BGM Mining &Infra Limited, Hyderabad V. Asst. Commissioner of Income Tax, Central Circle, Hyderabad

ITA 1914/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7921 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 23-04-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 17-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Search and seizure; Opportunity of being heard
• Section: 271(1)(c); 143(3); 133A; 27; 132; 2

Judgement Text

ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1911 AND 1912/HYD/2018 (ASSESSMENT YEARS: 2009-10 & 2010-11) B. GIRIJAPATI REDDY & CO. NELLORE PAN:AABFG9906A VS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, TIRUPATHI (APPELLANT) (RESPONDENT) ITA NOS.1913 & 1914/HYD/2018 (A.YS 2012-13 & 2013-14) B. G.R. MINING & INFRA LTD, HYDERABAD PAN:AAECB5497R VS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, TIRUPATHI (APPELLANT) (RESPONDENT) ITA NO.2012/HYD/2018 (A.Y. 2014-15) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, TIRUPATHI VS B. G.R. MINING & INFRA LTD, HYDERABAD PAN:AAECB5497R (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SHRI Y.V.S.T. SAI, CIT(DR) O R D E R PER SMT. P. MADHAVI DEVI, J.M. APPEALS IN ITA NOS.1911 TO 1914/HYD/2018 ARE FILED BY THE ASSESSEE FOR THE A.YS 2009-10, 2010-11, 2012 -13 AND 2013-14 AGAINST THE ORDER OF THE CIT (A) CONFIRMING THE PENALTY DATE OF HEARING: 23.04.2019 DATE OF PRONOUNCEMENT : 19.07.2019 ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 2 OF 12 U/S 271(1)(C) OF THE I.T. ACT WHEREAS APPEAL IN ITA NO.2012/HYD/2018 IS THE REVENUES APPEAL AGAINST TH E ORDER OF THE CIT (A) DELETING THE PENALTY LEVIED BY THE AO U /S 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT M/S. G. GIRIJAP ATHI REDDY & CO. WAS A PARTNERSHIP FIRM ESTABLISHED IN T HE YEAR 1995. SUBSEQUENTLY, THE FIRM WAS CONVERTED INTO PRIVATE L IMITED COMPANY ON 18.04.2011 IN THE NAME OF M/S. BGR MININ G & INFRA PVT. LTD AND IS INVOLVED MAINLY IN THE BUSINESS OF MINING, SPECIALIZING IN OVER BURDEN REMOVAL AND OPEN CAST M INING & ERECTION WORKS. DURING THE A.YS 2009-10 & 2010-11, THE ASSESSEE WAS ASSESSED IN THE NAME OF M/S. GIRIJAPATI REDDY & CO. AND THEREAFTER IT IS IN THE NAME OF M/S. BGR MINING & I NFRA PVT. LTD. A SURVEY U/S 133A OF THE I.T. ACT WAS CONDUCTED IN TH E ASSESSEES BUSINESS PREMISES ON 14.10.2014 BASED ON THE INFORM ATION THAT THE ASSESSEE FIRM IS INVOLVED IN SIPHONING OFF HUGE FUNDS THROUGH THE PARTNERS ACCOUNTS. DURING THE COURSE OF SURVEY , THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WAS EXAMINED IN DETAILS AND THE AO NOTICED THAT THE CLAIM OF EXPENDITURE WAS MA INLY LABOUR PAYMENTS, BUT NO DETAILS WERE AVAILABLE IN RESPECT OF SITE AND PROJECTS FOR WHICH SUCH EXPENSES WERE CLAIMED. HE A LSO NOTICED THAT THE LABOUR EXPENSES WERE CLAIMED BY THE FIRM A S WELL AS INDIVIDUAL PARTNERS FOR AND ON BEHALF OF THE FIRM A ND AT THE BUSINESS PREMISES OF THE ASSESSEE, SUBSTANTIAL VOLU ME OF VOUCHERS WERE FOUND WHICH WERE CONSIDERED AS INCRIM INATING IN NATURE. BASED ON THE ABOVE FACTS FOUND DURING THE C OURSE OF SURVEY, A WARRANT OF AUTHORIZATION U/S 132 WAS OBTA INED FROM DIRECTOR OF INCOME TAX (INV.), HYDERABAD AND THE SU RVEY WAS ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 3 OF 12 CONVERTED INTO A SEARCH AND SEIZURE PROCEEDINGS U/S 132 OF THE ACT. 3. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS A ND INCRIMINATING EVIDENCE BELONGING TO THE ASSESSEE WE RE FOUND AND SEIZED. THEREAFTER, AFTER RECORDING THE REASONS AS REQUIRED U/S 153C OF THE ACT A NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE. THE ASSESSEE FILED ITS RETURN OF INCOME U/S 153C ON 31.08.2016 ADMITTING A TOTAL INCOME OF RS.20,57,36,340/- AGAIN ST THE TOTAL INCOME ADMITTED IN THE ORIGINAL RETURN OF INCOME FI LED U/S 139(1) ON 1.10.2009 AT RS.18,47,36,340/-. DURING THE ASSES SMENT PROCEEDINGS U/S 143(3), R.W.S. 153C OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE WAS BOOKING BOGUS EXPENDITURE MAI NLY ON THE LAST DAY OF THE FINANCIAL YEAR AND THE SAME IS SHOW N AS OUTSTANDING LABOUR MAISTRY CHARGES AND SUCH PAYMENT S WERE CARRIED FORWARD YEAR AFTER YEAR AS AGAINST THE PRIN CIPLE OF PAYING ON WEEKLY BASIS OR A MONTHLY BASIS TO THE LABOUR AS WAS THE CASE IN THIS LINE OF BUSINESS. THUS, ACCORDING TO HIM, T HE ASSESSEE FIRM IS INFLATING EXPENDITURE WHICH RESULTED IN SUPPRESS ION OF PROFIT OF THE FIRM AND LATER BY THE COMPANY. HE ALSO OBSERVED THAT DURING THE SEARCH PROCEEDINGS AT THE BUSINESS PREMISES OF M/S. BGR MINING & INFRA PVT. LTD, HYDERABAD, A SWORN STATEME NT OF SRI DUGUNAPALLI VENKAT RAMI REDDY, GENERAL MANAGER (FIN ANCE) WAS RECORDED WHEREIN HE HAD STATED THAT THE EXPENSES RE CORDED UNDER OUTSTANDING LABOUR MAISTRIES REPRESENTED SUNDRY CREDITORS ON ACCOUNT OF WORK SITE EXPENSES WHICH WAS REDUCED GRA DUALLY IN THE SUBSEQUENT YEARS, BY SHOWING CASH PAYMENTS AGAINST THE OUTSTANDING BALANCE THROUGH OUT THE YEAR. HE HAD ST ATED THAT HE WAS NOT AWARE OF THE PARTIES TO WHOM THESE PAYMENTS ARE MADE. WHEN SRI I SUDHAKAR REDDY, MANAGING DIRECTOR OF THE ASSESSEE COMPANY WAS CONFRONTED WITH THESE DETAILS, HE REPLI ED THAT THE ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 4 OF 12 SAID WORK SITE IS MANAGED BY ONE SITE INCHARGE AND AFTER COMPLETION OF THE WORK, THE TEAM IS SHIFTED TO ANOT HER SITE. IT WAS SUBMITTED THAT IN THIS LINE OF BUSINESS, HUGE LABOU R IS EMPLOYED FOR EXECUTION OF CONTRACT WORK AND SUCH LABOUR IS F ROM DIFFERENT PARTS OF THE COUNTRY AND THEREFORE, IT IS VERY DIFF ICULT TO MAINTAIN AND ENSURE CORRECTNESS OF THE ADDRESS OF THE LABOUR . IT WAS ALSO SUBMITTED THAT THE LABOUR MOSTLY RETAIN THEIR SALAR Y WITH THE COMPANY AND TAKE THEIR AMOUNTS WHENEVER THEY GO TO THEIR NATIVE PLACES IN BATCHES. WHEN THE ASSESSEE WAS ASKED TO P RODUCE THE BILLS AND VOUCHERS FOR THE OUTSTANDING LABOUR MAIST RIS, THE DIRECTOR SUBMITTED THAT THE ASSESSEE CANNOT BE IN A POSITION TO MAINTAIN ALL THE VOUCHERS RELATING TO LABOUR MAISTR IS DUE TO THE VOLUME OF THE TURNOVER. HOWEVER, HE AGREED TO ADMIT AN AMOUNT OF RS.26.00 CRORES FOR THE FINANCIAL YEARS 2008-09 TO F.Y 2014-15 U/S 132(4) OF THE ACT OVER AND ABOVE THE INCOME ALR EADY DECLARED IN THE RETURNS OF INCOME OF THE RESPECTIVE YEARS. THE AO THEREFORE, OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM OF LABOUR EXPENSES AND HAS A DMITTED ADDITIONAL INCOME OF RS.26.00 CRORES FOR THE FINANC IAL YEARS UPTO 2014-15 AND THE INCOME WAS ALSO DECLARED IN THE RET URNS OF INCOME OF THE RESPECTIVE YEARS. THE AO THEREFORE, A CCEPTED THE INCOME RETURNED BY THE ASSESSEE IN RESPONSE TO THE NOTICE U/S 153C OF THE ACT. 4. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BY ISSUING A SHOW-CAUSE NOTICE U/S 271(1)(C) OF THE ACT. THE ASSESSEE VIDE LETTER DATED 21.5.201 7 FILED HIS EXPLANATION STATING THAT THE EXPENDITURE CLAIMED UN DER THE WORK SITE/LABOUR EXPENSES WERE NOT IN DISPUTE BUT SINCE THERE WERE DEFICIENCIES REGARDING THEIR MAINTENANCE, THE ASSES SEE HAS OFFERED ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 5 OF 12 THE ADDITIONAL INCOME OF RS.26.00 CRORES OVER THE P ERIOD OF 5 YEARS. IT WAS SUBMITTED THAT THE RETURNED INCOME HA S BEEN ACCEPTED BY THE AO AND THEREFORE, THERE WAS NO FURN ISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME REQ UIRING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. HOWEVER, THE AO W AS NOT SATISFIED WITH THE ASSESSEES EXPLANATION AND HOLDING THAT TH E ASSESSEE COULD NOT HAVE OFFERED THE ADDITIONAL INCOME AFTER THE SEARCH AND CONCEALMENT OF INCOME BASED ON AN ESTIMATE, HE LEVI ED THE MINIMUM PENALTY I.E. 100% OF THE AMOUNT SOUGHT TO B E EVADED. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS I N SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS O F APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VISAKAPATNAM GROSSLY ERRED IN CONFIRMING THE ORDERS PASSED U/S 271(L)(C) OF THE INCOME TAX ACT, 1961 FOR THE A.Y. YEAR 2009-10 BY THE LEARNED ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, TIRUPATH I ,LEVYING A PENALTY OF RS. 71,37,9001-, WITHOUT APPRECIATING AND CONSIDERING THE SUBMISSION MADE BY YOUR APPELLANT. THE ACTION OF THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) VISAKAPATNAM IS GROSSLY UNJUSTIFIED, UNREASONABLE, UNLAWFUL AND THE REASON ADDUCED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VISAKAPATNAM IN CONFIRMING THE ORDERS U/ S 271(L)(C) PASSED BY THE ASSESSING OFFICER ARE AGAIN ST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , VISAKAPATNAM, OUGHT TO HAVE SEEN AND APPRECIATED TH E EXPLANATION AND SUBMISSION SUBMITTED BY THE APPELLA NT AND OUGHT TO HAVE HELD THAT PROVISION OF SECTION 27 1 (1)( C) ARE NOT APPLICABLE AS THERE WAS NO CONCEALMENT O F INCOME OR FURNISHING OF INADEQUATE PARTICULARS OF I NCOME WITHIN MEANING OF SECTION 271(L)(C) AND ITS EXPLANA TIONS, SINCE THE ASSESSING OFFICER VIDE ORDERS PASSED U/S 143(3) R. W.S 153C, ACCEPTED THE RETURN WITHOUT ADDITIONS TO THE RETURNED INCOME FILED IN RESPONSE TO NOTICE U/S 153C AND HE OUGHT TO HAVE DISMISSED THE ORDERS PASSED U/S 271 (1)( C) OF THE INCOME TAX ACT BY THE LEARNED ASST. COMMISSIONER OF INCOME TAX, CENTR AL CIRCLE, TIRUAPATHI. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , VISAKAPTNAM, OUGHT TO HAVE SEEN THAT THE REASONS ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 6 OF 12 ADDUCED AND THE CASE LAWS CITED BY THE ASSESSING OFFICER IN LEVYING THE PENALTY U/S 271 (1)( C) ARE CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND OUGH T TO HAVE APPRECIATED THE WRITTEN SUBMISSION MADE BY YOU R APPELLANT AND OUGHT TO HAVE CANCELLED THE PENALTY U /S 27 I (1)( C), LEVIED BY THE ASST. COMMISSIONER OFIN COME TAX, CENTRAL CIRCLE, TIRUAPATHI. 4. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN THAT FOR LEVYING PENALTY U/S 271(L)(C), T HE ASSESSING OFFICER IS REQUIRED TO ESTABLISH EITHER CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS SPECIFICALLY, BY BRINING POSITIVE MATERIAL ON RECOR D, AND ACCORDINGLY ISSUE NOTICE SPECIFICALLY, WHETHER THER E WERE CONCEALMENT OF PARTICULARS OR FURNISHING INACCURATE PARTICULARS IN THE NOTICE U/S 271(1)(C) ITSELF AND THE LEARNED COMMISSIONER OFINCOME TAX OUGHT TO HAVE HELD THAT PENALTY PROCEEDINGS U/S 271(L)(C) WA S BAD IN LAW IN THE ABSENCE OF SPECIFIC REASON IN THE NOTICE ISSUED U/S 271(L)(C), WHETHER IT IS A CASE O F CONCEALMENT OF PARTICULARS OR FURNISHING OF INACCUR ATE PARTICULARS AND OUGHT TO HAVE CANCELLED THE ORDERS PASSED U/S 27I(L)(C) BY ASST. COMMISSIONER OF INCOM E TAX, CENTRAL CIRCLE, TIRUAPATHI. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , VISAKAPTNAM OUGHT TO HAVE SEEN THAT EXPLANATION I O F SECTION 271 (1)( C) ON WHICH THE ASSESSING OFFICER LEVIED PENALTY IS NOT APPLICABLE TO THE FACTS AND CIRCUMST ANCES OF YOUR APPELLANT'S CASE AND OUGHT TO HAVE CANCELLE D THE ORDER PASSED U/S 271 (1)( C) OF THE INCOME TAX 1961 , BY THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E, TIRUAPATHI. 6. VIEWED FROM ANY ANGLE, THE ACTION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VISAKAPTNAM I N CONFIRMING THE ORDER U/S 27I(L)(C) PASSED BY THE ASSESSING OFFICER IS UNJUSTIFIED, UNWARRANTED, ILLE GAL AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. FOR THE REASONS STATED ABOVE AND ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME HEARING, YOUR APPELLA NT PRAYS THE HON'BLE INCOME TAX APPELLATE TRIBUNAL HYDERABAD TO KINDLY CANCEL THE ORDERS PASSED BY THE LEARNED CIT CONFIRMING THE ORDERS PASSED BY THE AO AND ALSO PRAYS THE HON'BLE ITAT TO CANCEL THE PENAL TY LEVIED U/S 271(1)(C) OF THE ACT FOR THE A.YS 200-10 AND DO JUSTICE. 5. FURTHER, VIDE LETTER DATED 9.2.2019, THE ASSESSE E HAS RAISED THE FOLLOWING ADDITIONAL GROUND OF APPEAL: ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 7 OF 12 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY ORDER PASSED BY THE AO AND PARTLY UPHELD BY THE CIT (A) IS UNSUSTAINABLE ON THE FACTS OF THE PR ESENT CASE AND ALSO IN LAW FOR NON-APPLICATION OF MIND ON PART OF AO AS THE VERY BASIS I.E. PENALTY SHOW CAUSE NOT ICE DOES NOT SPECIFY THE CHARGE AS TO WHETHER THE NOTIC E WAS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. IT IS SUBMITTED THAT WHILE FILING THE APPEAL BEF ORE THE TRIBUNAL, THE ASSESSEE HAS INADVERTENTLY MISSED THE LEGAL GROUND WITH RESPECT TO NON SPECIFICATION OF THE GROUND ON WHICH THE SHOW CAUSE NOTICE DATED 31.12.2016 U/S 271(1)(C) OF THE ACT WAS ISSUED. THEREFORE, HE PRAYED FOR ADMISSION OF THE S AME AND DECISION ON MERITS. 7. THE LEARNED DR, OBJECTED TO THE ABOVE GROUND OF APPEAL STATING THAT IT IS A MATTER OF FACT AND NOT A LEGAL GROUND. HE SUBMITTED THAT THE ASSESSEES CASE INVOLVED BOTH FU RNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME AN D THEREFORE, THERE WAS NO NEED FOR THE AO TO STRIKE OFF THE IRRE LEVANT PORTION. FURTHER, AS REGARDS ASSESSEES CONTENTION THAT THE ASSESSEES RETURNED INCOME HAS BEEN ACCEPTED AND THEREFORE, NO PENALTY IS LEVIABLE, HE SUBMITTED THAT THE ADMISSION OF THE AD DITIONAL INCOME BY THE ASSESSEE IS NOT VOLUNTARY BUT WAS MADE ONLY AFTER DETECTION AND CONFRONTATION IN THE SEARCH U/S 132 OF THE ACT. HE ALSO RELIED UPON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SUNDARAM FINANCE REPORTED ON 23.4.2018 FOR LEVY OF PENALTY UNDER SUCH CIRCUMSTANCES. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE PENALTY U/S 271(1)(C) I S LEVIED FOR NOT OFFERING THE ADDITIONAL INCOME TO TAX IN THE ORIGIN AL RETURNS OF INCOME FOR OFFERING THE SAME ONLY AFTER CONFRONTATI ON DURING THE ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 8 OF 12 COURSE OF SEARCH. THE ASSESSEE HAS RAISED THE ADDIT IONAL GROUND AGAINST NON-STRIKING OFF THE IRRELEVANT PORTION OF THE SHOW CAUSE NOTICE U/S 271(1)(C) OF THE ACT, WE FIND THAT THE S HOW CAUSE NOTICE FOR THE A.Y 2009-10 IS AS UNDER: PENALTY NOTICE U/S 271(1)(C) OF THE ACT, 1961 PAN: AABFG9906A DATE:31-12-2016 TO M/S.B.GIRIJAPATHI REDDY & CO. 16-11-380B SRINIVASA AGRAHARAM SUJATHAMMACOLONY, AGRHARAA MITTA NELLORE 524001 WHEREAS THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE ME FOR THE A.Y 2009-10, IT APPEARS TO ME THAT YOU HAVE CONCEALED THE PARTICULARS OF YOUR DISCLOSED INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAL BEFORE ME AT 11. 45AM ON 25 TH JANUARY, 2017 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE U/S 271(1)(C) OF THE I.T. ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERS ON OR THROUGH YOUR AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH W ILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE U/S 271(1) (C) OF THE ACT. SD/- (SELVI ARUMUGHAM) ASSTT. CIT, CENTRAL CIRCLE (I/C TIRUPATI) 9. THUS, IT CAN BE SEEN THAT THE AO DOES NOT SPECIF Y AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE LE ARNED DR HAD SUBMITTED THAT THE ASSESSEE HAD CONCEALED THE INCOM E AS WELL AS FURNISHED INACCURATE PARTICULARS OF INCOME, BUT WE FIND THAT THE AO HAS USED OR AND NOT AND BETWEEN CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS CLEAR THAT THE AO WAS NOT CLEAR IN HIS MIND WHETHER IT WAS A CASE OF FURNISHING OF INACCURATE PARTICULARS OR CONCEALM ENT OF INCOME OR HE HAS FAILED TO STRIKE OFF THE IRRELEVANT PORTI ON IN THE PROFORMA ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 9 OF 12 OF THE NOTICE BEFORE ISSUING THE SAME. THEREFORE, T HE ADDITIONAL GROUNDS OF APPEAL IS TO BE ADMITTED AND ALLOWED IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF PR. CIT VS. BAISETTY REVATI REPORTED IN (2017) 398 ITR 88 A.P. THE ADDITIONAL GROUND IS THEREFORE, ALLOWED. 10. EVEN ON MERITS OF THE OTHER GROUNDS, WE FIND TH AT THE DISALLOWANCE OF EXPENDITURE WAS NOT BECAUSE IT HAS BEEN FOUND TO BE BOGUS EXPENDITURE BUT IT WAS BECAUSE THE ASSESSE E COULD NOT SUBSTANTIATE THE SAME WITH BILLS AND VOUCHERS. IN R ESPONSE TO THE SHOW CAUSE NOTICE U/S 271(1)(C) OF THE ACT, THE ASS ESSEE HAD FILED ITS EXPLANATION AND THERE IS NO FINDING OF THE AO T HAT THE ASSESSEES EXPLANATION IS NOT ACCEPTABLE OR THAT IT IS NOT BONAFIDE. THEREFORE, WE ARE IN AGREEMENT WITH THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THOUGH IT IS A GOOD G ROUND FOR MAKING ADDITION, IT CANNOT BE A GROUND FOR PENALTY U/S 271(1)(C) OF THE ACT, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEM LTD REPORTED ION 322 ITR 158. 11. IN THE RESULT, ASSESSEES APPEALS FOR THE A.YS 2009-10, 2010-11, 2012-13 & 2013-14 ARE ALLOWED. 12. AS REGARDS THE REVENUES APPEAL FOR THE A.Y 201 4-15, THE AO WANTED TO LEVY PENALTY U/S 271(1)(C) OF THE ACT FOR THE VERY SAME REASONS AS IN THE A.Y 2009-10 TO 2013-14. HOWE VER, HE ISSUED A NOTICE U/S 271AAB OF THE ACTTO THE ASSESSE E. THE ASSESSEE SUBMITTED HIS EXPLANATION AND THEREAFTER T HE AO HELD THAT THE NOTICE U/S 271(1)(C) WAS TO BE ISSUED AND THAT ERRONEOUSLY THE PROVISIONS OF SECTION 271AAB OF THE ACT WAS ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 10 OF 12 MENTIONED IN THE NOTICE. HE HELD THAT SUCH MENTIONI NG WILL NOT INVALIDATE THE NOTICE. THEREAFTER, HE PROCEEDED TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT (A), WHO OBSERVED THAT THE REQUIREME NTS OF CONDITIONS TO BE SATISFIED FOR INITIATING PENALTY U /S 271AAB OF THE ACT AND LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AR E DIFFERENT. HE HELD THAT HAVING ISSUED NOTICE U/S 271AAB OF THE AC T, THE AO CANNOT LEVY PENALTY U/S 271(1)(C) OF THE ACT. ACCOR DINGLY, THE PENALTY ORDER WAS CANCELLED AND THE REVENUE IS IN A PPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1 . THE ORDER OF THE LD.CIT(A) IS ERRONEOUS BOTH ON T HE FACTS AND IN LAW. 2. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE INTENTION OF THE AA WAS TO LEVY PENALTY U/S. 271(1) (C) OF THE I.T.ACT, 1961 AND THEREFORE, THE NOTICE WAS ISSUED IN THE PRESCRIBED FORMAT USED FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE I.T.ACT, BUT THE SECT ION WAS ERRONEOUSLY MENTIONED IN THE HEADING AS SEC.271AAB INSTEAD OF SECTION 271(1)(C) OF THE ACT. 3. THE LD.CIT(A) OUGHT TO HAVE OBSERVED THAT THE PENALTY NOTICE U/S. 271AAB FORMAT IS COMPLETELY DIFFERENT FROM THAT OF NOTICE U/S. 271(1)(C). THE P ENALTY NOTICE ISSUED BY AA IS IN THE FORMAT OF SEC.271(1)( C) BUT ONLY THE 'HEADING' AND LAST LINE ONLY WAS MENTIONED AS 271AAB, WHICH SHOWS THAT AA INTENDED TO LEVY PENALTY U/S. 271(1)( C) AND NOT 271AAB. 4. THE LD.CIT(A) IGNORED THE FACT THAT THE OBJECTIO N RAISED BY THE APPELLANT ON THIS GROUND DURING THE PENALTY PROCEEDINGS WAS DULY ADDRESSED IN THE PENALTY ORDER ITSELF BY THE AA BY RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN C IVIL APPEAL NO.2099 ARISING OUT OF SLP(CIVIL) NO.2308 OF 2009 IN THE CASE OF 'P. K. PALANISAMY VS. N. ARUMUGHAM AND ANOTHER' WHEREIN IT WAS HELD THAT 'MENTIONING OF WRONG PROVISION OR NON-MENTIONING OF PROVISIONS DOES NOT INVALIDATE AN ORDER IF THE COUR T AND/OR STATUTORY AUTHORITY HAD JURISDICTION THERE F OR'. 5. THE LD.CIT(A) OUGHT TO HAVE OBSERVED THAT THE PENALTY PROVISIONS U/S. 271AAB ARE NOT APPLICABLE F OR THE A.Y.2014-1S AT ALL, AS FOR THIS ASSESSMENT YEAR , ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 11 OF 12 THE PENALTY PROVISIONS APPLICABLE ARE ONLY THAT OF 271(1)(C). 6. THE POWERS OF CIT(A) ARE CO-TERMINUS WITH THAT O F AA AND HE SHOULD HAVE RECTIFIED THE MISTAKE AND UPHELD THE ORDER OF AA LEVYING PENALTY U/S.271(1)(C). 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING WITH THE PERMISSION OF THE COURT. 13. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO S TATING THAT THE WRONG MENTIONING SECTION 271AAB OF THE ACT IN THE NOTICE WILL NOT INVALIDATE THE PENALTY U/S 271(1)(C) OF TH E ACT. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMIT TED THAT THE PENALTY U/S 271AAB AND 271(1)(C) OF THE ACT ARE UND ER DIFFERENT CIRCUMSTANCES AND THEREFORE, THE ORDER OF THE CIT ( A) HAS TO BE UPHELD. 14. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE THIS BEING THE YEAR OF SEARCH AND THE ASSESSEE HAVING OFFERED UNDISCLOSED INCOME IN ITS R ETURN OF INCOME U/S 153C, THE AO ISSUED THE NOTICE U/S 271AA B OF THE ACT, WE FIND THAT PENALTY U/S 271AAB IS LEVIABLE WH ERE SEARCH HAS BEEN INITIATED AND THE ASSESSEE DURING THE COURSE O F SEARCH ADMITS UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; AND SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED, WHER EAS THE PENALTY U/S 271(1)(C) IS LEVIABLE FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. THUS, IT IS S EEN THAT THESE PROVISIONS ARE APPLICABLE IN DIFFERENT SITUATIONS A ND CIRCUMSTANCES THEREFORE, IF THE AO HAS ISSUED NOTIC E U/S 271AAB OF THE ACT WITHOUT ISSUING A NOTICE U/S 271(1)(C) O F THE ACT. THE AO GETS THE JURISDICTION TO LEVY THE PENALTY BY ISS UING A NOTICE AND THEREFORE, IT IS NOT A PROCEDURAL REQUIREMENT BUT I S A JURISDICTIONAL ONE. BY ISSUING A NOTICE, THE AO HAS INTIMATED THE ASSESSEE THE ITA NOS 1911 1912 1913 AND 1914 2012 OF 2018 BGR MINING AND INFRA P LTD HYDERABAD. PAGE 12 OF 12 REASONS FOR INITIATING PENALTY AND THE ASSESSEE GET S AN OPPORTUNITY TO EXPLAIN THE CIRCUMSTANCES UNDER WHIC H THE DEFAULT, IF ANY, WAS COMMITTED AND AS TO WHY THE PE NALTY WAS NOT LEVIABLE. BY ISSUANCE OF NOTICE U/S 271AAB OF THE A CT, THE AO IS SEEKING ASSESSEES EXPLANATION AS TO WHY THE PENALT Y SHOULD NOT BE LEVIED ON THE UNDISCLOSED INCOME DECLARED IN THE RETURNS OF INCOME, WHEREAS U/S 271(1)(C) OF THE ACT HE IS SEEK ING ASSESSEES EXPLANATION FOR FURNISHING OF INACCURATE PARTICULAR S OR CONCEALMENT OF INCOME. THEREFORE, WE AGREE WITH THE FINDINGS OF THE CIT (A) THAT THESE TWO PROVISIONS OPERATE IN DI FFERENT CIRCUMSTANCES AND BY ISSUANCE OF NOTICE U/S 271AAB OF THE ACT, THE AO CANNOT THEREAFTER CHANGE IT TO SECTION 271(1 )(C) OF THE ACT AND LEVY PENALTY THEREUNDER. THEREFORE, WE DO NOT F IND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). 15. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 16. TO SUM UP, ASSESSEES APPEALS ARE ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JULY, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 19 TH JULY, 2019. VINODAN/SPS COPY TO: 1 I.SUNDARARAJA RAO, C.A. D.NO.24-3-380 SUJATHAMMA COLONY, DARGAMITTA, NELLORE 524003 A.P 2 ACIT, CENTRAL CIRCLE, TIRUPATHI 3 CIT (A)-3 VISAKHAPATNAM 4 PR. CIT CENTRAL, VISAKHAPATNAM 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER