Sri K Krishna Reddy, Hyderabad V. DCIT, Central Circle-1, Hyderabad, Hyderabad

ITA 1741/HYD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2686 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Search and seizure; Document seized; Initiation of penalty proceedings; Documents seized
• Section: 143(3); 153A

Judgement Text

ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1739 TO 1741/HYD/2014 (ASSESSMENT YEARS: 2007-08 TO 2009-10) SHRI K. KRISHNA REDDY HYDERABAD PAN: AJPPK 7452 C VS DCIT, CENTRAL CIRCLE 1 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. RAGHAVENDRA RAO FOR REVENUE : SMT. SUMAN MALIK, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. ALL ARE ASSESSEES APPEALS FOR THE A.YS 2007-08 TO 2009-10. FOR THE A.YS 2007-08 & 2008-09, THE ASSESS EE IS CHALLENGING THE PENALTY LEVIED BY THE AO U/S 271(1) (C) OF THE ACT AND CONFIRMED BY THE CIT (A), WHILE FOR THE A.Y 200 9-10, THE ASSESSEE IS IN APPEAL AGAINST THE PENALTY LEVIED BY THE AO U/S 271AAA OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, AND IS THE SECRETARY AND TRUSTEE OF VEN KATA SAI EDUCATIONAL SOCIETY. THERE WAS A SEARCH AND SEIZURE OPERATION IN THE PREMISES OF THE ASSESSEE AS WELL AS THE SOCIETY ON 7.8.2008, DURING THE COURSE OF WHICH RECEIPTS ISSUED BY THE A SSESSEE TO THE DATE OF HEARING: 12.12.2017 DATE OF PRONOUNCEMENT: 2 5 . 0 1 .201 8 ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 2 OF 11 CANDIDATES/PARENTS OF STUDENTS FOR ADMISSION INTO M EDICAL COLLEGE RUN BY THE SOCIETY HAVE BEEN FOUND AND SEIZED. CONS EQUENT TO THE SEARCH, THE ASSESSMENTS HAVE BEEN MADE FOR THE A.YS 2007-08 TO 2009-10 BOTH ON THE ASSESSEE AS WELL AS ON THE SOCI ETY. 3. DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASS ESSEE DENIED HAVING RECEIVED ANY MONEY AS MENTIONED IN TH E SEIZED RECEIPTS. THE AO HOWEVER, OBSERVED THAT THE RECEIPT S ARE ON ACCOUNT OF FEES AND THEREFORE, BROUGHT THE AMOUNT M ENTIONED IN THE RECEIPTS TO TAX ON SUBSTANTIVE BASIS IN THE HAN DS OF THE SOCIETY AND ON A PROTECTIVE BASIS IN THE HANDS OF THE ASSES SEE. THEREAFTER, HE INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF T HE ACT IN BOTH THE CASES. 4. MEANWHILE, THE ASSESSEE AS WELL AS THE SOCIETY F ILED APPEALS BEFORE THE CIT (A). BEFORE THE CIT (A), THE ASSESSEE OFFERED THE INCOME IN HIS OWN HANDS AND REQUESTED TO TAKE I NTO CONSIDERATION THE TAXES OF RS.2.2 CRORES ALREADY PA ID TOWARDS THE INCOME ASSESSED. THE CIT (A), TAKING INTO CONSIDERA TION THE ASSESSEES OFFERING OF THE INCOME CONFIRMED THE ADD ITION ON SUBSTANTIVE BASIS IN THE ASSESSEES HANDS AND THERE AFTER DELETED THE ADDITION IN THE HANDS OF THE SOCIETY. NEITHER T HE ASSESSEE NOR THE REVENUE FILED ANY APPEAL BEFORE THE ITAT. THE O RDER OF THE CIT (A) IN THE ASSESSEES CASE HAS THUS BECOME FINAL. B UT IN THE CASE OF THE SOCIETY, FURTHER APPEALS WERE FILED BY THE R EVENUE BEFORE THE TRIBUNAL. THE TRIBUNAL, TAKING INTO CONSIDERATI ON THE FACT THAT THE ORDER OF THE CIT (A) IN THE ASSESSEES CASE HAS NOT BEEN APPEALED AGAINST BY THE REVENUE, UPHELD THE ORDER O F THE CIT (A) ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 3 OF 11 IN THE CASE OF THE SOCIETY AND HELD THAT THE SOCIET Y IS NOT TO BE TAXED ON SUCH RECEIPTS. AFTER TAKING INTO CONSIDERA TION THAT THE CIT (A) HAS CONFIRMED THE SUBSTANTIVE ADDITION IN T HE HANDS OF THE ASSESSEE, THE AO PASSED THE PENALTY ORDER, AGAINST WHICH, THE ASSESSEE APPEALED TO THE CIT (A). THE CIT (A) CONFI RMED THE PENALTY AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE PROTECTIVE ADDITION WAS MADE IN THE HANDS OF TH E ASSESSEE AND THEREFORE, IT IS EVIDENT THAT THE AO WAS NOT SURE A BOUT THE PERSON TO WHOM THE INCOME BELONGED AND THEREFORE, HE COULD NOT HAVE RECORDED A SATISFACTION THAT THERE IS CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. HE PLACED RELIANCE UPON VARIOUS CASE LAW TO THE FACT T HAT THE PENALTY PROCEEDINGS CANNOT BE INITIATED WHERE A PRO TECTIVE ASSESSMENT HAS BEEN MADE. THUS, ACCORDING TO HIM, T HE AO HAD NO JURISDICTION TO INITIATE PROCEEDINGS U/S 271(1)( C) OF THE ACT. 6. FURTHER, THE ASSESSEE HAD ALSO RAISED ADDITIONAL GROUNDS OF APPEAL THAT THE NOTICE U/S 271(1)(C) WAS NOT PROPER AS THE AO HAD NOT STRUCK OFF THE INAPPROPRIATE WORDS I N THE NOTICE AND THEREFORE, FOLLOWING THE DECISION OF THE HON'BL E KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON GINNING FACTORY REPORTED IN (2013) 395 ITR 565 WHICH HAS BE EN CONFIRMED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT & A NR VS. M/S SSA'S EMERALD MEADOWS IN CC NO. 11485/2016 DATED 05 .8.2016, THE PENALTY ORDERS ARE LIABLE TO BE QUASHED. ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 4 OF 11 7. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMIT TED THAT THE ASSESSEE HAS VOLUNTARILY ADMITTED THE INCO ME IN HIS HANDS BEFORE THE CIT (A) AND THEREFORE, THERE WAS N O FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME BY THE ASSESSEE. HE ALSO REFERRED TO THE FINDINGS OF THE CIT (A) THA T THE UNACCOUNTED RECEIPTS WERE UTILIZED BY THE ASSESSEE FOR PURCHASE OF ASSETS IN THE NAME OF HUF. HE SUBMITTED THAT IF THE PENALTY IS TO BE LEVIED, THE PENALTY ON SUCH INCOME SHOULD BE LEVIED IN THE HANDS OF THE HUF AND NOT IN THE HANDS OF THE ASSESS EE, THE INDIVIDUAL. 8. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE IS THE SECRETARY OF THE SOCIETY AND HAS ISSUED RECEIPT S UNDER HIS HAND AND HIS SIGNATURES HAVE BEEN CONFIRMED BY HIM DURING THE SEARCH PROCEEDINGS AND THAT INITIALLY THE ASSESSEE HAD STATED THAT THE RECEIPTS WERE ISSUED BY HIM IN THE CAPACITY OF SECRETARY ON BEHALF OF THE SOCIETY AND ON THE BASIS OF SUCH STAT EMENT, THE AO HAS MADE THE SUBSTANTIVE ADDITION IN THE HANDS OF T HE SOCIETY. HOWEVER, SINCE THE ASSESSEE HAD ISSUED THE RECEIPTS UNDER HIS HAND, THE AO HAS ALSO TREATED THE RECEIPTS AS INCOM E OF THE ASSESSEE ON PROTECTIVE BASIS. SHE SUBMITTED THAT TH ERE IS NO DISPUTE REGARDING RECEIPT OF UNACCOUNTED MONEY AND THAT THE CIT (A) HAS CONFIRMED THE SUBSTANTIVE ADDITION IN THE H ANDS OF THE ASSESSEE. THEREFORE, ACCORDING TO HER, THE INITIATI ON OF PENALTY PROCEEDINGS IN THE HANDS OF THE ASSESSEE IS ON THE BASIS OF THE SEIZED MATERIAL AND THE CIT (A) HAS ALSO BROUGHT OU T AS TO HOW THE ASSESSEE WAS THE KINGPIN OF THE SOCIETY AND HAD UTI LIZED THE UNACCOUNTED/UNDISCLOSED MONEY FOR PURCHASE OF PROPE RTIES IN HIS ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 5 OF 11 OWN INDIVIDUAL NAME AND IN THE NAMES OF HIS FAMILY MEMBERS AND IN THE NAME OF HIS HUF. THEREFORE, ACCORDING TO HER , IT IS A CLEAR CASE OF CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. SHE SUBMITTED THAT IN THE CA SES RELIED UPON BY THE ASSESSEE, THE APPEALS AGAINST SUBSTANTIVE AD DITIONS WERE STILL PENDING AND THE HON'BLE COURTS HAVE HELD THAT THE PENALTY IN THE CASE OF PROTECTIVE ADDITION, WHERE THE ADDITION S HAVE NOT BEEN CONFIRMED IS NOT SUSTAINABLE. SHE SUBMITTED THAT IN THE CASE OF THE ASSESSEE, THE SUBSTANTIVE ADDITION HAS BEEN CON FIRMED IS IN THE HANDS OF THE ASSESSEE AND THEREFORE, THESE DECI SIONS ARE NOT APPLICABLE. 9. AS REGARDS THE ADDITIONAL GROUND OF APPEAL, THE LEARNED DR SUBMITTED THAT SINCE BOTH THE CONDITIONS FOR INI TIATING THE PENALTY PROCEEDINGS WERE PRESENT IN THE ASSESSEES CASE, THE AO HAS ISSUED THE NOTICE FOR BOTH THE CONCEALMENT OF I NCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS AND THERE W AS NO CASE FOR STRIKING OFF OF ANY OF THE PORTION OF THE NOTICE. S HE ALSO SUBMITTED THAT IN THE CASE BEFORE THE HON'BLE SUPREME COURT I N THE CASE OF SSA EMERALD MEADOWS (SUPRA) AND BEFORE THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNI NG FACTORY (SUPRA), THE NOTICE HAS BEEN ISSUED IN THE PROFORMA WITHOUT STRIKING OFF THE IRRELEVANT PORTION, WHEREAS IN THE CASE OF THE ASSESSEE, NOTICE HAS BEEN ISSUED ONLY FOR THE DEFAU LTS COMMITTED BY THE ASSESSEE. THEREFORE, ACCORDING TO HER, THESE DECISIONS ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 6 OF 11 10. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE MAIN GROUND ON WHICH TH E ASSESSEE IS CHALLENGING THE INITIATION OF THE PENALTY PROCEEDIN GS U/S 271(1)(C) IS THAT THE PROTECTIVE ASSESSMENT HAS BEEN MADE IN THE HANDS OF THE ASSESSEE AND THEREFORE, THE AO COULD NOT HAVE B EEN SATISFIED ABOUT THE DEFAULT OF THE ASSESSEE. FOR THE SAKE OF CLARITY AND READY REFERENCE, THE PROVISIONS OF SECTION 271(1) A RE REPRODUCED HEREUNDER: 271 (1) IF THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS)OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER IN THE COURS E OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON (A) (B) HAS FAILED TO COMPLY WITH A NOTICE UNDER SUB-SECTIO N (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 115WE OR UNDER SUB- SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SE CTION 143OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2 A) OF SECTION 142, OR (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) HAS CONCEALED THE PARTICULARS OF THE FRINGE BEN EFITS OR FURNISHED INACCURATE PARTICULARS OF SUCH FRINGE BENEFITS,] HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (I) (II) IN TH E CASES REFERRED TO IN CLAUSE (B), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM OF TEN THOUSAND RUPEES FOR EACH SUCH FAILURE (III) IN THE CASES REFERRED TO IN CLAUSE (C) [OR CLAUSE (D)], IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL N OT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REA SON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS] OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS. [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER] TO BE FALSE , OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE T O SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE A ND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PE RSON AS A RESULT ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 7 OF 11 THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF TH IS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 11. IN ALL THE DECISIONS RELIED UPON BY THE LEARNE D COUNSEL FOR THE ASSESSEE, THE COURTS HAVE OBSERVED IN THOSE CASES, THAT SUBSTANTIVE ASSESSMENTS WERE NOT YET ADJUDICATED AN D IN SUCH CIRCUMSTANCES, THE PENALTY ON PROTECTIVE ASSESSMENT S ARE NOT SUSTAINABLE. BUT IN THE CASE BEFORE US, THE SUBSTAN TIVE ADDITION HAS BEEN CONFIRMED BY THE CIT (A) IN THE ASSESSEES HANDS AND PARTICULARLY SINCE THE ASSESSEE BY HIMSELF HAS ACCE PTED BEFORE THE CIT (A) THAT THE UNDISCLOSED INCOME BELONGED TO HIM . THE ASSESSEE HAS NOT APPEALED AGAINST THE SAID ORDER AN D THEREFORE, THE SUBSTANTIVE ADDITION IN HIS HANDS HAS BECOME FI NAL. FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE AO HAS TO BE SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS O F SUCH INCOME. LET US NOW EXAMINE THE APPLICABILITY OF THE CASE LA WS RELIED UPON BY THE ASSESSEE TO THE FACTS OF THE CASE BEFORE US. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. SUPER ST EEL (SALES) CO. (1989) 178 ITR 451 (CAL.), HAS HELD THAT ONLY A PER SON IN WHOSE HANDS, A SUBSTANTIVE ASSESSMENT IS MADE, WOULD BE L IABLE FOR PENALTY, PROVIDED, THE CONDITIONS PRECEDENT FOR IMP OSITION OF PENALTY ARE SATISFIED. THE COORDINATE BENCH OF THE TRIBUNAL AT AHMEDABAD IN THE CASE OF SRI NATVARBHAI CHATURBHAI PATEL VS.ACIT (ITA NO.707/AHD/2006, DATED 7.5.2010) HAS H ELD THAT WHERE THE AO MAKES PROTECTIVE ASSESSMENT, THERE COU LD NOT HAVE BEEN ANY SATISFACTION ON THE PART OF THE AO FOR INI TIATING PENALTY PROCEEDINGS AS HE WAS NOT SURE AS TO IN WHOSE HANDS THIS INCOME IS TO BE ASSESSED. THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 8 OF 11 PATEL CHEMICAL WORKS VS. AO (2009) 309 ITR 450 (GUJ .) WAS CONSIDERING THE CASE OF AN ASSESSEE IN WHOSE HANDS AN ADDITION WAS MADE ON ACCOUNT OF DIVERSION OF PROFITS BY THE SHAM TRANSACTION WITH ITS SISTER CONCERN. SUBSEQUENTLY, THE THREE SISTER CONCERNS OFFERED THE INCOME IN THEIR HANDS AND THE QUANTUM PROCEEDINGS WERE CONCLUDED AT THAT STAGE. THE PENAL TY PROCEEDINGS WERE INITIATED THEREIN IN THE CASE OF T HE ASSESSEE AND THE CASE HAD TRAVELLED UP TO THE HON'BLE HIGH COURT AND THE HON'BLE HIGH COURT HELD THAT THE FACT OF THE INCOME FROM THE TRANSACTION ALREADY BEING TREATED ON SUBSTANTIVE BA SIS IN THE HANDS OF THE SISTER CONCERNS WERE RELEVANT TO BE CO NSIDERED DURING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE HON'BLE HIGH COURT THEREFORE, SET ASIDE THE ISSUE T O THE FILE OF THE ITAT TO DECIDE THE APPEAL AFRESH BY CONSIDERING THE RELEVANT FACTS. THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF METAL STORES VS. CIT (1990) 186 ITR 612 (GAU) HAS HELD THAT THERE CA NNOT BE ANY PROTECTIVE PENALTY. 12. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE H AD PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE KA RNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FA CTORY (CITED SUPRA) WHEREIN ADDITIONS TO INCOME WERE AGREED TO B Y THE ASSESSEE DURING THE APPELLATE PROCEEDINGS AND CONCE ALMENT WAS DISCOVERED IN APPELLATE PROCEEDINGS AND THEREFORE, IT WAS HELD THAT THE PENALTY PROCEEDINGS SHOULD HAVE BEEN INITIATED BY THE APPELLATE AUTHORITY U/S 271(1)(C) OF THE ACT. HOWEV ER, WE HAVE GONE THROUGH THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA AND FIND THAT IN THE SAID CASE, THE ADDITIONS MADE DURING THE ASSESSMENT PROCEEDINGS WAS APPEALED AGAINST BEFORE THE CIT (A) ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 9 OF 11 AND DURING THE APPELLATE PROCEEDINGS, AN ADDITION O N A NEW GROUND WAS MADE BY THE CIT (A) AND PENALTY PROCEEDI NGS WERE INITIATED AFTER THE RECEIPT OF THE APPELLATE ORDER BY AMENDING THE PENALTY PROCEEDINGS. IN SUCH CIRCUMSTANCES, THE HON 'BLE HIGH COURT HAS HELD THAT THE CIT (A) OUGHT TO HAVE INITI ATED THE PENALTY PROCEEDINGS AND NOT THE AO. BUT IN THE CASE BEFORE US, THE AO HAS CLEARLY BROUGHT OUT THAT THE SEIZED DOCUMENTS W ERE SIGNED BY THE ASSESSEE IN THE CAPACITY OF THE SECRETARY OF TH E SOCIETY AND THEREFORE, THE RESPONSIBILITY WAS ESTABLISHED UNDER HIS HAND. THE REASON FOR MAKING THE PROTECTIVE ASSESSMENT WAS BEC AUSE THE SOCIETY HAD DENIED THE OWNERSHIP OF UNRECORDED RECE IPTS, AND SINCE THE ASSESSEE HAS SIGNED THE RECEIPTS, THEY WE RE ALSO BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. THE CIT (A), I N HIS ORDER, HAS CLEARLY BROUGHT OUT THAT THE ASSESSEE HAS MISUSED H IS CAPACITY AS THE SECRETARY OF SOCIETY AND HAD RECEIVED THE FUNDS FOR HIMSELF AND HAS UTILIZED THE FUNDS FOR ACQUIRING ASSETS FOR HIMSELF AND HIS FAMILY MEMBERS. FURTHER, THE ASSESSEE IN A STATEMEN T ON OATH U/S 132(4) OF THE ACT, HAD DECLARED UNDISCLOSED INC OME IN THE HANDS OF THE PROMOTERS INCLUDING HIMSELF, BUT WHILE FILING THE RETURN OF INCOME U/S 153A, HE FAILED TO OFFER THE S AME TO TAX IN HIS HANDS. THEREFORE, THE AO WAS SATISFIED THAT THE RE WAS FURNISHING OF INACCURATE PARTICULARS AND CONCEALMEN T OF INCOME BY THE ASSESSEE AT THE TIME OF THE ASSESSMENT PROCE EDINGS ITSELF AND THEREFORE, THE ASSESSEES CONTENTION THAT, THE NOTICE FOR INITIATION OF THE PROCEEDINGS U/S 271(1)(C) BY THE AO IS NOT VALID, IS NOT SUSTAINABLE. THOUGH THE NOTICE U/S 271(1)(C) WAS ISSUED AFTER THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S . 153A OF THE ACT, THE PENALTY PROCEEDINGS WERE CONCLUDED ONLY AF TER THE PROTECTIVE ASSESSMENT HAS BEEN CONFIRMED AS A SUBST ANTIVE ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 10 OF 11 ASSESSMENT IN THE HANDS OF THE ASSESSEE BY THE CIT (A). THEREFORE, THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DISTI NGUISHABLE ON FACTS AND ARE NOT APPLICABLE TO THE CASE OF THE ASS ESSEE. AS REGARDS THE ADDITIONAL GROUND IS CONCERNED, WE HAVE PERUSED THE NOTICE U/S 271(1)(C) OF THE ACT AND FIND THAT THE N OTICE IS NOT ISSUED IN THE PROFORMA, BUT IS ISSUED BOTH FOR CONC EALMENT AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT THE AO WAS SATISFIED ABOUT THE EXISTENCE OF BOTH THE IN GREDIENTS AND THEREFORE, THERE IS NO NEED TO STRIKE OFF ANY PORTI ON OF THE NOTICE. THEREFORE, THE ASSESSEES APPEALS FOR THE A.YS 2007 -08 & 2008-09 ARE WITHOUT ANY MERITS AND ARE THUS DISMISSED. 13. AS REGARDS THE PENALTY FOR THE A.Y 2009-10 IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE HAS FILED ADDITIONAL GROUNDS OF APPEAL THAT THE ASSESSEE HAS BEEN ISSUED A NOTICE FOR PENALTY U/S 2 71(1)(C) OF THE ACT BUT THE PENALTY U/S 271AAA WAS LEVIED AND NO NO TICE WAS ISSUED FOR PENALTY LEVIED U/S 271AAA OF THE ACT AND THEREFORE, THE PENALTY LEVIED U/S 271AAA IS INVALID. IT IS THE ARG UMENT OF THE ASSESSEE THAT THE CONDITIONS FOR INITIATION OF PENA LTY U/S 271(1)(C) AND 271AAA ARE DIFFERENT AND THEREFORE, SEPARATE NO TICES HAVE TO BE ISSUED FOR EACH OF THE PENALTY. HE, THEREFORE, P RAYED FOR ADMISSION OF THE ADDITIONAL GROUNDS AND DELETION OF PENALTY. 14. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT THE PENALTY U/S 271AAA HAS BEEN VALIDLY INITIATED. HOWE VER, THE COPY OF THE NOTICE U/S 271AAA HAS NOT BEEN PRODUCED BEFO RE US, WHEREAS THE ASSESSEE HAS FILED THE COPY OF THE NOTI CE U/S 271(1)(C) ITA NOS 1739 TO 1741 OF 2014 K KRISHNA REDDY HYDERABAD. PAGE 11 OF 11 OF THE ACT FOR THE A.Y 2009-10 AS WELL. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE AO HAS TO ISSUE A NOTICE FOR PENALTY U/S 271AAA SEPARATELY AND CANNOT SUO MO TO TREAT CONVERT THE NOTICE ISSUED U/S 271(1)(C) TO A PENALT Y NOTICE U/S 271AAA. THEREFORE, WE ADMIT THE ADDITIONAL GROUND, WHICH IS A LEGAL GROUND AND ALLOW THE SAME. THE PENALTY ORDER FOR A.Y 2009- 10 IS ACCORDINGLY SET ASIDE AND THE OTHER GROUNDS O F APPEAL ON THE MERITS OF THE PENALTY ORDER ARE NOT ADJUDICATED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A .Y 2009- 10 IS TREATED AS PARTLY ALLOWED AND THE APPEALS FOR THE A.Y 2007- 08 AND 2008-09 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 25 TH JANUARY, 2018. VINODAN/SPS COPY TO: 1 SHRI K. KRISHNA REDDY, R/O 16-2-740/51, KALYAN NA GAR, GADDI ANNARAM, HYDERABAD 2 DCIT, CENTRAL CIRCLE - 1 AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 3 CIT (A)-I HYDERABAD 4 CIT CENTRAL, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER