V.T. Palresha and Co. Pvt. Ltd., Pune V. Asssitant Commissioner of Income-tax,

ITA 1713/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0327 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NIKHIL PATHAK S HRI CHAVAN
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 / ASSESSMENT YEAR S : 20 0 5 - 0 6, 2006 - 07, 2008 - 09 & 2010 - 11 V.T. PALRESHA AND CO. PVT. LTD., 318, CONNAUGHT PLACE, BUND GARDEN ROAD, BUND GARDEN ROAD, PUNE 41100 1 . / APPELLANT PAN: AA ACV5628C VS. THE A SST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE . / RESPONDENT / APPELLANT BY : S HRI NIKHIL PATHAK / APPELLANT BY : S HRI NIKHIL PATHAK / RESPONDENT BY : S HRI B.Y. CHAVAN / DATE OF HEARING : 08 . 1 2 .20 1 6 / DATE OF PRONOUNCEMENT: 21 . 1 2 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS BUNCH OF FOUR APPEALS FILED BY THE ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - CENTRAL , PUNE , DATED 25 . 0 7 .20 1 4 RELATING TO ASSESSMEN T YEAR S 20 0 5 - 0 6, 2006 - 07, 2008 - 09 & 2010 - 11 AGAINST RESPECTIVE ORDER S LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 2 2 . THE ONLY ISSUE ARISING IN THIS BUNCH OF APPEALS IS AGAINST LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN ALL THE APPEALS, THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL WHICH GOES TO THE JURISDICTION OF LEVY OF PENALTY AND THE SAME DOES NOT INVOLVE ANY INVEST IGATION INTO FACTS AND THE SAME MAY BE ADMITTED. 4. THE ISSUE ARISING IN THIS BUNCH OF APPEALS IS SIMILAR, HENCE WE PROCEED TO DECIDE THE PRESENT BUNCH OF APPEALS AFTER REFERRING TO THE FACTS AND ISSUE IN ITA NO.1712/PN/2014 BY WAY OF CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE. 5. THE ASSESSEE IN ITA NO.1712/PN/2014 HAS RAISED THE FOLLOWING 5. THE ASSESSEE IN ITA NO.1712/PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN CONFIRMING THE PENALTY OF RS. 4,71,490 / - UNDER SECTION 271( 1 )(C) OF THE ACT. THIS PENALTY IS LEVIED ON THE BASIS OF DECLARATION MADE BY THE ASSESSEE IN ITS STATEMENT AT THE TIME OF SEARCH WHICH IS DULY REFLECTED IN RETURN FILED THEREON. THERE WERE NO OTHER DOCUMENTS TO PROVE THAT THERE IS A CONCEALMENT OF INCOME TO JUSTIFY THE LEVY OF PENALTY. 1.1 THE LEARNED CIT (A) ERRED IN HOLDING THAT STEEL PURCHASE BILLS FOUND ARE NOT GENUINE AS THERE IS SALES BILLS FOR EACH PURCHASE BILL SUPPORTED BY PAYMENT RECEIVED FROM CUSTOMERS BY CHEQUE WHICH IN A WAY PAID FURTHER TO SUPPLIERS . STOCK RECORDS OF THE SAME ARE ALSO MAINTAINED FOR EACH ITEM TRADED. 1.2 THE LEARNED CIT (A) SHOULD HAVE APPRECIATED THE FACT THAT GOING FURTHER WHEN IT WAS FOUND THAT SUPPLIER HAS SOLD THE GOODS AT HIGHER RATE APPELLANT HAD STOPPED PURCHASES FROM THOS E PARTIES AND MADE ONLY PARTIAL WRITE OFF THE AMOUNT PAYABLE TO TWO PARTIES. 2. THE APPELLANT CLAIMS THAT THE PENALTY LEVIED U/S 271(1)(C) BE DELETED. ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 3 6 . THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND OF APPEAL, WHICH READS AS UNDER: - 1] THE ASSESSEE SUBMITS THAT THE PENALTY ORDER PASSED U/S. 271(1)(C) I S NULL AND VOID SINCE THE NOTICE ISSUED BY THE LD. A.O. WAS BAD IN LAW. 7 . BRIEFLY, IN THE FACTS OF THE CASE, SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE PALRESHA GROUP OF CASES ON 10.02. 2011 . THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE ACT, IN RESPONSE TO WHICH THE ASSESSEE FURNISHED RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS. 88,88,972/ - . THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASSESSEE HAD OFFERED VARIOUS AMOUNTS FOR TAXATION AS ITS UNDISCLOSED ADDITIONAL INCOME FOR DIFFERENT YEARS TOTALING RS. 79 LAKHS. THE YEAR - WISE DETAILS ARE TABULATED UNDER PARA 3 AT PAGE 2 OF ASSESSMENT ORDER. FOR THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAD OFFERED ADDITIONAL INCOME OF RS.11,50,000/ - WHICH HAS BEEN DISCLOSED BY THE ASSESSEE IN THE COMPUTATION OF INCOME FILED . THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE ADDITIONAL INCOME WAS OFFERED FOR TAXATION ONLY DUE TO SEARCH ACTION, PENA LTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALING THE INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME WAS BEING SEPARATELY INITIATED. THEREAFTER, NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN T HE PENALTY PROCEEDINGS LEVYING PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER MAKES MENTION THAT THE PROCEEDINGS WERE INITIATED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT FOR CONCEALING THE PARTICULARS OF INCOME BASED ON REASONING AND SATISFACTION THAT THE ADDITIONAL INCOME WAS DECLARED BY THE ASSESSEE ONLY AFTER SEARCH AND SEIZURE ACTION. THE ASSESSING OFFICER THEREAFTER, FOUND THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY AND UNTRUE AND HELD THAT ON FAC TS, ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 4 THERE WAS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. THE ASSESSING OFFICER REITERATED THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME ON THE PART OF ASSESSEE IN PARA 5 ITSELF AND THEN VIDE PARA 6 LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 4,71,490/ - . 8. THE CIT(A) UPHELD THE LEVY OF PENALTY WITHOUT MENTIONING AS TO UNDER WHICH LIMB THE SAME IS BEING LEVIED. 9. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A ). 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS ENGAGED IN TRADING OF CEMENT AND STEEL. DURING THE COURSE OF SEARCH, CERTAIN EVIDENCE WAS FOUND IN RESPECT OF PURCHASE AND STEEL COURSE OF SEARCH, CERTAIN EVIDENCE WAS FOUND IN RESPECT OF PURCHASE AND STEEL FROM 4 - 5 PARTIES AND THE ASSE SSING OFFICER ACCEPTED THE SAID PURCHASES AND MADE DECLARATION OF ABOUT RS.79 LAKHS IN VARIOUS YEARS. HE FURTHER POINTED OUT THAT THE YEARS UNDER APPEAL WERE ASSESSMENT YEARS 2005 - 06, 2006 - 07, 2008 - 09 AND 2010 - 11 AND FOR ASSESSMENT YEAR 2009 - 10 , DECLARATI ON OF RS.2 LAKHS WAS MADE. FURTHER, IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, RETURNS OF INCOME WERE FILED FOR ALL FOUR YEARS AND ALSO FOR ASSESSMENT YEAR 2009 - 10 AND SUM OF RS. 79 LAKHS WAS DECLARED AND OFFERED FOR TAXATION IN THE INDIVIDUAL YE ARS. HE STATED THAT FOR FOUR YEARS IN APPEAL, NO FURTHER ADDITION WAS MADE BY THE ASSESSING OFFICER . F OR ASSESSMENT YEAR 2009 - 10 , T HE ASSESSEE OFFERED ADDITIONAL INCOME OF ABOUT RS.2 LAKHS, BUT NO PENALTY PROCEEDINGS WERE INITIATED OR LEVIED IN THE CASE OF ASSESSEE. HE FIRST STRESSED THAT ON SAME SET OF FACTS WHEN NO PENALTY HAS BEEN LEVIED IN ASSESSMENT YEAR ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 5 2009 - 10, THERE WAS NO MERIT IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF FOUR YEARS UNDER APPEAL. THE SECOND ISSUE RAISED B Y THE ASSESSEE WAS THE SATISFACTION RECORDED BY THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS, WHEREIN HE HAS INITIATED PROCEEDINGS ON BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT, WHEREAS THE REQUIREMENT OF THE ACT IS THAT THE ASSESSING OFF ICER WHILE RECORDING SATISFACTION OF INITIATING PENALTY PROCEEDINGS, MUST COME TO A FINDING SO THAT THE ASSESSEE IS AWARE OF THE CHARGE AGAINST IT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ADDITIONAL GROUND OF APPEAL IS RAIS ED, WHICH GOES TO THE ROOT AND DOES NOT INVOLVE INVESTIGATION OF FACTS AND HENCE BE ADMITTED. FOR MERITS OF ISSUE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN 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 . THE LEARNED AUTHORIZED 2003 - 04 TO 2007 - 08, ORDER DATED 30.11.2016 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER STATED THAT WHERE THE SATISFACTION RECORDED BY THE ASSESSING OFFICER W HILE INITIATING PENALTY PROCEEDING WAS ON BOTH THE LIMBS, THEREAFTER, THE NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS ALSO ISSUED WITHOUT STRIKING OFF EITHER OF THE LIMBS, THEN THE NOTICE SUFFERS FROM INFIRMITY AND CONSEQUENTLY, PENALTY ORDER PASSED IS INVALID. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA (1994) 75 TAXMAN 549 (BOM) . HE FURTHER REFERRED TO THE ORDER OF ASSESSING OFFICER, WHE REIN HE HAD GIVEN A FINDING THAT THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS ON ACCOUNT OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 6 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS O F THE CASE BEFORE US CONSEQUENT TO SEARCH AT THE PREMISES OF ASSESSEE ON 10.02.2011 , CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND THE ASSESSEE MADE DECLARATION OF RS.79 LAKHS, WHICH HE SPREAD OVER SEVERAL YEARS. IN REPLY TO NOTICE UNDER SECTION 153A OF THE ACT, RETURNS OF INCOME WERE FILED FOR THE RESPECTIVE YEARS OFFERING ADDITIONAL INCOME FOR TAXATION. THE ASSESSING OFFICER HAS ACCEPTED THE RETURN OF INCOME FILED FOR THE RESPECTIVE YEARS AND NO FURTHER ADDITION HAS BEEN MADE. HOWEVER, THE CASE OF ASS ESSEE HERE WAS THAT SINCE AN ADHOC ADDITION WAS MADE IN THE HANDS OF ASSESSEE, THERE WAS NO MERIT FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THAT THE ISSUE OF APP LICATION OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS DECIDED AGAINST THE ASSESSEE BY THE PUNE BENCH OF TRIBUNAL IN MRS.SARITA KAUR MANJEET SINGH CHOPRA VS. ITO REPORTED IN 174 TTJ 556 (PUNE). CHOPRA VS. ITO REPORTED IN 174 TTJ 556 (PUNE). 13. NOW, COMING TO THE NEXT PLANK OF REASONING, THE LE ARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ON SAME SET OF FACTS, THE ASSESSING OFFICER DID NOT LEVY ANY PENALTY FOR ASSESSMENT YEAR 2009 - 10 BUT LEVIED PENALTY FOR THE REST OF YEARS WHICH ARE IN APPEAL I.E. ASSESSMENT YEARS 2005 - 06, 2 006 - 07, 2008 - 09 AND 2010 - 11. WE FIND NO MERIT IN THE SAID PLEA OF ASSESSEE WHERE EACH YEAR IS AN INDEPENDENT YEAR AND THE ASSESSING OFFICER HAVING COME TO THE SATISFACTION CAN LEVY THE PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT, SUBJECT TO THE FULFILLMENT OF CONDITIONS LAID DOWN IN THE STATUTE. ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 7 14. NOW, COMING TO THE THIRD ARGUMENT OF ASSESSEE I.E. THE SATISFACTION TO BE RECORDED BY THE ASSESSING OFFICER BEFORE START OF PENALTY PROCEEDING S FOR CONCEALMENT UNDER SECTION 271(1)(C ) OF THE ACT CAN BE LEVIED EITHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS RAISED THE ISSUE BY WAY OF ADDITIONAL GROUND OF APPEAL, WHICH IS ADMITTED FOR ADJUDICATION. THE REQUIREMENT OF THE STATUTE IS THAT THE ASSESSING OFFICER WHILE RECORDING SATISFACTION FOR INITIATING PENALTY PROCEEDINGS HAS TO GIVE A FINDING AS TO UNDER WHICH LIMB THE ASSESSEE IS LIABLE FOR LEVY OF PENALTY SO THAT THE ASSESSEE IS GIVEN AN OPPORTUNITY TO MAKE THE CASE OF THE REVENUE . THE SAID ISSUE HAS BEEN DELIBERATED UPON 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 COMMISSIONER OR COMMISSIONER, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, IS SATISFIE D 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 COURSE 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 SATIS FACTION 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 PROCEEDI NGS AND THEREAFTER ON FIXATION OF CHARGE, LEVY THE PENALTY FOR SUCH ACT OF CONCEALING 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 PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS THE SATISFACTION TO BE RECORDED BY THE ASSESSING OFFICER, WHICH ADMITTEDLY, HAS TO BE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SO, WHER E 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 ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 8 FURNISHED INACCURATE PARTICULARS OF I NCOME 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 PA RTICULARS 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 CHARG E AGAINST THE ASSESSEE. THE CHARGE HAS TO BE FURTHER SPECIFIED WHILE COMPLETING 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 WHERE THE SATISFACTION RECORDED BY THE ASSESSING 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 H IGH COURT IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD 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 B E 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 C ASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION - 1 OR IN EXPLANATION - 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 CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIO NED 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 DEPARTME NT 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 REQUIR EMENT 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 U NDER 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. CLAUS E (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS 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 O FFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST 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 OT HER 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 ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 9 CONFINED ONLY TO THOSE GROUND S AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MA Y 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 PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN T HE 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 THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURA TE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT 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 IT R 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 SUSTAINA BLE. 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 T HE 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 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 HA S THUS, LAID DOWN THAT THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO CONCLUSION THAT WHETHER IT IS CASE OF CONCEALMENT OF INCOME OR CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAI D DOWN BY THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC), WHEREIN AT PAGE 19 IT WAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATION. APPLYING THE SAID PROPOSITION, IT WA S HELD THAT WHERE THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILARLY, FOR FURNISHING INACCURATE PARTICULARS OF ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 10 INCOME, THE STANDARD PROFORMA WITHOUT STRIKING OF RELEVANT CLA USES, AS PER THE HONBLE HIGH COURT WOULD LEAD TO INFERENCE AS TO NON - APPLICATION 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 APP EAL OF ASSESSEE HOLDING THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT TO BE BAD IN LAW AS IT DOES NOT SATISFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT UNDER WHICH IT HAS BEEN INITIATED THE HONBLE HIGH COU RT HAD RELIED ON DECISION OF DIVISION BENCH OF THE COURT RENDERED IN CIT & ANR. 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) 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 L IMBS, THEN NOTICE ISSUED 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, 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 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. PROCEEDINGS WERE INVALID. 19. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY KOLKATA BENCH OF TRIBUNAL IN 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 P ROVISIONS OF SECTION 292B OF THE ACT CANNOT CURE THE BASIC DEFECT IN ASSUMPTION 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 N OTICE AND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE WERE PART OF PROCESS 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 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 BEFOR E 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 - S TRIKING 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 WO RDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF ASSESSEE OF REASONABLE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIGH COURT ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 11 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 DEMONSTR ATE 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 MA DE AND WHERE THE ASSESSEE HAD NO KNOWLEDGE OF EXACT CHARGE 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 CLE ARLY 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 B ACKGROUND, 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 C ONSIDERED. 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 DECLARA TION 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 R S.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 SUC H CASES. HOWEVER, THE CASE OF ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER 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 ASSESSIN G 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 I NCOME. THE ONLY SOURCE OF ADDITION IN THE HANDS OF ASSESSEE IS ADDITIONAL INCOME 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 L IMBS OF SECTION 271(1)(C) OF THE ACT AND THE SATISFACTION RECORDED IN THIS CASE SUFFERS FROM INFIRMITY. FURTHER, EVEN IN THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT, IRRELEVANT PART HAS NOT BEEN STRUCK OFF. WHILE COMPLETING PENALTY PROCEEDINGS ALSO, T HE ASSESSING OFFICER MAKES REFERENCE TO BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 12 OF INACCURATE PARTICULARS OF INCOME AND IN THE FINAL, LEVIES PENALTY FOR CONCEALMENT OF INCOME. 23. HOWEVER, THE QUESTION WHICH IS RAISED BEFORE US BY WAY O F ADDITIONAL GROUND OF APPEAL IS ROOT OF START OF THE PROCEEDINGS I.E. RECORDING OF SATISFACTION AND THE ISSUE OF NOTICE, WHICH HAS BEEN CHALLENGED BY THE ASSESSEE TO BE INVALID. APPLYING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN CIT & AN R. 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 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 ACC ORDINGLY. 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 T HE 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 SEC TION 271(1)(C) OF THE ACT, EXACT SATISFACTION FOR INITIATING PROCEEDINGS UNDER SEC TION 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 PARTI CULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT HAD ALSO UPHELD THE QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967 - 68 TO BE JUSTIFIED ON ACCOUNT OF VAGUENESS AND AMBIGUITY IN THE NOTICE ISSUED. BUT THE HONBLE HIGH COURT FURTHER HELD THAT WHERE THE ASSESSEE WAS FULLY 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 C HARGE 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 QU ASHED. 25. THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (SUPRA) HAD HELD 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 PUR POSE 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 PARTIC ULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 13 NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION VERY OR SUGGESTION FALSI. 26. WHERE CONCEALMENT OF INCOME AND FU RNISHING 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 F ALLS. 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 UN DER 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 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 MAKING 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 I NVALID. 27. NOW, COMING TO THE MERITS OF CASE, THE ASSESSEE HAD OFFERED ADDITIONAL 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 COP IES OF SUCH ELABORATELY REFERRED TO THEM AND EVEN REPRODUCED THE SCANNED COP IES 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 - MONE Y 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 PENAL TY 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 G ROUNDS OF APPEAL RAISED BY THE ASSESSEE AND ADDITIONAL GROUND OF APPEAL RAISE D BY THE ASSESSEE ARE ALLOWED. 15. THE TRIBUNAL VIDE PARA 23 ONWARDS HAD GIVEN A FINDING THAT IN THE ABSENCE OF SATISFACTION RECORDED AS TO WHICH LIMB OF SECTION 271(1)(C) OF TH E ACT IS SATISFIED AND THE ASSESSING OFFICER IN CASES WHERE HAS NOT RECORDED SATISFACTION CORRECTLY AND HAS NOT GIVEN PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THEN THE NOTICE IS VITIATED AND THE PENALTY ORDER PASSED IN THE CASE IS INVALID IN LAW. ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 14 16. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT PROCEEDINGS UNDER SECTION 153A R.W.S. 143(3) OF THE ACT IN RESPECT OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE PURSUANT TO SEARCH, WAS SATISFIED THAT THE ASSESSEE HAS CONCEALED INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. IT MAY BE REITERATED HERE THAT NO FURTHER ADDITION WAS MADE BY THE ASSESSING OFFICER EXCEPT THE ADDITIONAL INCOME WHICH WAS OFFERED BY THE ASSESSEE IN ITS RETURN OF INCOME. SO AT B EST, IT IS THE CASE OF CONCEALMENT OF INCOME WHERE THE ASSESSEE HAD OFFERED THE INCOME ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. HOWEVER, THE ASSESSING OFFICER DOES NOT RECORD SATISFACTION IN THIS REGARD BUT IS SATISFIED T HAT PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IS TO BE LEVIED ON ACCOUNT OF EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT ALSO SUFFERS FROM INFIRMITY, WHERE EITHER OF THE 274 R.W.S. 271(1)(C) OF THE ACT ALSO SUFFERS FROM INFIRMITY, WHERE EITHER OF THE LIMBS HAS NOT BEEN STRUCK OFF. HENCE, THERE IS VAGUENESS AND AMBIGUITY IN THE NOTICE ISSUED. SINCE THE ASSESSEE IN THE PRESENT SET OF FACTS WAS NOT AWARE OF EXACT CHARGE OF THE DEPARTMENT AGAINST HIM, THEN THE INITIATION OF PENALTY PROCEEDINGS ARE VITIATED AND THE SAME ARE TO BE QUASHED. RELYING ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA) , WE HOLD THAT PENALTY NOTICE ISSUED IN THE PRESENT CASE SUFFERS FROM INFIRMITY I.E. LACK OF SATISFACTION AND LACK OF NOTICE BEING ISSUED IN MAKING THE ASSESSEE AWARE OF EXACT CHARGE AGAINST HIM, HENCE, THE SAME IS QUASHED. THE PENALTY PROCEEDINGS COMPLETED THEREAFTER ARE VITIATED AND THE SAME ARE HELD TO BE INVALID . THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, ALLOWED AND THE ORIGINAL GROUNDS OF APPEAL BECOME ACADEMIC. ITA NO S . 1 712 TO 1 71 5 /PN/20 1 4 V.T. PALRESHA & CO. PVT. LTD. 15 17 . THE FACTS AND ISSUES IN ITA NOS.1 713 /PN/2014 TO 1 715 /PN/2014 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.1 712 /PN/2014 AND OUR DECISION IN ITA NO.1 7 12 /PN/2014 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS. 1 713 /PN/2014 TO 1 715 /PN/2014 . 18 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER P RONOUNCED ON THIS THE 21 ST DAY OF DECEM BER , 201 6 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 21 ST DECE MBER , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - CENTRAL , PUNE ; 4. / THE CIT (CENTRAL), PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE