Maitree Biswas, Kolkata V. DCIT, CIR-51, KOLKATA, Kolkata

ITA 204/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4639 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 03-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2014
• Court: TRIBUNAL
• Assessee Lawyers: ANIL KOCHAR LD
• Keywords: Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3)

Judgement Text

ITA NO. 204/KOL/14 MAITREE BISWAS 1 IN THE INCOME TAX APPELLATE TRIBUNAL,A BENCH, KO LKATA BEFORE SHRI WASEEM AHMED,ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 204/KOL/ 2014 A.Y: 2008-09 MAITREE BISWAS VS. D.C.I.T, CIR-51, KOLKATA PAN: AEEPB3519B (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI ANIL KOCHAR, ADVOCATE, LD.AR FOR THE ASSESSEE SHRI SALLONG YADEN, JCIT, SR. D.R FOR THE REVENUE DATE OF CONCLUDING THE HEARING : 03-08- 2016 DATE OF PRONOUNCING THE ORDER : 24-08-2016 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), X XXII, KOLKATA DATED 02-12-2013 FOR THE ASSESSMENT YEAR 2 008- 09, WHEREIN HE CONFIRMED THE IMPUGNED PENALTY IMPOS ED BY THE AO U/S. 271(1) ( C) OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND DEALING IN THE BUSINESS OF MANUFACTU RING OF MACHINES. THE ASSESSEE FILED HER RETURN OF INCOME A T RS. NIL ON 29-09-2008 UNDER SCRUTINY, NOTICE U/SEC 143(2 ) WAS ISSUED. DURING SUCH PROCEEDINGS, THE AO DETERMINED TOTAL INCOME OF THE ASSESSEE AT RS.23,34,605/- TO THAT EFFECT AN AS SESSMENT ORDER ITA NO. 204/KOL/14 MAITREE BISWAS 2 DT: 27-12-2010 WAS PASSED U/SEC 143(3) OF THE ACT. DURING SUCH PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE CLAIM ED DISCOUNT ON SALE OF MACHINE DUE TO SOME DEFECTS, WH ICH WAS NOT ALLOWED BY HIM. ACCORDINGLY, THE SAID AMOUN T WAS ADDED AS INCOME OF THE ASSESSEE. ACCORDING TO HIM, THE ASSESSEE COULD NOT FILE ANY EVIDENCE IN RESPECT OF SAID CLAIM. FOR WHICH NOTICE DT. 27-12-2010 U/S. 274 R.W .S 271(1)(C) OF THE ACT ISSUED FOR INITIATION OF PENAL TY PROCEEDINGS. THE ASSESSING OFFICER HAS INITIATED TH E PENALTY PROCEEDINGS U/S. 271(1) (C) FOR WILLFUL CONCEALMENT AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND LEV IED PENALTY OF RS.7,84,087/- U/SEC 271(1)(C) OF THE ACT BY AN ORDE R DT. 24-06- 2011. AGAINST WHICH THE ASSESSEE PREFERRED AN APPEA L BEFORE THE CIT(A). THE CIT-A FOUND THAT THE ASSESSE E COULD NOT ABLE TO SATISFY PRIMA FACIE THAT HER CLAIM IS B ONAFIDE. ACCORDINGLY, HE CONFIRMED THE PENALTY IMPOSED BY TH E AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY R AISING THE FOLLOWING GROUNDS:- 1. FOR THAT THE LD.CIT(A) OUGHT TO HAVE ACCEPTED THE CONTENTION OF THE APPELLANT THAT IN VIEW OF THE FAC T THAT APPEAL AGAINST ORDER U/S. 143(3)/251 WAS PENDING BEFORE THE HONBLE TRIBUNAL, THIS APPEAL IN RESPECT OF THE LEVY OF PENALTY OUGHT TO BE KEPT PENDING FOR DISPOS AL TILL THE APPEAL BEFORE THE HONBLE TRIBUNAL WAS DISPOSED OFF. 2. FOR THAT THE ISSUE OF QUANTUM OF ADDITION IN APPEA L BEFORE THE LD. CIT(A) HAVING NOT BEEN DECIDED BY TH E LD. CIT(A) WHO DID NOT CONDONE THE DELAY IN FURNISHING OF THE APPEAL BEFORE HIM AND DISMISSED THE SAME WITHOU T GOING INTO THE MERITS OF THE ADDITION, THE REQUEST OF THE APPELLANT MADE TO THE LD. CIT(A) IN PENALTY APPEAL TO KEEP THE APPEAL PENDING FOR DISPOSAL OUGHT TO HAVE BEEN ACCEPTED. 3. FOR THAT THE APPELLANT HAD EFFECTED SALES OF SOME MACHINES WHICH WERE MANUFACTURED UPON RECEIPT OF ORDERS AND DUE TO SOME DEFECTS IN THE MACHINES SUPPLIED, THE BUYERS HAD PAID LESS AMOUNTS WHICH WE RE ITA NO. 204/KOL/14 MAITREE BISWAS 3 CLAIMED AS DEDUCTIONS BY THE APPELLANT BUT WERE NOT ALLOWED BY THE AO THE LD. CIT(A) DID NOT CONSIDER T HESE FACTS PROPERLY AND CONFIRMED THE LEVY OF PENALTY. 4. FOR THAT VARIOUS EVIDENCES AND EXPLANATIONS ADDUCED BY THE APPELLANT BEFORE THE LD.CIT(A) OUGHT TO HAVE BE EN PROPERLY CONSIDERED BY HIM AND THAT ONLY BECAUSE TH ERE WAS ADDITIONS TO THE TOTAL INCOME MADE BY THE AO, I T COULD NOT BE TAKEN AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN THIS VIEW OF THE MATTER THE LD.CIT(A) OUGHT TO HAVE ALLO WED THE APPEAL OF THE APPELLANT AND PENALTY LEVIED OUGH T TO HAVE BEEN CANCELLED. 3. THEREAFTER, THE ASSESSEE FILED THE FOLLOWING ADD ITIONAL GROUND:- FOR THAT THE ASSUMPTION OF JURISDICTION BY THE AO A ND ISSUE OF NOTICE U/S. 274 READ WITH SEC 271 IS WRONG , UNCALLED FOR AND THE RESULTANT LEVY OF PENALTY U/S. 271(1) ( C) IS TOTALLY BAD IN LAW. AND CONTENDED THAT THE NOTICE DT.27-12-2010 ISSUED BY THE AO U/S 274/271 OF THE ACT IS DEFECTIVE. WITH THE CO NSENT OF BOTH THE PARTIES, WE ADMIT THE ADDITIONAL GROUND. 4. DURING THE COURSE OF ARGUMENTS THE LD. AR FOR TH E ASSESSEE SUBMITTED THAT THE CASE UNDER CONSIDERATION IS COVE RED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), AND ALSO BY THE ORDER OF THE TRIBUNAL IN THE CASE OF SUVAPRA SANNA BHATTACHARYA VS. ACIT, CIR-55, KOLKATA IN ITA NO. 1303/KOL/2010 DATED 06-11-2015 WHICH CONSIDERED DECISION OF THE HONBLE KARNATAKA HIGH COURT SUPRA AND PASSED DETAILED ORDER THE SAID ISSUE. ON THE CO NTRARY, THE LD. DR HAS RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. ITA NO. 204/KOL/14 MAITREE BISWAS 4 5. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE QUESTION BEFORE US IS AS TO WHETHER THE PENALTY ORDER PASSED BY THE AO AND CONFIRMED BY THE LD.CIT(A) IS FALLS FOR OUR CONSIDERATION IN PURSUANCE OF THE LAW LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT SUPRA . 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 A CT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. FURTHER AS SUBMITTED BY THE LD.AR THE AFORE SAID DECISION WILL SQUARELY APPLICABLE TO THE PRESENT CASE AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 6. AS RIGHTLY POINTED OUT BY THE LD.AR, THE CO-ORDI NATE BENCH OF ITAT, KOLKATA IN THE CASE OF SUVAPRASANNA BHATTACHAR YA VS. ACIT BY AN ORDER DATED 06-11-2015 CONSIDERED THE JUDGMENT OF H ONBLE KARNATAKA HIGH COURT SUPRA THE RELEVANT PORTION OF WHICH REPRODUCED HEREUNDE R: 8. 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 T O WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURA TE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. ON THI S ASPECT WE FIND 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 T O WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOM E. 8.1 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 SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEAL MENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH ITA NO. 204/KOL/14 MAITREE BISWAS 5 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 PRO CEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WI LL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 8.2 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 O F 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 FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS I NITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIE NTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHOR ITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE 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, I N FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE C ONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 M AKES 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 NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTME NT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCE S OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NAT URE 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 IS SUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPE CIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SH OW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES 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 G UILTY FOR EITHER THE ONE ITA NO. 204/KOL/14 MAITREE BISWAS 6 OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEED LESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIO NED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E 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 U PON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDI NGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEN D 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 INITIATION OF P ENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHI CH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID . THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERE NCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF TH E AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASS ED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT 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 IN THE COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INA CCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISH ING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSES SING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER I S 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 PA I REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME A ND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKE TING 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 UNCLE AR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS T O BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURA TE PARTICULARS OF INCOME. THE STANDARD PRO FORMA WITHOUT STRIKING OF THE RELE VANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. ITA NO. 204/KOL/14 MAITREE BISWAS 7 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 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 F AILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, 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 BONA FIDE AND ALL FACTS RELATING TO ITA NO. 204/KOL/14 MAITREE BISWAS 8 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 INCOR RECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PR OCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDING S ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESS MENT IN PURSUANCE 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) 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 SOUGH T TO BE IMPOSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIG H COURT, WE HOLD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT Y EARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELL ED. ITA NO. 204/KOL/14 MAITREE BISWAS 9 7. IN THE PRESENT CASE, THE NOTICE DT: 27-12-2010 I SSUED TO ASSESSEE BY THE AO U/SEC 274 R/W 271 OF THE ACT DOES NOT SHO W ON WHICH GROUND THE PENALTY IS SOUGHT TO BE IMPOSED, THEREFO RE THE LAW LAID DOWN BY THE HONBLE HIGH COURT SUPRA AND FOLLOWED BY CO-ORDINATE BENCH OF ITAT, KOLKATA IN THE CASE OF SUVAPRASANNA B HATTACHARYA SUPRA , WE HOLD THAT THE ORDER DT: 24-06-2011 LEVYING PEN ALTY IS NOT VALID. RESPECTFULLY FOLLOWING THE ORDER ABOVE, WE C ANCEL THE PENALTY OF RS.7,84,087/- LEVIED U/S. 271(1) ( C) BY THE ASSES SING OFFICER AND CONFIRMED BY THE CIT(A). 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 24/08/2016 SD/ - WASEEM AHMED ACCOUNTANT MEMBER SD/ - S.S.VISWANETHRA RAVI J JUDICIAL MEMBER DATE 24 /08/2016 ITA NO. 204/KOL/14 MAITREE BISWAS 10 1. . THE APPELLANT/ASSESSEE : SMT. MAIT REE BISWAS C/O S.L KOCHAR ADVOCATE, 86 CANNING STREET, KOLKATA-1. 2 THE RESPONDENT/DEPARTMENT - DCIT,CIR - 51, UTTARAPAN, KOL - 54. 3 4. / THE CIT(A) THE CIT 5 . DR, KOLKATA BENCH 6 . GUARD FILE . **PP/SPS TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS COPY OF THE ORDER FORWARDED TO: