IN THE REVISED RETURN OF INCOME. IN VIEW THEREOF, THE ASSESSING OFFICER MAKES ADDITION OF RS.13,65,537/ - ON ACCOUNT OF UNDISCLOSED DEBTORS FOR WHICH, THE ASSESSEE HAD AGREED. THE ASSESSING OFFICER THUS, RE CORDS THE SATISFACTION FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. FIRST OF ALL, THE SATISFACTION HAS BEEN RECORDED APPARENTLY FOR THE ADDITION OF RS.13,65,537/ - AN D NOT FOR THE INCOME DISCLOSED BY THE ASSESSEE AT RS.1.32 CRORES WHICH IN TURN, WAS INCORPORATED IN THE REVISED RETURN OF INCOME. NO DOUBT, DURING THE COURSE OF PENALTY PROCEEDINGS , THE ASSESSING OFFICER HAD LEVIED PENALTY ON BOTH THE ADDITIONS I.E. OF RS .1.32 CRORES AND RS.13,65,537/ - BUT IF WE LOOK AT THE SATISFACTION, WHICH IS PRELIMINARY ACTION TO BE TAKEN BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, THE SATISFACTION VIS - - VIS ADDITION OF RS.1.32 CR ORES IS ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 12 MISSING AND IN SUCH CIRCUMSTANCES, WHERE THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION, THEN THE PROCEEDINGS ARE VITIATED AND THE ORDER LEVYING PENALTY IS INVALID. 19. ANOTHER FACET OF SATISFACTION RECORDED BY THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS IS THAT HE HAS INITIATED PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING OF INCOME. THE SECTION HAS TWO LIMBS I.E. PENALTY IS LEVIABLE WHERE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME. WHILE RECORDING SATISFACTION, THE ASSESSING OFFICER HAS TO GIVE A FINDING AS TO WHICH LIMB FOR WHICH THE PENALTY PROCEEDINGS ARE BEING INITIATED SO THAT THE ASSESSEE IS SHOW CAUSED TO MEET THE CASE OF REVENUE. HOWEVER, IN TH E PRESENT CASE, WHERE THE CHARGED INCOME HAS BEEN ON THE BASIS OF INCRIMINATING DOCUMENTS, THEN AT BEST IT IS THE CASE OF CONCEALMENT AND NOT FURNISHING OF INACCURATE PARTICULARS OF INCOME. EVEN THE PENALTY ORDER TALKS OF EXPLANATION 1 TO SECTION 271(1)(C ) OF THE ACT WHICH RELATES TO CONCEALMENT OF INCOME. THE SATISFACTION RECORDED FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IS ON BOTH THE LIMBS. THE NOTICE THUS, ISSUED IN THE PRESENT CASE WHERE THE SATISFACTION RECORDED BY THE ASSESSING OFFICER IS NOT PROPER, THEN SUCH NOTICE IS VITIATED IN LAW. 20. SIMILAR ISSUE AROSE BEFORE 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 HAVE 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 S ECTION 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 I NACCURATE 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 CONCERN ED OFFICER TO RECORD SATISFACTION IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, THAT ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 13 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. WHE RE 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 C ONCEALING THE PARTICULARS OF INCOME. SIMILARLY, IN CASES WHERE THE ASSESSEE CONCERNED HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN SIMILAR EXERCISE HAS TO BE CARRIED OUT BY THE CONCERNED OFFICER. 14. THE FIRST STAGE OF INVOCATION OF PROVIS IONS OF SECTION 271(1)(C) OF THE ACT IS THE SATISFACTION TO BE RECORDED BY THE ASSESSING OFFICER, WHICH ADMITTEDLY, HAS TO BE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SO, WHERE THE ASSESSMENT PROCEEDINGS ARE PENDING, THEN THE ASSESSING OFFICER HAS TO APPLY HIS MIND AND ON BEING SATISFIED, HE HAS TO GIVE A FINDING THAT THE ASSESSEE BEFORE HIM HAS EITHER CONCEALED THE 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 OFFICER, WHEREIN IT SHOULD BE CLEAR THAT THE ASSESSEE HAS TO JUSTIFY ITS CASE EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THERE MAY BE CASES WHERE THERE IS ISSUE OF BOTH CONCEA LMENT 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 COMPLE TING PENALTY PROCEEDINGS AND THE ASSESSING OFFICER 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 FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE QUESTION WHICH FURTHER ARISES WHERE THE SATISFACTION RECORDED BY THE AS SESSING OFFICER AND THE NOTICE ISSUED THEREAFTER 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) HA D DEALT UPON THE ISSUE OF NOTICE UNDER SECTION 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 RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF 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 EXPLANA TION - 1(B), THEN THOUGH PENALTY PROCEEDINGS ARE 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 INTE ND 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 ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 14 SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALL Y 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 PARTICULA RS OF INCOME OR FURNISHING INACCURATE PARTICULARS 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 MUS T BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY 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 SECTION 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 W OULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUT HORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPL ES 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 PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PAS SED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN 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 SATIS FIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE 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 ISS UING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEA LMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS 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) T O SECTION 271(1) OF THE ACT. IT HAS BEEN CATEGORICALLY HELD THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THE HONBLE HIGH COURT HAS THUS, LAID DOWN THAT THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COM E TO CONCLUSION THAT WHETHER IT IS CASE OF ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 15 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 1 1 (SC), WHEREIN 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 BE ING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILARLY, FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THE STANDARD PROFORMA WITHOUT STRIKING OF RELEVANT CLAUSES, AS PER THE HONBLE HIGH COURT WOULD LEAD TO INFERENCE AS TO NON - APPLIC ATION OF MIND. 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 UNDE R 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 RELIED ON DECISION OF DIVISION BENCH OF THE COURT RENDERED IN CIT & A NR. VS. MANJUNATHA COTTON 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) AN D 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 I NVALID AND SUBSEQUENT PENALTY PROCEEDINGS WERE HELD TO BE VITIATED. 18. THE MUMBAI BENCH OF TRIBUNAL IN SANGHAVI SAVLA COMMODITY BROKERS P. LTD. VS. ACIT IN ITA NO.1746/MUM/2011, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 22.12.2015 WHILE DECIDING SIMILAR ISSUE, WHEREIN THE ASSESSING OFFICER ORDER DATED 22.12.2015 WHILE DECIDING SIMILAR ISSUE, WHEREIN THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOME WITHOUT STRIKING INAPPROPRIATE WORDS OR ANY PARTS OF NOTICE AND PROCEEDED TO LEVY PENALTY FOR CONCEALMENT, THEN FOLLOWING THE RATIO LAI D 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 I N SHRI DEEPAK KUMAR PATWARI VS. ACIT IN ITA NOS.616 TO 618/KOL/2013, RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2009 - 10, ORDER DATED 03.02.2016 AND IT HAS BEEN FURTHER HELD THAT THE PROVISIONS OF SECTION 292B OF THE ACT CANNOT CURE THE BASIC DEFECT IN ASSUMPT ION OF JURISDICTION AND COULD ONLY CURE THE MISTAKE, DEFECT OR OMISSION IN THE RETURN OF INCOME, ASSESSMENT, NOTICE OR THE PROCEEDINGS. THE TRIBUNAL FURTHER HELD THAT SHOW CAUSE NOTICE AND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE WERE PART OF PROCES S OF NATURAL JUSTICE AND THE DEFECT IN SUCH NOTICE COULD NOT BE OVERLOOKED. SIMILAR PROPOSITION HAS FURTHER BEEN LAID DOWN IN OTHER DECISIONS OF VARIOUS BENCHES OF TRIBUNAL WHICH HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE US. 20. THE LEARNED DEPARTME NTAL 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 HELD THAT THE SAME WOU LD 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 T HE ASSESSEE FULLY KNEW IN DETAIL THE EXACT CHARGE OF DEPARTMENT AGAINST ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 16 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 REASONAB LE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIGH COURT DELIBERATED UPON THE PROVISIONS OF SECTION 274 OF THE ACT WHICH CONTAINED PRINCIPLE OF NATURAL JUSTICE OF THE 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 ASS ESSMENT 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 OPPORTUNITY OF HEARING CONTEMPLATED UNDER SECTION 274 OF THE ACT. THE SHOW CAUSE NOTICE FOR ASSESSMENT YEAR 1967 - 68 WAS ISSUED EVEN BEFORE THE ASSESSMENT ORDER WAS MADE AND WHERE THE ASSESSEE HAD NO KNOWLEDGE OF EXACT CHARGE OF DEPARTMENT AGA INST 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 ASSESSMENT YEAR 1967 - 68 WAS H ELD 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 VAGUENES S 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 NOTI CE 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 YEA RS. 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 PLOTS, WHICH WAS DETECTED FROM THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH. ADMITTEDLY, EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED IN SUCH CASES. HOWEVER, THE CASE OF ASSESSEE BEFORE US IS THAT THE ASSESSING OFFI CER WHILE COMPLETING THE ASSESSMENT PROCEEDINGS HAD TO BE SATISFIED THAT THE ASSESSEE HAD EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND IS 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 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 REFLE CTS 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 I NCOME OFFERED BY THE ASSESSEE 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 C ASE SUFFERS FROM INFIRMITY. FURTHER, EVEN IN THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT, IRRELEVANT PART HAS NOT BEEN STRUCK OFF. WHILE COMPLETING PENALTY PROCEEDINGS ALSO, THE ASSESSING OFFICER MAKES REFERENCE TO BOTH THE LIMBS I.E. CONCEALMENT OF I NCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN THE FINAL, LEVIES PENALTY FOR CONCEALMENT OF INCOME. ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 17 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. RECOR DING OF SATISFACTION AND THE ISSUE OF NOTICE, WHICH HAS BEEN CHALLENGED BY THE ASSESSEE TO BE INVALID. APPLYING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA) AND CIT VS. SSAS EMERAL D 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 AD DITIONAL INCOME OFFERED BY THE ASSESSEE IS INCORRECT. FURTHER, WHERE THE ASSESSEE IS NOT AWARE OF EXACT CHARGE AGAINST HIM, THE AMBIGUITY IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT BY NOT STRIKING OF PORTION WHICH IS NOT APPLICABLE , PREJUDICE THE RIGHT OF REASONABLE OPPORTUNITY TO THE ASSESSEE, AS HE WAS NOT MADE AWARE OF EXACT CHARGE HE HAD TO FACE. IT IS A CLEAR - CUT CASE OF CONCEALMENT SINCE THE 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. 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 AWA RE 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 ASSESS EE 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 QUASHIN G 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 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 - STRIKING OF CERTAIN TERMS IN THE NOTICE WOULD NOT INVALIDATE THE PROCEEDINGS. WHERE THERE IS DEFAULT IN THE FIRST STAGE OF MAKING THE ASSESSEE AWARE OF EXACT CHARGE OF THE DEPARTMENT, THEN INITIATION OF PENALTY PROCEEDINGS ARE VITIATED AND THE SAME ARE TO BE QUASHED. THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT ON SUCH VAGUENESS AND AMBIGUITY MAKES SUCH NOTICE INVALID AND PROCEEDINGS THEREAFTER ARE TO BE QUASHED. 25. THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (SUPRA) HAD HE LD AS UNDER: - 23. SECTION 271(1)(C) REMAINS A PENAL STATUTE. THE RULE OF STRICT CONSTRUCTION SHALL APPLY THERETO. THE INGREDIENTS FOR IMPOSING PENALTY REMAIN THE SAME. THE PURPOSE OF THE LEGISLATURE THAT IT IS MEANT TO BE A DETERRENT TO TAX EVASION IS EVIDENCED BY THE INCREASE IN THE QUANTUM OF PENALTY, FROM 20 PER CENT UNDER THE 1922 ACT TO 300 PER CENT IN 1985. 24. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION VERY OR SUGGESTION FALSI. 26. WHERE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT CONNOTATIONS, THEN AS PER PROVISIONS OF THE ACT, THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS AS TO UNDER WHICH LIMB THE CASE OF ASSESSEE FALLS. IN THE PRESENT SET OF FACTS, THE SATISFACTION AS RECORDED BY THE ASSE SSING 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 ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 18 I.E. FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURAT E 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 RE ASONABLE OPPORTUNITY TO BE ALLOWED TO THE ASSESSEE BEFORE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. CONSEQUENTLY, PENALTY NOTICE ISSUED IN THE PRESENT CASE SUFFERS FROM INFIRMITIES I.E. LACK OF SATISFACTION AND LACK OF NOTICE BEING ISSUED IN MAK ING THE ASSESSEE AWARE OF EXACT CHARGE AGAINST HIM, HENCE THE SAME IS QUASHED. THE PENALTY PROCEEDINGS COMPLETED PURSUANT TO SUCH NOTICE ARE VITIATED AND THE SAME ARE HELD TO BE INVALID. 27. NOW, COMING TO THE MERITS OF CASE, THE ASSESSEE HAD OFFERED ADD ITIONAL INCOME ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS. THE ASSESSING OFFICER HAD ACCEPTED THE SAME AND HAD INITIATED PENALTY PROCEEDINGS 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 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 BAFNA, BUT STILL UPHOLDS THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. ONCE THE FINDING OF CIT(A) IS THAT THESE ARE LOANS RECEIVED FROM BAFNA AND ARE NOT ON - MONEY RECEIVED ON SALE OF PLOTS, THEN IN CASES WHERE PENALTY PROCEEDINGS HAVE BE EN 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 UNDER SECTION 271(1)(C) OF THE ACT AND THERE IS NO MERIT AT ALL IN LEVYING THE PENALTY @ 150%. ACCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE EVEN ON MERITS. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND ADDITIONAL GROUND OF APPEAL RAIS E D BY THE ASSESSEE ARE ALLOWED. 2 1 . APPLYING THE SAID RATIO TO THE FACTS OF THE PRESENT CASE EVEN IF IT IS HELD THAT THE ASSESSING OFFICER HAD RECORDED SATISFACTION FOR INITIATING PENALTY PROCEEDINGS AGAINST THE ADDITION OF RS.1.32 CRORES, THE SATISFACTI ON RECORDED FOR BOTH THE LIMBS OF SECTION IS INCORRECT AND THE NOTICE SO ISSUED IN THIS CASE STANDS VITIATED. CONSEQUENTLY, THE ORDER LEVYING PENALTY PASSED IN THE PRESENT CASE IS INVALID AND BAD IN LAW. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE HAS RELIED ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF GUJARAT IN CIT VS. LAKHDHIR LAL JI (1972) 85 ITR 77 (GUJ), WHEREIN IT HAS BEEN HELD THAT WHERE THE PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE ON THE BASIS OF CONCEALMENT OF IN COME, THEN IMPOSITION OF PENALTY ON THE BASIS OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WAS INVALID. IN SUCH CIRCUMSTANCES, THE ASSESSEE COULD NOT BE SAID TO HAVE GIVEN A PROPER OPPORTUNITY OF HEARING. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY TH E HONBLE ALLAHABAD HIGH COURT IN CIT VS. SEWAK ICE AND COLD STORAGE P. LTD. (2014) 369 ITR 316 (ALL) , WHEREIN THE PENALTY NOTICE WAS WITH ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 19 REGARD TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND NOT WITH REGARD TO CONCEALMENT OF INCOME. THE PENALTY W AS TO BE LEVIED WITH REGARD TO CONCEALMENT OF INCOME, THEN IT WAS HELD THAT IN THE ABSENCE OF ANY NOTICE, THE SAID PENALTY COULD NOT BE IMPOSED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT & ANR. VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND THE PUNE BENCH OF TRIBUNAL IN SANJOG TARACHAND LODHA VS. ITO (SUPRA), WHICH HAS BEEN APPLIED IN DELETING PENALTY. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED HEAVY RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN MAK DATA P. LTD. VS. CIT (SUPRA), WHEREIN THE ASSESSEE HAD FAILED TO DECLARE ADDITIONAL INCOME PURSUANT TO SURVEY AND HENCE, THE HONBLE SUPREME COURT UPHELD THE LEVY OF PENALTY. IN THE FACTS OF THE PRESENT CASE, AS POINTED OUT BY US IN THE PARAS HEREINABOVE, THE ASSESSEE HAS OFFERED AND INCLUDED THE SAID ADDITIONAL INCOME FOR TAXATION, HENCE THE FACTS OF THE PRESENT CASE ARE AT VARIANCE TO THE FACTS BEFORE THE HONBL E SUPREME COURT AND HENCE, THE SAID RATIO IS NOT TO BE APPLIED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF MADHYA PRADESH IN CIT VS . SURESH CHANDRA MITTAL (SUPRA), WH ICH HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT, WHERE IT HAS BEEN HELD THAT IN CASE THE ASSESSEE SURRENDERS THE INCOME AND REVISED RETURNS HAVE BEEN REGULARIZED BY THE REVENUE, THE EXPLANATION OF ASSESSEE THAT HE HAD DECLARED ADDITIONAL INCOME TO BUY P EACE OF MIND AND TO COME OUT OF VEXED LITIGATION COULD BE TREATED AS SURRENDER AND PENALTY FOR CONCEALMENT HAS TO BE CANCELLED. THE SAID CASE WAS BECAUSE OF SEARCH BUT THE SAME RELATES TO ASSESSMENT YEAR 1983 - 84 TO 1986 - 87 I.E. BEFORE INTRODUCTION OF EXPL ANATION 5A TO SECTION 271(1)(C) OF THE ACT, HENCE, THE SAID PROPOSITION, IN VIEW OF THE AMENDED PROVISIONS OF THE ACT DO NOT APPLY. IN ANY CASE, IN THE FACTS OF THE CASE BEFORE US, IT IS THE CASE OF SURVEY AND NOT THE SEARCH AND WE HAVE ALREADY HELD IN TH E PARAS HEREINABOVE THAT SURVEY AND SEARCH STANDS ITA NO . 1660 /PN/201 3 ANILKUMAR CONSTRUCTION CO. 20 ON DIFFERENT FOOTING AND HAVE DELETED THE PENALTY ON ACCOUNT OF ASSESSEE DECLARING ADDITIONAL INCOME IN HIS HANDS FOR TAXATION AFTER SURVEY AND ALSO FOR LACK OF SATISFACTION RECORDED BEFORE INITIATING PENAL TY PROCEEDINGS . IN VIEW THEREOF, THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 2 2 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 14 TH DAY OF DECEMBER , 201 6 . SD/ - SD/ - ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 14 TH DECEMBER , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : / 1. / TH E APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , NASHIK ; 4. / THE CIT - I , NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE