M/s Sun - Kwik Appliances Pvt Ltd.(Formerly Pushpanjali Appliances Pvt Ltd), Kolkata V. D.C.I.T CC - XVI,Kol., Kolkata

ITA 1867/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4434 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 30-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 18-12-2012
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Principle of natural justice; Initiation of penalty proceedings; Documents seized
• Section: 133A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.1867-1870/KOL/2012 ASSESSMENT YEARS:2003-04 TO 2006-07 M/S SUN-KWIK APPLIANCES PVT. LTD., (FORMERLY PUSHPANJALI APPLIANCES PVT. LTD.) 14, N.S. ROAD, 4 TH FLOOR, ROOM NO. 409A, KOLKATA-700 001 [ PAN NO.AADCA 6478 L ] / V/S . DCIT, CENTRAL CIRCLE-XVI, KOLKATA /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI RAVI TULSIYAN, FCA /BY RESPONDENT NONE /DATE OF HEARING 24-08-2016 /DATE OF PRONOUNCEMENT 09-09-2016 /O R D E R PER BENCH:- THESE FOUR APPEALS BY ONE ASSESSEE IS AGAINST THE C OMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, KOLKATA IN APPEAL NO. 45-48/CC- XVI/CIT(A)C-II/10-11 DATED 03.10.2012. ASSESSMENTS WERE FRAMED BY DCIT, CENTRAL CIRCLE-XVI, KOLKATA U/S 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 31.1 2.2009 FOR ASSESSMENT YEARS 2003-04 TO 2006-07 RESPECTIVELY. ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 2 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F REVENUE AND DR FILED THE ADJOURNMENT APPLICATION. THE BULK ADJOURN MENT IN 16 CASES IS NOT ACCEPTED. SO WE DECIDED TO HEAR THOSE CASES WHERE W E FIND THAT THE HEARING IS POSSIBLE WITHOUT APPEARANCE OF LD. DR ON THE PAR T OF REVENUE. HOWEVER, IN THE PRESENT CASES, WE FIND THAT THESE ARE OLD APPEA LS AND HAVE BEEN FIXED FOR HEARING AS MANY AS EIGHT TIMES (INCLUDING TODAYS H EARING). HENCE, WE REJECTED THE ADJOURNMENT APPLICATION AND PROCEEDED FOR HEARING LD. AR, SHRI RAVI TULSIYAN APPEARING ON BEHALF OF ASSESSEE. 3. THE ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL . THE LD. COUNSEL FOR ASSESSEE SUBMITS THAT GROUNDS ARE BEING REVISED FOR CORRECTING THE ERRORS WHICH HAD CREPT IN THE ORIGINAL GROUNDS OF APPEAL. THE REVISED GROUNDS OF APPEAL ARE HEREBY ADMITTED FOR THE SAKE OF CONVENIE NCE. SINCE COMMON GROUNDS ARE INVOLVED EXCEPT THE CHANGE IN THE FIGUR ES IN ALL THE APPEALS, THEREFORE, THEY WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. HENCE, WE TAKE THE LEAD CASE IN ITA NO.1867/KOL/2012 FOR A.Y. 2003-04 AND REPRODUCED THE GROUNDS AS UNDER:- THE ABOVE-MENTIONED APPEAL IS PENDING FOR DISPOSA L. 2. IT IS FOUND THAT THE GROUNDS OF APPEAL FILED BY THE ASSESSEE-APPELLANT ALONG WITH ITS APPEAL MEMO (FORM NO.36) DO NOT BRIN G OUT ALL THE ISSUES DISPUTED IN THIS APPEAL. IT IS THEREFORE PRAYED THA T THE APPELLANT MAY KINDLY BE PERMITTED TO SUBSTITUTE ITS ORIGINAL GROU NDS OF APPEAL WITH THE FOLLOWING REVISED GROUNDS WHICH MAY KINDLY BE ADMIT TED, HEARD AND DISPOSED OF WHILE DECIDING THIS APPEAL. REVISED GROUNDS 1. THAT, THE LD. AO ERRED IN IMPOSING A PENALTY OF RS.6,04,532 @ 150% OF THE TAX SOUGHT TO BE EVADED ON THE APPELLANT U/S 271(1)(C) AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAID PENALTY ORDER WITH A DIRECTION TO THE LD. AO TO RESTRICT THE PENALTY TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED. 2. THAT, THE LD. CIT(A) ERRED IN CONFIRMING THE PEN ALTY ORDER AS, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. AO FAILED TO INITIATE A VALID PENALTY PROCEEDING U/S. 271(1)(C) OF THE IT A CT AND CONSEQUENTLY ALL SUBSEQUENT PROCEEDINGS INCLUDING THE LEVY OF PE NALTY WERE INVALID. ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 3 3. THAT, THE LD. CIT(A) ERRED IN UPHOLDING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE IT ACT BY THE LD. AO ON THE GROUND THAT EXPLANATION-5A TO SEC.271(1)(C) WAS APPLICABLE IN THE CASE OF THE APPELLANT. 4.THAT, SINCE THERE WAS NO CONCEALMENT OF INCOME IN THE APPELLANTS RETURN FILED U/S. 153C OF THE IT ACT, NO PENALTY U/ S 271(1)(C) COULD BE LEVIED ON IT. 5. THAT, THE APPELLANT CRAVES LEAVE TO ALTER, AMEND , RESCIND AND SUBSTITUTE ANY OF THE ABOVE-MENTIONED GROUNDS AND A DD ANY FURTHER GROUNDS BEFORE OR AT THE TIME OF HEARING OF THE APP EAL. 4. SOLE ISSUE RAISED BY ASSESSEE IS AS REGARDS THAT LD. CIT(A) ERRED IN RESTRICTING THE PENALTY U/S 271(1)(C) OF THE ACT TO THE EXTENT OF 100%. THE FACTS AS BROUGHT ON RECORD ARE THAT ASSESSEE IN THE PRESE NT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN MANUFACTURING BUSINE SS OF PRESSURE COOKER AND TRADING OF HOME APPLIANCES AND CELL BRAND PENS REFILLS ETC. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED AT THE BUSIN ESS AS WELL AS RESIDENTIAL PREMISES OF PUSHPANJALI GROUP ON 12.09.2007 AND ON SUBSEQUENT DATES. THE VARIOUS GROUP COMPANIES WERE COVERED UNDER THE SEAR CH & SEIZURE OPERATION U/S. 132 OF THE ACT. THE ASSESSEE, IN THE INSTANT C ASE, WAS A PART OF THE SAID GROUP AND ITS FACTORY-CUM-BUSINESS PREMISES WAS ALS O COVERED UNDER SURVEY OPERATION U/S. 133A OF THE ACT. DURING THE COURSE O F SEARCH OPERATION, BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE IMPOUNDED AND S EIZED. THE SEIZED DOCUMENTS CONTAINED THE INCREMENTING MATERIAL PERTA INING TO THE ASSESSEE FOR AYS 2003-04 TO 2006-07. ACCORDINGLY, NOTICE U/S. 15 3C OF THE ACT WAS ISSUED UPON THE ASSESSEE. IN RESPONSE TO NOTICE ASSESSEE S UBMITTED ITS RETURN OF INCOME DISCLOSING ITS CONCEALED INCOME. THE ASSESSM ENT WAS FRAMED BY ASSESSING OFFICER AFTER CONSIDERING THE CONCEALED I NCOME AND AFTER MAKING CERTAIN ROUTINE ADDITIONS TO THE TOTAL INCOME OF AS SESSEE. THE AO IN HIS ASSESSMENT ORDER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT SEPARATELY AND FINALLY LEVIED THE PENALTY @ 150% OF THE TAX SOUGHT TO THE EVADED. ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 4 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO HAS REDUCED THE PENALTY FROM 150% TO 100%. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 6. BEFORE US, LD. AR SUBMITTED THAT NOTICE ISSUED U /S. 274 OF THE ACT IS DEFECTIVE AS IT DOES NOT SPEAK ABOUT THE CHARGE WHE THER THE PENALTY WAS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 7. WE HAVE HEARD LD. AR OF THE ASSESSEE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AFTER HEARING LD. AR WE FIND T HAT ASSESSEE IN THE INSTANT CASE DISCLOSED CERTAIN INCOME WHICH WERE NOT DISCLO SED IN THE RETURN FILED U/S139(1) OF THE ACT. THIS CONCEALED INCOME WAS DIS CLOSED IN ITS RETURN ON ACCOUNT OF SEARCH AND SEIZURE OPERATION AND SURVEY OPERATION U/S 132/133A OF THE ACT. THE AO HAS LEVIED THE PENALTY @ 150% OF TH E TAX SOUGHT TO BE EVADED WHICH WAS SUBSEQUENTLY REDUCED BY LD. CIT(A) IN APPELLATE STAGE TO 100% OF THE TAX SOUGHT TO BE EVADED. WE FIND THAT T HE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE FR OM EACH OTHER. THE AO FOR LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT H AS TO CLEARLY SPECIFY THE CHARGE WHETHER IT IS LEVIED FOR CONCEALMENT OF INCO ME OR FURNISHING INACCURATE PARTICULARS OF INCOME. FROM THE NOTICE ISSUED U/S. 274 OF THE ACT, WE FIND THAT THE SPECIFIC CHARGE FOR WHICH PENALTY HAS BEEN LEVI ED BY AO HAS NOT BEEN SPECIFIED UNDER THE NOTICE ISSUED U/S. 274 OF THE A CT. IT IS A MANDATORY REQUIREMENT ON THE PART OF ASSESSING OFFICER TO LEV Y THE SPECIFIC CHARGE BEFORE IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT. IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE FIND THAT VARIOUS COURTS HAVE DEC IDED THE ISSUE IN FAVOR OF ASSESSEE. IN THIS CONNECTION THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR V. MANJUNATHA COTTON AND GINNING FACTORY , 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPE CIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEAL MENT OF PARTICULARS OF ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 5 INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINTED FO RM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY TH E REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEED INGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT W AS SUBMITTED 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 QUASHED. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN T HE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER OF IMPOSING PENALTY U/S.2 71(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 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 ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 6 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 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 ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 7 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 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 ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 8 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 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 ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 9 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. (EMPHASIS SUPPLIED) IT IS CLEAR FROM THE AFORESAID DECISION AND ON THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECT IVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IM POSED. 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. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF P ENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDER S IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL FILED BY THE ASSESSEE . NOW COMING TO OTHER APPEAL OF ASSESSEE IN ITA NOS.,1868/1869/1870/KOL/2012 THE LD. AR OF THE ASSESEEE AGREED THAT WHATEVER VIE W WILL BE TAKEN IN THE ABOVE CASE WILL ALSO BE APPLIED IN ITA NOS.1868-187 0/KOL/2012 FOR A.YRS.2004-05, 2005-06 AND 2006-07. ACCORDINGLY THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09 /09/2016 SD/- SD/- (K.NARASIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ' - 09 /09/2016 / KOLKATA ITA NO.1867-70/KOL/2012 A.Y. 0 3-04 TO 06-07 M/S SUN-KWIK APPLIANCES PVT. LTD. VS. DCIT CC- XVI, KOL. PAGE 10 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S SUN-KWIK APPLINANCES PVT. LTD. 14, N. S.ROAD, 4 TH FLOOR ROOM NO. 409A (FO RMERLY PUSHPANJALI APPLIANCES PVT. LTD.)KOL01 2. /REVENUE-DCIT, CENTRAL CIRCLE-XVI, KOLKATA 3. % ' / CONCERNED CIT 4. ' - / CIT (A) 5. ( ++% , % / DR, ITAT, KOLKATA 6. - / GUARD FILE. BY ORDER/ , / %,