Vikas Baburao Takawane, Pune V. Assistant Commissioner of Income-tax,

ITA 1845/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7193 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 10-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: HARI KRISHAN
• Keywords: Document seized; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 1842 TO 1847 /P U N/20 1 4 / ASSESSMENT YEAR S : 2005 - 06 TO 20 1 0 - 1 1 SHRI VIKAS BABURAO TAKAWANE, SHRI VIKAS BABURAO TAKAWANE, RAJYOG BUNGALOW, PLOT NO.10, SECTOR NO.28, PRADHIKARAN, PUNE 411044 . / APPELLANT PAN: AA I PT7606D VS. THE ASST . COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2( 3 ), PUNE . / RESPONDENT / APPELLANT BY : S HRI HARI KRISHA N / RESPONDENT BY : S HRI ANIL CHAWARE / DATE OF HEARING : 30 . 0 1 .201 7 / DATE OF PRONOUNCEMENT: 02 . 0 2 .201 7 / ORDER / PER SUSHMA CHOWLA, J M : TH IS BUNCH OF APPEALS FILED BY THE SAME ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - CENTRAL , PUNE , DATED 11 . 0 7 .20 1 4 RELATING TO ASSESSMENT YEA R S 20 0 5 - 0 6 TO 20 1 0 - 11 AGAINST PENALTY LEVIED UNDER SECTION 271(1)( C ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 2 2 . ALL THE SE APPEALS RELATING TO THE SAME ASSESSEE ON IDENTICAL ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATE D ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUE IN ITA NO.1842/PUN/2014 TO ADJUDICATE THE ISSUES. 3. THE ASSESSEE IN ITA NO.1842/PUN/2014 RELATING TO ASSESSMENT YEAR 2005 - 06 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT SINCE THERE IS NO DIFFERENCE IN THE ASSESSED INCOME AND INCOME DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTIC E ISSUED BY THE LEARNED ASSESSING OFFICER U/S 153A OF THE I.T. ACT, 1961, THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER U/S 271(1)(C) OF THE I.T. ACT , 1961 WAS BAD IN LAW, PATENTLY ILLEGAL, WITHOUT JURISDICTION AND VOID AB INITIO. THE IMPUGNED PENA LTY LEVIED U/S. 271(1)(C) OF THE I.T. ACT, 1961 BY THE LEARNED ASSESSING OFFICER AND AS CONFIRMED BY THE LEARNED CIT(A) BEING BAD IN LAW THE SAME MAY PLEASE BE DELETED. 4. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS OF APPEAL WHICH READ AS UNDER: - AS UNDER: - 1. THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING THE PENALTY U/S 271(1)(C) OF THE I.T. ACT IS WITHOUT JURISDICTION, AB - INITIO - VOID, BAD - IN - LAW AND UNSUSTAINABLE, SINCE THE PENALTY PROCEEDINGS HAVE NOT BEEN INITIATED AS PER LAW; THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE I.T. ACT IS NOT AS PER LAW AND THE PENALTY LEVIED U/S 271(1)(C) OF THE I.T. ACT IS NOT AS PER LAW. 2. THE ACTION OF THE CIT(A) IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE I.T. ACT IS NOT SUSTAINABLE IN LAW AS THE CIT(A) HAS CONF IRMED THE PENALTY FOR THE WRONG CHARGE U/S 271(1)(C) OF THE I.T. ACT 3. THE ACTION OF THE CIT(A) IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE I.T. ACT IS NOT SUSTAINABLE IN LAW AS THE CIT(A) HAS UPHELD THE PENALTY U/S 271(1)(C) OF THE I.T. ACT , FOR THE CHARGE WHICH IS DIFFERENT FROM THE CHARGE FOR WHICH THE ASSESSING OFFICER HAS LEVIED THE PENALTY. 5 . THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 6. THE LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED VIDE ADDITIONAL GROUND S OF APPEAL IS BEING RAISED WHICH IS PURELY LEGAL AND DOES NOT REQUIRE INVESTIGATION INTO THE FACTS AND THE SAME ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 3 MERITS TO BE ADMITTED FOR ADJUDICATING THE ISSUE AGAINST LEVY OF PE NALTY UNDER SECTION 271(1)(C) OF THE ACT. 7 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE ASSESSEE HAD DECLARED ADDITIONAL INCOME PURSUANT TO THE SEARCH ON THE PREMISES OF ASSESSEE WHICH WAS ADDED AS ADDITIONAL INCOM E IN THE RETURN OF INCOME AND THEREAFTER, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED. THE FIRST OBJECTION RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS AS TO WHETHER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS ATTRA CTED. THE SECOND LIMB OF OBJECTION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT EVEN IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C ) OF THE ACT, THERE IS NO STRIKING OF EITHER OF THE LIMBS. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN SHRI RAVIRAJ VIKAS TAKAWANE VS. ACIT IN ITA NOS.1871 TO 1875/PN/2014, RELATING TO ASSESSMENT YEARS 2005 - 06, 2007 - 08 TO 2010 - 11 , ORDER DATED 28.12.2016. 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF ASSESSING OFFICER AND CIT(A). 9 . WE HAVE HEARD THE RIVAL CONTEN TIONS AND PERUSED THE RECORD. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE SIDDHESHWAR GROUP OF CASES ON 27.09.2010. THE PROCEEDINGS AGAINST THE ASSESSEE WERE INITIATED UNDER SECTION 153A OF THE ACT AND IN R ESPONSE, THE ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 4 ASSESSEE FILED RETURNS OF INCOME IN THE RESPECTIVE YEARS AND OFFERED ADDITIONAL INCOME. DURING THE COURSE OF SEARCH, THE ASSESSEE OFFERED ADDITIONAL INCOME IN RESPECT OF VARIOUS ASSESSMENT YEARS AT RS. 3 , 38 , 21 , 932 / - FOR ASSESSMENT YEARS 2005 - 0 6 TO 201 1 - 1 2 . THE BREAK - UP OF INCOME OFFERED BY THE ASSESSEE FROM YEAR TO YEAR IS AVAILABLE UNDER PARA 3 AT PAGE 2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER ACCEPTED THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE RETURNS OF INCOME AND WAS OF T HE VIEW THAT SINCE THE ADDITIONAL INCOME WAS OFFERED ONLY AS A RESULT OF SEARCH ACTION IN HIS CASE, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE SEPARATELY BEING INITIATED IN THE CASE FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTI CULARS OF INCOME. SIMILAR OBSERVATIONS HAVE BEEN MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEARS 2006 - 07 TO 2010 - 11 . THE CASE OF THE ASSESSEE BEFORE US IS THAT IN THE ABSENCE OF SATISFACTION BEING RECORDED AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE A CT IS SATISFIED, THEN SUCH SATISFACTION RECORDED BY THE ASSESSING OFFICER TO INITIATE PENALTY PROCEEDINGS BOTH FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AGAINST THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE , IS INCORRECT. IT IS FURTHER CONTENDED THAT WHERE THE ASSESSEE IS NOT AWARE OF EXACT CHARGE AGAINST HIM, THE AMBIGUITY IN THE NOTICE ISSUED, THEREAFTER WITHOUT STRIKING OFF OF INAPPLICABLE PORTION, IT PREJUDICES THE RIGHT OF REASONABLE OPPORTUNITY ALLOWED TO THE ASSESS EE TO MEET THE CASE OF REVENUE, IN THE ABSENCE OF EXACT CHARGE HE HAD TO FACE. IN THE FACTS OF THE PRESENT CASE, WHERE THE ADDITIONAL INCOME WAS OFFERED PURSUANT TO SEARCH, IT WAS CLEAR - CUT CASE OF CONCEALMENT OF INCOME AND THE ASSESSING OFFICER SHOULD HA VE RECORDED SATISFACTION ACCORDINGLY AND ISSUED NOTICE. THE ASSESSING OFFICER HAD LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN APPEAL. ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 5 10 WE FIND THAT SIMILAR ISSUE OF RECORDING OF SATISFACTION BY THE ASSESSING OFFICER BEFORE ISSUE OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT AROSE BEFORE THE TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA), WHEREIN IT WAS HELD AS UNDER: - 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D 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 ACT, IS SATISFIED 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 PERSO N 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 PARTIC ULARS OF SUCH INCOME IS OR. SO THE PENALTY LEVIED BY THE CONCERNED OFFICER IS ON SATISFACTION OF ANY OF THE LIMBS AND NOT THE SATISFACTION OF BOTH THE LIMBS. WHERE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME IN PARTICULAR CIRCUMSTANCES, THEN T HE ASSESSING OFFICER MAY RECORD INCOME IN PARTICULAR CIRCUMSTANCES, THEN T HE ASSESSING OFFICER MAY RECORD SATISFACTION TO THAT EFFECT AND INITIATE PENALTY PROCEEDINGS AND THEREAFTER ON FIXATION OF CHARGE, LEVY THE PENALTY FOR SUCH ACT OF 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 OF FICER, WHICH ADMITTEDLY, HAS TO BE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SO, WHERE THE ASSESSMENT PROCEEDINGS ARE PENDING, THEN THE ASSESSING OFFICER HAS TO APPLY HIS MIND AND ON BEING SATISFIED, HE HAS TO GIVE A FINDING THAT THE ASSESSEE BEFORE HI M HAS EITHER CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE ISSUE BEFORE HIM. THEREAFTER, THE NOTICE SHOULD BE ISSUED TO SUCH PERSON BY THE CONCERNED OFFICER, WHEREIN IT SHOULD BE CLEAR THAT THE ASSESSE E HAS TO JUSTIFY ITS CASE EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THERE MAY BE CASES WHERE THERE IS ISSUE OF BOTH 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 CHARGE 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 WHETHE R 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 T HE SUBSEQUENT ORDER PASSED LEVYING PENALTY BE HELD TO BE VALID?. THE HONBLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD DEALT UPON THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT FOR THE PURPOSE OF LEVYING PE NALTY FOR CONCEALMENT AND OBSERVED AS UNDER: - ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 6 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 SAI D GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF TH E EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION - 1 OR IN EXPLANATION - 1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, I T IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO C ONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LI ABILITY. 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 VAGUE. O N THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CA SES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO 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 OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR I NITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE 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 AS SESSEE 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 O NE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS 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 ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 7 PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOM E 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 CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATION S. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING P. LTD. REPORTED IN [2008] 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND . 15. THE HONBLE KARNATAKA HIGH COURT HAS LAID DOWN THE PROPOSITION THAT THE ASSESSING OF FICER 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 HAS 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 I NACCURATE PARTICULARS OF INCOME. THE RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (2007) 292 ITR 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 WAS 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 INCOME, THE STANDARD PROFORMA WITHOUT STRIKING OF RELEVANT CLAUSES, 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 ME ADOWS (SUPRA) HAS DISMISSED THE APPEAL OF REVENUE, WHERE THE TRIBUNAL HAD ALLOWED THE APPEAL OF ASSESSEE HOLDING THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT TO BE BAD IN LAW AS IT DOES NOT SATISFY WHICH LIM B OF SECTION 271(1)(C) OF THE ACT UNDER WHICH IT HAS BEEN INITIATED THE HONBLE HIGH COURT HAD RELIED ON DECISION OF DIVISION BENCH OF THE COURT RENDERED IN CIT & 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 LIMBS, 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 CONCEAL MENT OF PARTICULARS OF INCOME WITHOUT STRIKING INAPPROPRIATE WORDS OR ANY PARTS OF NOTICE AND PROCEEDED TO LEVY PENALTY FOR CONCEALMENT, THEN FOLLOWING THE RATIO ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 8 LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT, THE TRIBUNAL HELD THAT NOTICE ISSUED FOR INITIA TING PENALTY PROCEEDINGS WERE INVALID AND CONSEQUENTLY PENALTY 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 PROVISIONS 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 IN COME, ASSESSMENT, NOTICE OR THE PROCEEDINGS. THE TRIBUNAL FURTHER HELD THAT SHOW CAUSE NOTICE AND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE WERE PART OF PROCESS OF NATURAL JUSTICE AND THE DEFECT IN SUCH NOTICE COULD NOT BE OVERLOOKED. SIMILAR PROPOS ITION 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 HON BLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA). IN THE FACTS OF THE CASE BEFORE THE HONBLE BOMBAY HIGH COURT, THE HONBLE HIGH COURT QUASHED THE PENALTY LEVIED FOR ASSESSMENT YEAR 1967 - 68 AS THE SAME WAS IMPOSED WITHOUT AFFORDING REASONABLE OPP ORTUNITY OF HEARING TO THE ASSESSEE. IN RESPECT OF OTHER TWO YEARS WHERE THERE WAS NON - STRIKING OF INACCURATE PORTION, THE HONBLE HIGH COURT HELD THAT THE SAME 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 B E SAID THAT EITHER THERE WAS NON - APPLICATION OF MIND BY THE ITO OR SO - CALLED AMBIGUITY WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF ASSESSEE OF REASONABLE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIGH COURT REASONABLE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIGH COURT DELIBERATED UPON THE PROVISIO NS 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 DEMONSTRATE NON - APPLICATION OF MIND BY THE AUTHORITY AND / OR ULTIMATE PREJUDICE TO THE RIGHT OF OPPORTUNITY OF HEARING CONTEMPLATED UNDER SECTION 274 OF THE ACT. THE SHOW CA USE NOTICE FOR ASSESSMENT YEAR 1967 - 68 WAS ISSUED EVEN BEFORE THE ASSESSMENT ORDER WAS MADE AND WHERE THE ASSESSEE HAD NO KNOWLEDGE OF EXACT CHARGE OF DEPARTMENT AGAINST HIM AS IN THE NOTICE NOT ONLY THERE WAS USE OF WORD OR BETWEEN THE GROUP OF CASES BU T THERE WAS USE OF WORD DELIBERATELY ALSO. THE HONBLE HIGH COURT HELD THAT NOTICE CLEARLY DEMONSTRATED NON - APPLICATION OF MIND ON THE PART OF ASSESSING OFFICER. THE VAGUENESS AND AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE RIGHT OF REASONABLE OPPO RTUNITY TO THE ASSESSEE SINCE HE DID NOT KNOW OF EXACT CHARGES HE HAD TO FACE. IN THIS BACKGROUND, QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967 - 68 WAS HELD TO BE JUSTIFIED. APPLYING THE SAID PRINCIPLE LAID DOWN BY THE JURISDICTIONAL HIGH COUR T, APPLICATION OF MIND BEFORE ISSUING THE NOTICE UNDER SECTION 274 OF THE ACT HAS TO BE CONSIDERED. THE HONBLE HIGH COURT CLEARLY HELD THAT WHERE THERE IS 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 SE IZURE OPERATIONS WERE CARRIED OUT ON CHHORIYA GROUP OF CONCERNS ON ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 9 22.08.2008 AND DECLARATION 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, DIFF ERENT ENTITIES FILED THE RETURN OF INCOME FOR THE RESPECTIVE YEARS AND CUMULATIVELY FOR RS.13.99 CRORES AS ADDITIONAL INCOME. THE INCOME WAS DECLARED ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS, WHICH WAS DETECTED FROM THE DOCUMENTS SEIZED DURING THE COURSE O F SEARCH. ADMITTEDLY, EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED IN SUCH CASES. HOWEVER, THE CASE OF ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT PROCEEDINGS HAD TO BE SATISFIED THAT THE ASSESSEE HAD E ITHER 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 SU CH NOTICE, SATISFACTION HAS TO COME OUT FROM THE PROCEEDINGS GOING ON BEFORE THE ASSESSING OFFICER. THE PERUSAL OF ASSESSMENT ORDER PASSED IN THE PRESENT CASE 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 INCOME. 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 LIMBS 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 AC T, IRRELEVANT PART HAS NOT BEEN STRUCK OFF. WHILE COMPLETING PENALTY PROCEEDINGS ALSO, THE ASSESSING OFFICER MAKES REFERENCE TO BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN THE FINAL, LEVIES PENALTY F OR CONCEALMENT OF INCOME. 23. HOWEVER, THE QUESTION WHICH IS RAISED BEFORE US BY WAY OF ADDITIONAL GROUND OF APPEAL IS ROOT OF START OF THE PROCEEDINGS I.E. RECORDING OF 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 & ANR. 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 A WARE 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 O F 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 ASSE SSING OFFICER SHOULD HAVE RECORDED THE SATISFACTION ACCORDINGLY AND ISSUED THE NOTICE ACCORDINGLY. 24. WE FIND NO MERIT ON THE PARTIAL RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA). THE HONBLE HIGH COURT HAS CLEARLY LAID DOWN THE PROPOSITION THAT THE ASSESSING OFFICER HAS TO MAKE THE ASSESSEE FULLY 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 SECTION 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 PRO CEEDINGS ON BOTH THE COUNTS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT HAD ALSO UPHELD THE QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967 - 68 TO BE JUSTIFIED ON ACCOUNT OF VAGUENES S 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 ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 10 DEPARTMENT AGAINST HIM, THEN TECHNICAL NON - STRIKING OF CERTAIN TERMS IN THE NOTICE WOULD NOT INVALIDATE THE PROCEE DINGS. WHERE THERE IS DEFAULT IN THE FIRST STAGE OF MAKING THE ASSESSEE AWARE OF EXACT CHARGE OF THE DEPARTMENT, THEN INITIATION OF PENALTY PROCEEDINGS ARE VITIATED AND THE SAME ARE TO BE QUASHED. THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT ON SUCH VAGUENESS AND AMBIGUITY MAKES SUCH NOTICE INVALID AND PROCEEDINGS THEREAFTER ARE TO BE QUASHED. 25. THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (SUPRA) HAD HELD AS UNDER: - 23. SECTION 271(1)(C) REMAINS A PENAL STATUTE. THE RULE OF STRICT CONSTRUC TION SHALL APPLY THERETO. THE INGREDIENTS FOR IMPOSING PENALTY REMAIN THE SAME. THE PURPOSE OF THE LEGISLATURE THAT IT IS MEANT TO BE A DETERRENT TO TAX EVASION IS EVIDENCED BY THE INCREASE IN THE QUANTUM OF PENALTY, FROM 20 PER CENT UNDER THE 1922 ACT T O 300 PER CENT IN 1985. 24. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBER ATE ACT OF SUPPRESSION VERY OR SUGGESTION FALSI. 26. WHERE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT CONNOTATIONS, THEN AS PER PROVISIONS OF THE ACT, THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OF FICER BEFORE INITIATING PENALTY PROCEEDINGS AS TO UNDER WHICH LIMB THE CASE OF ASSESSEE FALLS. IN THE PRESENT SET OF FACTS, THE SATISFACTION AS RECORDED BY THE 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 OF REVENUE AGAINST THE ASSESSEE THAT IT IS LIABLE FOR LEVY OF PENALTY FOR CONCEALMENT UNDER 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 O FFICER 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 INVALID. 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 COPIES OF SUCH DOCUMENTS AND COMES TO CONCLUSION THAT LOANS WERE RECEIVED FROM RATANLAL BAFNA, BUT STILL UPHOLDS THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. O NCE THE FINDING OF CIT(A) IS THAT THESE ARE LOANS RECEIVED FROM BAFNA AND ARE NOT ON - MONEY RECEIVED ON SALE OF PLOTS, THEN IN CASES WHERE PENALTY PROCEEDINGS HAVE 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 PENALTY FOR CONCEALMENT VARIES. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THERE IS NO MERIT AT ALL IN LEVYING THE PENALTY @ 150%. ACCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE EVEN ON MERITS. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND ADDITIONAL GROUND OF APPEAL RAISE D BY THE ASSESSEE ARE ALLOWED. ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 11 1 1 . FURTHER, IN BUNCH OF CASES I.E. IN NANDKISHOR TULSIDAS KATORE VS. ACIT IN ITA NOS.2174 TO 2180/PN/2014, RELATING TO ASSESSMENT YEARS 2002 - 03 TO 2008 - 09, ORDER DATED 14.12.2016, REFERENCE WAS MADE TO THE JUDGMENT OF HONBLE HIGH COURT OF KARNATAKA IN CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 241 (KAR ), WHEREIN THE ISSUE NO.1 RAISED BEFORE THE HONBLE HIGH COURT AND ITS REPLY WAS AS UNDER: - (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271(1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSIN G OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? 1 2 . THE HONBLE HIGH COURT HAD ALLOWED THE CLAIM OF ASSESSEE WHERE THE ASSESSING OFFICER HAD NOT EXPLICITLY MENTIONED THAT AS TO WHETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME, SUFFERS FROM INFIRMITY EVEN IF IT IS ESTABLISHED THAT THE ASSESSEE HAD CONCEALED THE INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APEX COURT HAS DISMISSED T HE SLP FILED BY THE DEPARTMENT. 1 3 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE IN THE CASE OF NANDKISHOR TULSIDAS KATORE VS. ACIT (SUPRA) HA D STRE SSED THAT IN VIEW OF THE PROVISIONS OF SECTION 271(1)(1B) OF THE ACT, WHERE THE ORDER CONTAINS D IRECTIONS FOR INITIATION OF PENALTY PROCEEDINGS, SUCH AN ORDER OF ASSESSMENT OR RE - ASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS UNDER CLAUSE (C). THE TRIBUNAL HELD THAT ADMITTEDLY, THE S ATISFACTION HAS TO BE RECORDED IN THE ORDER OF ASSESSMENT OR RE - ASSESSMENT BY THE ASSESSING OFFICER WHILE FINALIZING THE ASSESSMENT ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 12 ORDER. HOWEVER, THE ASSESSING OFFICER HAS TO AT INITIAL STAGE ITSELF COME TO A FINDING AS TO WHETHER THE ADDITIONS MADE IN THE HANDS OF ASSESSEE JUSTIFY THE LEVY OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 14. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE TRIBUNAL IN SHRI RA VIRAJ VIKAS TAKAWANE VS. ACIT (SUPRA). 15. WE FIND THAT THE ASSESSING OFFICER HAS RECORDED SATISFACTION FOR INITIATING PENALTY PROCEEDINGS ON ACCOUNT OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. UNDER THE PROVISIONS OF SEC TION 271(1)(C) OF THE ACT, PENALTY FOR CONCEALMENT IS LEVIABLE WHERE THE ASSESSEE HAS FULFILLED EITHER CONDITIONS I.E. CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS HAS TO BE SATISFIED AS TO UNDER WHICH LIMB, THE PENALTY IS LEVIABLE PROCEEDINGS HAS TO BE SATISFIED AS TO UNDER WHICH LIMB, THE PENALTY IS LEVIABLE AND CONSEQUENT THERETO, ISSUE NOTICE IN THIS REGARD. HOWEVER, IN THE FACTS OF THE PRESENT CASE AND AS POINTED OUT HEREINABOVE, THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION CORRECTL Y AND CONSEQUENTLY, WE HOLD THAT INITIATION OF PENALTY PROCEEDINGS AGAINST THE ASSESSEE ARE NOT VALID FOR NON - RECORDING OF SATISFACTION BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT PROCEEDINGS. FURTHER, THE ASSESSING OFFICER HAS FAILED TO STRIKE O FF EITHER OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT, WHICH ARE NOT SATISFIED BY THE ASSESSEE AND CONSEQUENTLY, NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT IS BAD IN LAW AND ORDER LEVYING PENALTY FOR CONCEALMENT THEREAFTER, IS INFRUCTUOUS . ACCORDINGLY, WE HOLD SO. EVEN IN PENALTY ORDER, THE ASSESSING OFFICER HAS LEVIED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALING THE INCOME. SUCH AN ORDER IS INVALID. THE STATUTE HAS PROVIDED DISTINCTION BETWEEN CONC EALMENT OF INCOME AND FURNISHING OF ITA NO S . 1842 TO 1847 /P U N/20 1 4 SHRI VIKAS BABURAO TAKAWANE 13 INACCURATE PARTICULARS OF INCOME, WHICH MAY BE THIN LINE OF DISTINCTION, BUT THE SAME HAS TO BE KEPT IN MIND WHILE RECORDING SATISFACTION BY THE ASSESSING OFFICER. FOLLOWING THE SAME PARITY OF REASONING AS LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR), CIT VS. SSAS EMERALD MEADOWS (SUPRA) AND THE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA), WE SET ASIDE THE ORDER PASSE D UNDER SECTION 271(1)(C) OF THE ACT LEVYING PENALTY FOR CONCEALMENT IN THE RESPECTIVE YEARS. THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED AND THE ORIGINAL GROUNDS OF APPEAL BECOME ACADEMIC . 1 6 . IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER P RONOUNCED ON THIS 2 ND DAY OF FEBR UARY , 201 6 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 2 ND FEBR UARY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RE SPONDENT; 3. ( ) / THE CIT (A) - CENTRAL , PUNE ; 4. / THE CIT , CENTRAL, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE CO PY // / ASSISTANT REGISTRAR, , / ITAT, PUNE