Uma Shankar Agarwal, Kolkata V. DCIT, CC-I, Kolkata

ITA 1831/KOL/2009

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3370 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 08-04-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 04-11-2009
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Assessee Lawyers: A K TIBREWAL
• Keywords: Search and seizure; Document seized; Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings; Agreed addition; Documents seized
• Section: 133A; 153A

Judgement Text

1 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NOS.1831 TO 1835/KOL/2009 ASSESSMENT YEARS : 2002-03 TO 2006-07 UMA SHANKAR AGARWAL -VERSUS- D.C.I.T., CENTRAL CIR CLE-I, KOLKATA KOLKATA (PAN:ACQPA 9624 A) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI A.K.TIBREWAL, FCA FOR THE RESPONDENT : SHRI S.S.ALAM, JCIT, SR.DR DATE OF HEARING : 09.12.2015. DATE OF PRONOUNCEMENT : 20.01.2016. ORDER PER BENCH ITA NO. 1831 TO 1835/KOL/2009 : THESE ARE APPEALS BY THE ASSESSEE AGAINST COMMON ORDER DATED 2.9.2015 OF CIT(A), CENTRAL-III, KOLKAT A, RELATING TO AY 2002-03 TO 2006- 07. IN ALL THESE APPEALS THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF THE AO IMPOSING P ENALTY ON THE ASSESSEE U/S.271(1)( C ) OF THE INCOME TAX ACT, 1961 (ACT). 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY WAS IMPOSED ON THE ASSESSEE BY THE AO IN ALL THE AYS REFERRED TO ABOVE ARE AS F OLLOWS: THE INCOME TAX DEPARTMENT HAD CONDUCTED SEARCH AND SEIZURE OPERATIONS U/S.132(1) OF THE ACT IN THE BUILDER GROUP OF CASES ON 23.08.2006. SHRI. UMA SHANKAR AGARWAL(THE ASSESSEE IN THESE APPEALS) AND HIS BROT HER SHRI.L.K.AGARWAL ARE MEMBERS OF THE BUILDER GROUP. THE SEARCH AND SEIZUR E OPERATIONS WERE CARRIED OUT AT THE PREMISES -DA 14 AND DA 122,SALT LAKE CITY, SECT OR I , KOLKATA. IN THE COURSE OF SEARCH ON 24-08-2006, SHRI L.K. AGARWAL, BROTHER OF THE APPELLANT, HAD MADE AN AD- HOC DISCLOSURE, IN HIS STATEMENT GIVEN UNDER SECTIO N.L32 (4) OF THE INCOME TAX ACT, 1961, OF RS.6.25 CRORES IN RESPECT OF HIMSELF AND H IS FAMILY MEMBERS. SUBSEQUENTLY , 2 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 THE ASSESSEEE, VIDE HIS LETTER DATED 20.10.2006 ADD RESSED TO THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION), UNIT - 1(2) , KOLKATA , OFFERED TO TAX INCOME OF RS.3,25,00,000/- UPTO THE DATE OF SEARCH(23.08.2006 ) AND DULY REFLECTED SUCH DISCLOSURE IN THE REGULAR BOOKS OF ACCOUNTS. THE AS SESSEE IN THIS LETTER HAD ALSO STATED THAT HIS UNDISCLOSED INCOME IS RS.3,06,07,997/-, WH ICH HE WANTED THE DEPARTMENT TO TREAT AS HIS UNDISCLOSED INCOME WHICH IS BEING DISC LOSED ULS.132(4) READ WITH EXPLANATION 5 OF SEC.271(1) (C ) OF THE I TACT, 196 1 AND GRANT IMMUNITY FROM PENALTY ULS.271(L)(C ) AND, PROSECUTION. THE ASSESSEE HAD F URNISHED THE ASSESSMENT YEAR WISE BREAK-UP OF HIS DISCLOSURE AS UNDER: ASST. YEAR AMOUNT (RS.) 2001-02 1,25,943/- 2002-03 1,91,154/- 2003-04 2,35,877/- 2004-05 4,09,356/- 2005-06 33,93,719/- 2006-07 44,98,393/- 2007-08 2,17,53,555/- TOTAL 3,06,07,997/- 2.1. IN RESPONSE TO NOTICES ISSUED U/S 153A OF THE I.T.ACT, 1961, THE ASSESSEE HAD FILED RETURNS OF INCOME FOR A/YRS. 2002-03 TO 2006- 07 ON 26.09.2007 ADMITTING THE ABOVE DISCLOSED INCOMES FOR TAXATION. THE DETAILS A RE AS UNDER : ASST.YEAR INCOME AS PER RETURN FILE(RS.) INCOME DISCLOSED VIDE LR.DT. 20-10-06(RS.) TOTAL INCOME RETURNED IN RETURN U/.S 153A(RS.) 2001-02 4,85,517/- 1,25,943/- 6,11,460/- 2002-03 6,59,126/- 1,91,154/- 8,50,280/- 2003-04 8,57,623/- 2,35,877/- 10,93,500/- 2004-05 8,52,094/- 4,09,356/- 12,61,450/- 2005-06 10,50,831/- 33,93,719/- 44,44,550/- 2006-07 9,91,727/- 44,98,393/- 54,90,120/- 2.2. THE RETURN OF INCOME FOR ASST.YEAR 2007-08 WAS FILED U/S 139(1), WHEREIN THE INCOME OF RS.2,1753,555/- HAD BEEN ADMITTED. THE AS SESSEE IN THE COURSE OF THE 3 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 ASSESSMENT PROCEEDING HAD MADE AN ADDITIONAL DISCLO SURE OF INCOMES FOR THREE ASSESSMENT YEARS AS UNDER :- ASST. YEAR AMOUNT (RS.) 2003-04 3,61,600/- 2004-05 14,65,904/- 2006-07 3,86,350/- 22,13,854/- 2.3. IN TOTO, THE TOTAL DISCLOSURE MADE WAS AS UND ER :- ASST.YEAR INCOME AS PER LETTER DATED 20-10-2006 (RS.) ADDITIONAL INCOME DISCLOSED IN THE COURSE OF ASSESSMENT PROCEEDING (RS.) TOTAL INCOME DISCLOSED (RS.) 2002-03 1,91,154/- ---- 1,91,154/- 2003-04 2,35,877/- 3,61,600/- 5,97,477/- 2004-05 4,09,356/- 14,65,904/- 18,75,260/- 2005-06 33,93,719/- ------- 33,93,719/- 2006-07 44,98,393/- 3,86,850/- 48,85,243/- 2.4. THE A.O. HAD ACCEPTED THE ABOVE SAID DISCLOSU RES MADE BY THE ASSESSEE AND ASSESSED THE ASSESSEE AS UNDER :- ASST.YEAR INCOME DISCLOSED U/S 153A (RS. INCOME DISCLOSED IN THE COURSE OF ASSESSMENT (RS.) TOTAL (RS.) INCOME ASSESSED BY A.O. (RS.) ADDITION MADE BY A.O. IN ASSESSMENT (RS.) 2002-03 8,50,280/- NIL 8,50,280/- 8,50,280/- NIL 2003-04 10,93,500/- 3,61,600/- 14,55,100/- 14,55,10 0/- NIL 2004-05 12,61,450/- 14,65,904/- 27,27,354/- 27,27,3 50/- NIL 2005-06 44,44,550/- NIL 44,44,550/- 44,44,550/- NIL 2006-07 54,90,120/- 3,86,350/- 58,76,470/- 60,05,77 0/- 1,29,300/- 2007-08 2,27,60,190/- NIL 2,27,60,190 2,27,61,190/- NIL TOTAL 3,65,11,550/- 22,13,854/- 3,87,25,404/- 2.5. IN THE ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS.1,29,3900/- ON THE BASIS OF SEIZED PAPERS, WHICH THE ASSESSEE HAD ACCEPTED. 4 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 2.6. THE AO INITIATED PENALTY PROCEEDINGS IN THE OR DER OF ASSESSMENT FOR ALL THE AYS AND IMPOSED PENALTY ON THE ASSESSEE HOLDING THAT BU T FOR THE SEARCH AND SEIZURE OPERATION THE ASSESSEE WOULD NOT HAVE DECLARED THE INCOME IN QUESTION IN THE RETURNS OF INCOME AND AGREED FOR ADDITIONS MADE IN THE COUR SE OF ASSESSMENT PROCEEDINGS. THE AO ALSO HELD THAT THE MERE FACT THAT THE ASSESS EE DECLARED INCOME IN SOME OF THE AYS I.E., AY 2002-03 & 05-06 AND THE SAID DECLARATI ON WAS ACCEPTED BY THE AO WILL NOT GIVE ANY IMMUNITY TO THE ASSESSEE FROM THE LEVY OF PENALTY U/S.271(1)( C) OF THE ACT. THE AO WAS ALSO OF THE VIEW THAT THE ADDITION S MADE TO THE INCOME DECLARED IN THE RETURNS FILED FOR AY 2003-04, 2004-05 & 2006-07 U/S.153A OF THE ACT WOULD BY ITSELF BE SUFFICIENT TO IMPOSE PENALTY U/S.271(1) ( C) OF THE ACT, IN RESPECT OF ADDITIONS SO MADE. THE AO ALSO HELD THAT THE ASSESSEE WOULD N OT BE ENTITLED TO THE BENEFIT OF IMMUNITY UNDER EXPLANATION 5 TO SEC.271(1)(C ) OF T HE ACT. 3. ON APPEAL BY THE ASSESSEE THE CIT(A) FOUND THE P OSITION WITH REGARD TO INCOME DISCLOSED IN THE RETURNS FILED U/S.139(1) AN D THE INCOME ASSESSED U/S.153A OF THE ACT, WAS AS FOLLOWS: ASST.YEAR INCOME ADMITTED U/S 139(1) (RS.) INCOME DISCLOSED VIDE LER.DT 20/10/06 (RS.) INCOME DISCLOSED U/S 153A (RS.) INCOME ASSESSED U/S 153A (RS.) 2002-03 6,59,126/- 1,91,154/- ------ 8,50,280/- 2003-04 8,57,623/- 2,35,877/- 3,61,600/- 14,55,100/ - 2004-05 8,52,094/- 4,09,356/- 14,65,904/- 22,27,350 /- 2005-06 10,50,831/0- 33,93,719/- ------- 44,44,550/ - 2006-07 9,91,727/- 44,98,393/- 3,86,850/- 60,05,770 /- HE HELD THAT BUT FOR THE SEARCH THE ASSESSEE WOULD NOT HAVE DECLARED INCOME IN THE RETURN FILED U/S.153A OF THE ACT AND AGREED TO THE ADDITION MADE IN THE ASSESSMENT PROCEEDINGS U/S.153A OF THE ACT. THE ASSESSEE HAD PLEADED BEFORE THE CIT(A) THAT HE WAS ENTITLED TO IMMUNITY UNDER EXPLANATION 5 TO SEC .271(1)( C) OF THE ACT. THE CIT(A) HOWEVER HELD THAT THE ASSESSEE HAD NOT MADE ANY STATEMENT U/S.132(4) OF THE ACT AND IT WAS ONLY HIS BROTHER MR. L.K.AGARWAL WHO MADE STATEMENT U/S.132(4) OF 5 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 THE ACT WHEN THE SEARCH WAS CONDUCTED. HE HELD THA T STATEMENT GIVEN BY MR.L.K.AGARWAL CANNOT BE CONSTRUED AS STATEMENT GIV EN BY THE ASSESSEE SO AS TO EXTENT THE BENEFIT OF IMMUNITY UNDER EXPLANATION 5 TO SEC.271(1)( C) OF THE ACT. WITH REGARD TO THE OTHER CONDITIONS FOR GRANT OF IMMUNIT Y THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE SATISFIED THE OTHER CONDITIONS FOR GRA NT OF IMMUNITY. THE CIT(A) THEREFORE CONFIRMED THE ORDERS OF THE AO IMPOSING P ENALTY ON THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. BEFORE THE TRIBUNAL THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE STAND TAKEN BEFORE THE AO AND CIT(A). HE FURTHER SUBMITTED THAT THE AO HAS NOT RECORDED SATISFACTION IN THE ORDER OF ASSESSMENT THAT THE ASSESSEE IS LIABLE TO BE PROCEEDED AGAINST U/S.271( 1)( C) OF THE ACT EXCEPT RECORDING AS FOLLOWS IN THE ORDER OF ASSESSMENT VIZ., PENALTY PROCEEDING U/S.271(1)( C) INITATED. ACCORDING TO HIM THE ABOVE MANNER OF INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF ASSESSMENT IS NOT IN ACCORDANCE WITH LAW. IN THIS REGARD HE MADE REFERENCE TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MWP LTD. (2014) 41 TAXMANN.COM 496 (KARN.). IN THE AFORESAI D DECISION IT WAS HELD THAT MERE MENTION OF PENALTY PROCEEDINGS UNDER SECTION 271(1 )( C) INITIATED SEPARATELY IN ASSESSMENT ORDER, DOES NOT AMOUNT TO A DIRECTION UN DER SECTION 271(1)( (C) FOR LEVY OF PENALTY. THE LEARNED COUNSEL POINTED OUT THAT THE HONBLE KARNATAKA HIGH COURT IN THE AFORESAID DECISION HAS CONSIDERED THE EFFECT OF SEC.271(1B) OF THE ACT, IN THE LIGHT OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MS.MADHUSHREE GUPTA VS. UNION OF INDIA 317 ITR 107(DEL) WHEREIN IT WAS HELD IN THE RESULT, CONCLUSIONS ARE AS FOLLOWS : (I) SE C. 271(1B) IS NOT VIOLATIVE OF ART. 14 OF THE CONSTITUTION; (II) THE POSITION OF LAW BOTH PRE AND POST AMENDMENT IS SIMILAR, INASMUCH, THE AO WILL HAVE TO ARRIVE AT A PRIMA FAC IE SATISFACTION DURING THE COURSE OF PROCEEDINGS WITH REGARD TO THE ASSESSEE HAVING CONC EALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS, BEFORE HE INITIAT ES PENALTY PROCEEDINGS; (III) PRIMA FACIE SATISFACTION OF THE AO THAT THE CASE MAY DES ERVE THE IMPOSITION OF PENALTY SHOULD BE DISCERNIBLE FROM THE ORDER PASSED DURING THE COURSE OF THE PROCEEDINGS. 6 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 OBVIOUSLY, THE AO WOULD ARRIVE AT A DECISION, I.E., A FINAL CONCLUSION ONLY AFTER HEARING THE ASSESSEE; (IV) AT THE STAGE OF INITIATI ON OF PENALTY PROCEEDING THE ORDER PASSED BY THE AO NEED NOT REFLECT SATISFACTION VIS- A-VIS EACH AND EVERY ITEM OF ADDITION OR DISALLOWANCE IF OVERALL SENSE GATHERED FROM THE ORDER IS THAT A FURTHER PROGNOSIS IS CALLED FOR; (V) HOWEVER, THIS WOULD NO T DEBAR AN ASSESSEE FROM FURNISHING EVIDENCE TO REBUT THE PRIMA FACIE SATISFACTION OF THE AO; SINCE PENALTY PROCEEDING ARE NOT A CONTINUATION OF ASSESSMENT PROCEEDINGS; ( VI) DUE COMPLIANCE WOULD BE REQUIRED TO BE MADE IN RESPECT OF THE PROVISIONS OF SS. 274 AND 275; (VII) THE PROCEEDINGS FOR INITIATION OF PENALTY PROCEEDING CA NNOT BE SET ASIDE ONLY ON THE GROUND THAT THE ASSESSMENT ORDER STATES PENALTY PR OCEEDINGS ARE INITIATED SEPARATELY IF OTHERWISE, IT CONFORMS TO THE PARAMETERS SET OUT HEREINABOVE ARE MET. THE PRAYERS MADE IN THE WRIT PETITIONS ARE THUS REJECTED WITH T HE CAVEAT THAT PROVISIONS OF S. 271(1)(C) POST-AMENDMENT WILL BE READ IN THE MANNER INDICATED ABOVE. POINTING OUT THE ABOVE OBSERVATIONS IT WAS CONTENDE D THAT THE ORDER OF ASSESSMENT IN THE PRESENT CASE DOES NOT SPELL OUT ANY SATISFACTIO N AS IS CONTEMPLATED IN THE DECISIONS REFERRED TO ABOVE. THE AO ACCEPTED WHATEVER EVIDEN CE THE ASSESSEE PRODUCED AND ALSO THE OFFER OF THE ASSESSEE TO TAX.. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO DREW O UR ATTENTION TO THE SHOW CAUSE NOTICE ISSUED U/S.274 OF THE ACT BEFORE IMPOSING PE NALTY AND SUBMITTED THAT THE SAID NOTICE DOES NOT SPECIFY AS TO WHETHER THE ASSESSEE IS GUILTY OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME OR OF HAVING CON CEALED PARTICULARS OF SUCH INCOME. HE POINTED OUT THAT THE PRINTED SHOW CAUSE NOTICE D OES NOT STRIKE OUT THE IRRELEVANT PORTION VIZ., FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF SUCH INCOME. HE DREW OUR ATTENTION TO A DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GI NNING FACTORY (2013) 218 TAXMAN 423 (KAR.) WHEREIN IT WAS HELD THAT IF THE S HOW CAUSE NOTICE U/S.274 OF THE ACT DOES NOT SPECIFY AS TO THE EXACT CHARGE VIZ., W HETHER THE CHARGE IS THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF I NCOME OR CONCEALED PARTICULARS OF INCOME BY STRIKING OUT THE IRRELEVANT PORTION OF PRINTED SHOW CAUSE NOTICE, THAN THE IMPOSITION OF PENALTY ON THE BASIS OF SUCH INVA LID SHOW CAUSE NOTICE CANNOT BE SUSTAINED. 6.1. REFERENCE WAS ALSO MADE TO SEVERAL JUDICIAL PR ONOUNCEMENTS. IN PARTICULAR OUR ATTENTION WAS DRAWN TO A DECISION OF THE ITAT KOLKA TA BENCH A BENCH IN THE CASE 7 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 OF SHRI SATYANANDA ACHARIYA BISWAS VS. DCIT ITA NO .5/KOL/2010 ORDER DATED 2.12.2015 FOR AY 2003-04 WHEREIN ON IDENTICAL FACTS PENALTY WAS DELETED AFTER CONSIDERING ALL THE JUDICIAL PRONOUNCEMENTS REFERRE D TO ABOVE. 7. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A) . HE PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPRME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT 358 ITR 593 (SC) WHEREIN IT WAS HELD THAT SATISFACTION IS NOT REQUIRED TO BE RECORDED IN ANY PARTICULAR MANNER OR REDUCE SUCH MANNER OF ARRI VING AT SATISFACTION IN WRITING. 8. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELI ANCE ON THE DECISION OF THE HONBLE AP HIGH COURT IN THE CASE OF CIT VS. LOTUS CONSTRUCTIONS (2015) 55 TAXMANN.COM 182 (AP) WHEREIN THE HONBLE AP HIGH CO URT EXPLAINED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA ( SUPRA) AND HELD THAT IN THE ABSENCE OF INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF ASSESSMENT, IMPOSITION OF PENALTY U/S.271(1)( C) OF THE ACT WAS UNSUSTAINABLE . 9. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE ORDERS OF ASSESSMENT FOR AY 2003-0 4, 04-05 & 06-07. IN THE OTHER TWO ASSESSMENT YEARS THE INCOME RETURNED IN THE RET URN OF INCOME HAS BEEN ACCEPTED AND THERE HAS BEEN NO EXPRESSION OF SATISFACTION RE GARDING THE ASSESSEE HAVING CONCEALED PARTICULARS OF INCOME. IN AY 2003-04, 06 -07 CERTAIN ADDITIONS HAVE BEEN MADE BASED ON SEIZED DOCUMENTS. THERE WAS NO ADVER SE OBSERVATION BY THE AO IN THE ORDER OF ASSESSMENT. THE ASSESSEE ALSO DID NOT OBJ ECT TO THE ADDITION MADE BY THE AO AND IT WAS MORE OR LESS AN AGREED ADDITION. IN THE CIRCUMSTANCES, THE QUESTION ARISES WHETHER SATISFACTION REQUIRED FOR INITIATING PROCEE DINGS FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE COURSE O F ASSESSMENT PROCEEDINGS HAS BEEN ARRIVED AT BY THE AO. WE HAVE ALSO PERUSED THE SHO W-CAUSE NOTICE ISSUED U/S.274 OF THE ACT FOR ALL THE AFORESAID AYS 2002-03 TO 2006-0 7. THE AO IN THE SAID SHOW CAUSE NOTICE HAS NOT STRUCK OFF THE IRRELEVANT PORTION AS TO WHETHER THE CHARGE AGAINST THE ASSESSEE IS CONCEALING PARTICULARS OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD, THIS TRIBUNAL IN THE C ASE OF SHRI SATYANANDA ACHARIYA 8 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 BISWAS (SUPRA) HAS TAKEN THE FOLLOWING VIEW ON BOTH THE QUESTION WITH REGARD TO EXISTENCE OF SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS AND THE EFFECT OF NOT STRIKING OFF THE IRRELEVANT PORTION IN THE SHOW CAU SE NOTICE U/S.274 OF THE ACT AS FOLLOWS: 7. ON THE ABOVE ISSUE THE FIRST ASPECT WHICH WE N OTICE IS THAT IN THE ORDER OF ASSESSMENT, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER, NOWHERE SPELLS OUT OR INDICATES THAT THE AO WAS OF THE VIEW THAT THE A SSESSEE WAS GUILTY OF EITHER CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. THE OFFER TO TAX OF INCOME BY THE ASSESSEE HAS JUST BEE N ACCEPTED. IT IS NO DOUBT TRUE THAT IT IS NOT THE REQUIREMENT OF THE LAW THAT THE SATISFAC TION HAS TO BE RECORDED IN A PARTICULAR MANNER, ESPECIALLY AFTER THE INTRODUCTION OF THE PR OVISIONS OF SEC.271(1B) OF THE ACT WITH RETROSPECTIVE EFFECT FROM 1.4.1989. NEVERTHEL ESS, AS LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF MS.MADHUSHREE GUPT A (SUPRA), THE POSITION OF LAW BOTH PRE AND POST SEC.271(1B) OF THE ACT IS SIMILAR, INA SMUCH, THE AO WILL HAVE TO ARRIVE AT A PRIMA FACIE SATISFACTION DURING THE COURSE OF PROCE EDINGS WITH REGARD TO THE ASSESSEE HAVING CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS, BEFORE HE INITIATES PENALTY PROCEEDINGS. PRIMA FACIE SATIS FACTION OF THE AO THAT THE CASE MAY DESERVE THE IMPOSITION OF PENALTY SHOULD BE DISCERN IBLE FROM THE ORDER PASSED DURING THE COURSE OF THE PROCEEDINGS. AT THE STAGE OF INITIATI ON OF PENALTY PROCEEDING THE ORDER PASSED BY THE AO NEED NOT REFLECT SATISFACTION VIS- A-VIS EACH AND EVERY ITEM OF ADDITION OR DISALLOWANCE IF OVERALL SENSE GATHERED FROM THE ORDER IS THAT A FURTHER PROGNOSIS IS CALLED FOR. THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF MAK DATA (P) LTD. (SUPRA) HAS TO BE UNDERSTOOD IN THE CONTEXT OF THE FACTS OF THE SAID CASE. THE RELEVANT PORTION OF THE JUDGMENT IN THE AFORESAID C ASE, READS THUS: 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION F ORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANS FER 8 DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEED INGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CO NCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSE E TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE R ETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR T HAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STA TUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT , TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS 9 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UND ER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCE EDINGS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR R EDUCE IT INTO WRITING. 8. THE REVENUE PLACES RELIANCE ONLY ON THE SENTENC E APPEARING IN PARA-10 OF THE JUDGMENT WITHOUT READING IT IN THE CONTEXT OF T HE OBSERVATIONS IN THE LAST PORTION OF PARA-9 OF THE SAID JUDGMENT. THEREFORE EVEN THE HONBLE SUPREME COURTS DECISION SUGGESTS THAT THE SATISFACTION NEE D NOT BE RECORDED IN A PARTICULAR MANNER BUT FROM A READING OF THE ASSESSM ENT ORDER AS A WHOLE SUCH SATISFACTION SHOULD BE CLEARLY DISCERNIBLE. IF THE AO ACCEPTS ALL THE CONTENTIONS OF THE ASSESSEE AND THE OFFER OF INCOME THAT HAS NO T BEEN DECLARED IN THE RETURN OF INCOME TO TAX WITHOUT INDICATING EITHER DIRECTLY OR INDIRECTLY THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME, IT CANNOT BE SAID THAT SATIS FACTION FOR INITIATION OF PENALTY PROCEEDINGS IS DISCERNIBLE FROM THE ORDER O F ASSESSMENT. IF THE ASSESSEE IN GOOD FAITH OFFERS INCOME TO TAX VOLUNTA RILY PRIOR TO ANY POSITIVE DETECTION BY THE AO, SUCH VOLUNTARY OFFER CANNOT BE TAKEN ADVANTAGE OF BY THE AO TO INITIATE PENALTY PROCEEDINGS AGAINST THE ASSE SSSEE WITHOUT SPECIFYING THE REASONS WHY PENALTY PROCEEDINGS ARE INITIATED U/S.2 71(1) ( C) OF THE ACT. IN THE PRESENT CASE, WE HAVE READ THE ORDER OF ASSESSMENT AS A WHOLE AND ARE SATISFIED THAT SATISFACTION FOR INITIATION OF PENALTY PROCEED INGS IS NOT DISCERNIBLE FROM THE ORDER OF ASSESSMENT. WE THEREFORE CONCUR WITH THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSSEE THAT INITIATION OF PENALT Y PROCEEDINGS WAS NOT PROPER IN THE PRESENT CASE AND ON THAT GROUND THE IMPOSITI ON OF PENALTY U/S.271(1)( C) OF THE ACT IS UNSUSTAINABLE. 9. THE NEXT ARGUMENT THAT THE SHOW CAUSE NOTICE U /S.274 OF THE ACT WHICH IS IN A PRINTED FORM DOES NOT STRIKE OUT AS TO WHETHER TH E PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURATE PARTICULAR S OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIN D THAT IN THE SHOW CAUSE NOTICE U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THEREFORE NOT SPELT OUT AS TO WHETHER THE PENALTY P ROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF IN COME OR CONCEALING PARTICULARS OF SUCH INCOME. 9.1. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. M.ANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STAT E AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PAR TICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE H ONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINTED FORM WHERE A LL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY THE REQUIRE MENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEEDINGS ON ON E LIMB AND FIND THE ASSESSEE 10 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMI TTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUAS HED. 9.2. 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 PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FIN DING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTION ED 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 N OT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE O F RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS A RE 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 GROUN DS ON WHICH THEY INTEND IMPOSING PENALTY ON HIM AS THE SE CTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEE T THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AS SUC H HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTME NT 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 INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED , NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAG UE. 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 11 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE M AY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES T HE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ON E OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT B E 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 PEN ALTY 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 G ROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTI ATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOU LD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO A NSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSI NG PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSES SEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATIO N OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FIN AL 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 INITIATI ON OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUN D ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PE NALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUS T BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING TH E PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOV ERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNO T VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, W AS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED I N THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOM E UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PART ICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WH ILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT W HETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CA SE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HEL D THAT 12 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS 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 VIR GO MARKETING REPORTED IN 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 NO T SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN TH E NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES W ILL 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 AUTHORIT Y OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FRO M THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALME NT 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 TAX AND INTER EST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INI TIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM TH E ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONC LUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIA BILITY CAME TO BE 13 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED 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 PRO VE THAT THE EXPLANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL 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 SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE 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 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 IMPO SED 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 PENALTY THOUGH EM ANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SE PARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCOR RECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PR OCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSU ANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) 9.3. IT IS CLEAR FROM THE AFORESAID DECISION THAT ON THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS D EFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO B E IMPOSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HO LD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE T O BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. 14 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07 10. THE AFORESAID RULING WILL SQUARELY APPLY TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE ALSO SATISFACTION FOR INITIATION OF PE NALTY PROCEEDINGS U/S.271(1)( C) OF THE ACT IS NOT DISCERNIBLE FROM THE ORDER OF ASSESSMENT . THE SHOW CAUSE NOTICE U/S.274 OF THE ACT IS ALSO DEFECTIVE. FOLLOWING THE DECISION REFERRED TO ABOVE, WE HOLD THAT THE PENALTY IMPOSED ON THE ASSESSEE U/S.271(1)( C) OF T HE ACT CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELLED. 11. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO ADVAN CED ARGUMENTS ON THE AVAILABILITY OF IMMUNITY TO THE ASSESSEE UNDER EXPL ANATION 5 TO SEC.271(1) ( C) OF THE ACT. WE ARE NOT DEALING WITH THOSE CONTENTIONS AS THE PENALTY IS BEING DELETED ON THE BASIS OF THE OTHER ARGUMENTS REFERRED TO ABOVE. 12. IN THE RESULT THE APPEALS ARE ALLOWED. O RDER PRONOUNCED IN THE COURT ON 20.01.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20.01.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.UMA SHANKAR AGARWAL, DA-14, SALT LAKE CITY, KOLKA TA-700064. 2. D.C.I.T., CENTRAL CIRCLE-1, KOLKATA. 3. CIT(A)-CENTRAL-III, KOLKATA 4. CIT-CENTRAL-III, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, DEPUTY /ASST. REGISTRAR, ITAT, KOLKATA BENCHES 15 ITA NOS.1831 TO 1835/KOL/2009 UMA SHANKAR AGARWA L ,A.YS.2002-03 TO 2006-07