Reena Mitra, Kolkata V. I.T.O Wd - 29(2),kolkata, Kolkata

ITA 1799/KOL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3412 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: A K TIBREWAL
• Keywords: Principle of natural justice; Question of law; Initiation of penalty proceedings
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1799 / KOL / 2013 ASSESSMENT YEAR :2006-07 REENA MITRA 10, MAHENDRA ROAD, KOLKATA-700 025 [ PAN NO.AEWPM 1942 H ] V/S . INCOME TAX OFFICER, WARD-29(2), AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 031 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K. TIBREWAL, FCA /BY RESPONDENT SHRI NIRAJ KUMAR, CIT-DR /DATE OF HEARING 10-12-2015 /DATE OF PRONOUNCEMENT 20-01-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-XVI, KOLKATA IN APPEAL NO.13/C IT(A)XVI/WD- 29(2)/KOL/09-10 DATED 08.02.2013. ASSESSMENT WAS FR AMED BY ITO WARD- 29(2), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 31.12.2008 FOR A SSESSMENT YEAR 2006-07. PENALTY LEVIED BY ASSESSING OFFICER U/S 271(1)(C) O F THE ACT VIDE ORDER DATED 23.06.2009. THE ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, ORDER OF THE LD. CIT(A) CONFIRMING THE IMPOSITION OF PENALTY OF RS.1,86,568/-, UNDER SECTION 271(10(C), FOR THE ALLEGED CONCEALMEN T OF INCOME BEING ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 2 GROSSLY FOUNDED ON THE ARBITRARY, SUBJECTIVE AND SU PERFICIAL VIEWS, RATHER THAN THE FACTS, EVIDENCE AND MOREOVER THE HONEST AN D FAIR CONDUCT OF THE APPELLANT, ON RECORD, IS LIABLE FOR COMPLETE RE VERSAL AND INVALIDATION. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, ORDER OF THE LD. CIT(A) SHOULD NOT HAVE CONFIRMED THE IMPOSI TION OF PENALTY, UNDER SECTION 271(1)(C) FOR THE ALLEGED CONCEALMENT , IN REGARD TO THE INCOME ARISING FROM LONG TERM CAPITAL GAIN ORIGINAT ING FROM THE SALE OF DELHI PROPERTY AMOUNTING TO RS.6,33,078/-, GIVEN TH E SUO MOTU AND BONA FIDE DISCLOSURE OF THE PERTINENT PARTICULARS, PRIOR TO ANY DETECTION THEREOF IN COURSE OF ASSESSMENT PROCEEDING. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, ORDER OF THE LD. CIT(A) SHOULD NOT HAVE CONFIRMED THE IMPOSI TION OF PENALTY, UNDER SECTION 271(1)(C) FOR THE ALLEGED CONCEALMENT , IN REGARD TO THE INCOME ARISING FROM SHORT TERM CAPITAL GAIN OR REDE MPTION OF EQUITY ORIENTED MUTUAL FUNDS, AMOUNTING TO RS.1,95,574/-, GIVEN THE SUO MOTU AND BONA FIDE DISCLOSURE OF THE PERTINENT PARTICULA RS, PRIOR TO ANY DETECTION THEREOF IN COURSE OF ASSESSMENT PROCEEDIN G. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, ORDER OF THE LD. CIT(A) SHOULD NOT HAVE CONFIRMED THE IMPOSI TION OF PENALTY, UNDER SECTION 271(1)(C) FOR THE ALLEGED CONCEALMENT , IN REGARD TO THE DISCREPANCY AS REGARDS BANK INTEREST OF RS.6,106/-, GIVEN THE SUO MOTU AND BONA FIDE DISCLOSURE OF THE PERTINENT PARTICULA RS, PRIOR TO MAY DETECTION THEREOF IN COURSE OF ASSESSMENT PROCEEDIN G. IN THIS REGARD ASSESSEE ALSO FILED ADDITIONAL GROUN D, WHICH IS REPRODUCED BELOW:- 3) THAT THE APPELLANT WOULD LIKE TO RAISE THE FOLL OWING GROUND AS ADDITIONAL GROUND WHICH IS PURELY A LEGAL GROUND. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY OF RS.1,86,568 LEVIED BY THE INCOME TAX OFFICER UNDER SECTION 271(1)(C) OF THE ACT IN ABSEN CE OF PROPER SATISFACTION IN ACCORDANCE WITH SECTION 271(1)(C) W ITH SECTION 271(1)(C) OF THE ACT, IN THE ASSESSMENT ORDER DATED 31 ST DECEMBER, 2008 AND ALSO THE SHOW CAUSE NOTICE ISSUE D UNDER SECTION 271(1)(C) READ WITH SECTION 274 OF THE ACT. 2. THE COMMON ISSUE, INVOLVED IN ALL THE GROUNDS OF APPEAL, RAISED IN THIS APPEAL OF THE ASSESSEE IS THAT CIT(A) ERRED IN CONF IRMING THE ORDER OF THE AO FOR LEVYING THE PENALTY ON ACCOUNT OF UNDISCLOSED I NCOME. ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 3 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS AN IN DIVIDUAL AND DECLARED INCOME UNDER THE HEAD OF BUSINESS, HOUSE PROPERTY, LONG TERM CAPITAL GAIN (LTCG), SHORT TERM CAPITAL GAIN (STCG) AND OTHER SO URCES. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE FAILED TO DISCLOSE CE RTAIN INCOME IN HER RETURN OF INCOME AND FOR THE SAME THE AO HAS MADE THE ADDI TION IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE D ETAIL OF SUCH INCOME IS AS UNDER :- 1) BANK INTEREST INCOME RS. 6,106/- 2) STCG ON THE REDEMPTION OF MUTUAL FUNDS RS.1,99, 574/- 3) LTCG ON THE SALE OF PROPERTY RS.6,33,078/- THE AO AT THE TIME OF PASSING ORDER U/S 143(3) OF T HE ACT INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND ISSUED NOT ICE U/S 274 OF THE ACT FOR LEVYING THE PENALTY U/S 274 OF THE ACT. BUT NO ONE APPEARED ON BEHALF OF ASSESSEE IN RESPONSE TO THE NOTICE ISSUED UNDER SEC TION 274 OF THE ACT. HOWEVER, THE AO IMPOSED PENALTY @ 100% OF THE TAX S OUGHT TO BE EVADED FOR FURNISHING INACCURATE PARTICULARS OF INCOME U/S. 27 1(1)(C) OF THE ACT. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER:- I HAVE DULY CONSIDERED THE SUBMISSION OF THE A/R O F THE APPELLANT AND PENALTY ORDER. THE AO MADE THE ADDITION OF RS.6,33, 078/- AS INCOME FROM LTCG ON PROPERTY. INCOME FROM STCG OF RS.1,95, 574/-. INTEREST ON SB A/C. OF THE RS.17,236/-. THE APPELLANT DIDNT DISPUTE SUCH ADDITIONS. THE AO IMPOSED MINIMUM PENALTY @ 100% OF THE TAX SOUGHT TO THE EVADED AFTER EXAMINING THE SUBMISSION OF THE APPELLANT. THE CIT(A)-XXXVI, IN HER HUSBAND CASE SHRI PARIMAL SARK AR CONFIRMED THE PENALTY ON SAME GROUND. HENCE, FOLLOWING THE ORDER OF CIT(A)-XXXVI IN HER HUSBAND CASE, SHRI PARMIMAL SARKAR I AM IN FULL AGREEMENT WITH THE DECISION TAKEN BY THE AO IN IMPOSING PENALTY. THUS, I CONFIRM THE PENALTY OF RS.1,86,568/- IMPOSED U/S 271(1)(C) OF T HE IT ACT BY THE AO. THESE GROUND ARE NOT ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 4 5. AT THE OUTSET, THE LD. AR DREW TO OUR ATTENTION TO ADDITIONAL GROUND FILED WHICH IS REPRODUCED BELOW : THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY OF RS.1,86,568 LEVIED BY THE INCOME TAX OFFICER UNDER SECTION 271(1)(C) OF THE ACT IN ABSEN CE OF PROPER SATISFACTION IN ACCORDANCE WITH SECTION 271(1)(C) W ITH SECTION 271(1)(C) OF THE ACT, IN THE ASSESSMENT ORDER DATED 31 ST DECEMBER, 2008 AND ALSO THE SHOW CAUSE NOTICE ISSUE D UNDER SECTION 271(1)(C) READ WITH SECTION 274 OF THE ACT. 5.1. ACCORDING TO THE ASSESSEE THE SHOW CAUSE NOTIC E ISSUED UNDER SECTION 274 OF THE ACT DOES NOT SPECIFY AS TO WHETHER PENAL TY IS IMPOSED FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. IN SUPPORT OF HIS CLAIM THE ASSESSEE RELIED IN THE ORD ER OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY , 359 ITR 565 (KARN), WHERE IT WAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS F URTHER LAID DOWN THAT CERTAIN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASS ESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMITTED THAT IN THE PR ESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMP OSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. OUR AT TENTION WAS ALSO DRAWN TO THE ITAT BANGALORE BENCH DECISION IN THE CASE OF E. KRISHNAPPA VS. ITO, ITA NOS. 313 TO 315/BANG/2014, ORDER DATED 14.8.2015 WH EREIN THIS TRIBUNAL ON AN IDENTICAL REQUEST FOR ADMISSION OF ADDITIONAL GR OUND, ADMITTED THE SAME OBSERVATION AS UNDER :- 4.4.1. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORD ON THE ISSUE OF THE ADDITIONAL GROUNDS RAISED BY TH E ASSESSEE CHALLENGING THE VALIDITY OF THE IMPUGNED PENALTY ORDER LEVYING PENA LTY U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEARS 2007-08 TO 2009-10 ON THE BASI S OF DEFECTIVE NOTICES ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R WS 271 OF THE ACT DT. ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 5 29.12.2011 FOR INITIATING PENALTY PROCEEDINGS U/S 2 71(1)(C) OF THE ACT. ON A CAREFUL APPRECIATION THEREOF, WE FIND THAT THESE GR OUNDS ARE PURE QUESTION OF LAW AND DO NOT INVOLVE INVESTIGATION OF ANY FACTS OTHER WISE THAN THOSE ON THE RECORDS OF THE DEPARTMENT. TAKING INTO CONSIDERATIO N THE MATTER BEFORE US, WE ARE OF THE CONSIDERED VIEW THAT, IN THE INTEREST OF EQUITY AND JUSTICE, THESE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE REQUIRE T O BE ADMITTED FOR CONSIDERATION IN THIS APPEAL AS THEY GO TO THE VERY ROOT OF THE MATTER OF THE VALIDITY OF THE INITIATION OF THE PROCEEDINGS THAT RESULTED IN THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN THE CASE ON HAND FOR ASSESS MENT YEARS 2007-08 TO 2009-10. 6. THE LD. DR OPPOSED THE PRAYER FOR ADJUDICATION O F ADDITIONAL GROUND RAISED BY THE ASSESSEE ON THE GROUND THAT THE SAME WAS NOT RAISED EITHER BEFORE THE AO OR THE CIT(APPEALS). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS PURELY A L EGAL QUESTION AND DOES NOT INVOLVE INVESTIGATION OF ANY NEW FACT AND CAN BE DE CIDED ON THE BASIS OF FACTS ALREADY ON RECORD. KEEPING IN VIEW THE DECISION OF THE TRIBUNAL REFERRED ABOVE, WE ARE OF THE VIEW THAT THE ADDITIONAL GROUND DESER VES TO BE ADMITTED AND THE SAME IS ACCORDINGLY ADMITTED. 7.1. AS FAR AS MERITS OF ADDITIONAL GROUND RAISED B Y THE ASSESSEE IS CONCERNED, THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN THE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER OF IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDING S CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PAS SED 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 SECT ION 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 S AID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 6 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEED INGS 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 I N SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THE Y INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AN D SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO N OT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE D EPARTMENT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SE CTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INIT IAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE T O BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWIS E, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTIC E IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY AT TRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PE NALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSE E GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER TH E 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 2 71(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, TH E PENALTY PROCEEDINGS SHOULD BE 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 O N WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHOR ITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS O THER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE 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 T HE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALT Y PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHI CH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS N OT VALID. THE ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 7 VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS I N THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COU RSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME 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 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHI NG INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 1 22 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKE TING REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF P ENALTY 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 CON CEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS T HE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PRO FORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FO LLOWS:- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EME RGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTH ORITY OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT L EAST THE FACTS SET ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 8 OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNI BLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CON CEALMENT BECAUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDIN GS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFI CER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAI NED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMI SSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORD ER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TA X AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTH ORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNL ESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS O N ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT H AS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO B E ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINE D BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN ORDER IMPO SING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PR OCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFAC TION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APP ELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., W HETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T PARTICULARS OF INCOME ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 9 Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEP ENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS ' CONCEALMENT OF INCOME ' AND ' FURNISHING OF INCORRECT PARTICULARS ' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIE D, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. IN THE LIGHT OF ABOVE DECISION AND IN VIEW OF THE F ACT THAT NOTICE UNDER SECTION 274 OF THE ACT IN THE PRESENT CASE DOES NOT MAKE AN Y REFERENCE AS TO WHETHER THE ASSESSEE HAS CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME, THE ENTIRE PENALTY PROCEEDINGS ARE HELD TO BE IN VALID. SO THE PENALTY IMPOSED IS ACCORDINGLY CANCELLED. 8. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT 20/ 01/2016 SD/- SD/- (MAHAVIR SINGH) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 20 / 0 1/201 6 ITA NO.1799/KOL/2013 A.Y. 2006-07 REENA MITRA V. ITO WD-29(2), KOL. PAGE 10 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-REENA MITRA, 10, MAHENDRA ROAD, KOLKATA- 25 2. /RESPONDENT-ITO WARD-29(2), AAYAKAR BHAWAN DAKSHIN 2, GARIAHAT ROAD (SOUTH) KOLKAT A-700 031 3. ) *+, , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5.01233*+, , *+ , / DR, ITAT, KOLKATA 6.26789 / GUARD FILE. BY ORDER/ ,, /TRUE COPY/ / , *+ ,