Vidyanath Urban Co,op. Bank Ltd., Beed V. Assistant Commissioner of Income-tax,

ITA 2079/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6922 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , ! ' , #$ BEFORE SHRI R.K PANDA, AM AND SHRI VIKAS AWASTHY,JM / ITA NOS. 2078 & 2079/PUN/2014 #% & '& / ASSESSMENT YEARS : 2007-08 & 2008-09 VIDYANATH URBAN CO-OPERATIVE BANK LTD. HEAD OFFICE, PARLI (V), BEED, PIN-431515 PAN : AAAAV0305N ....... APPELLANT % / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AURANGABAD. / RESPONDENT / ITA NOS. 2139 & 2140/PUN/2014 #% & '& / ASSESSMENT YEARS : 2007-08 & 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AURANGABAD. ....... APPELLANT % / V/S. VIDYANATH URBAN CO-OPERATIVE BANK LTD. HEAD OFFICE, PARLI (V), BEED, PIN-431515 PAN : AAAAV0305N / RESPONDENT ASSESSEE BY : SHRI S.N PURANIK REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 16.03.2017 / DATE OF PRONOUNCEMENT : 24 .03.2017 ( / ORDER 2 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 PER VIKAS AWASTHY, JM THESE FOUR APPEALS, TWO BY THE ASSESSEE AND TWO BY TH E DEPARTMENT ARE DIRECTED AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD DATED 17.09.2014 FOR ASSESSMENT YEAR 2007-0 8 AND ORDER OF EVEN DATE FOR ASSESSMENT YEAR 2008-09. THESE CROSS A PPEALS BY THE ASSESSEE AND THE DEPARTMENT FOR THE ASSESSMENT YEAR 2007-08 & 2008-09 ARE IN RESPECT OF LEVY OF PENALTY U/S 271 (1) (C) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). SINCE THE ISSUES IN TH E APPEALS ARE ARISING FROM SAME SET OF FACTS, THEREFORE, THESE APPEALS ARE TAKE N UP TOGETHER FOR ADJUDICATION. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECO RDS ARE: THE ASSESSEE IS A CO-OPERATIVE BANK. THE ASSESSEE FILED ITS R ETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 31.10.2007 DECLARING INCOME R S. 1,75,14,480/-. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 31.03.2009 DECLARING LOSS OF RS.89,73,850/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING COURSE OF SCRUTINY ASSESSME NT, THE ASSESSING OFFICER MADE ADDITIONS ON FOLLOWING GROUNDS: SR. NO HEAD OF ADDITION AMOUNT 01 INTEREST PERTAIN TO PRIOR PERIODS PRIOR TO 31.03.2006 RECEIVED DURING HE YEAR 2,65,68,325/ - 02 INCREASE IN STATUTORY RESERVE FUND TREATED AS INCOME U/S 28 37,37,184/- 03 DEDUCTION CLAIMED ON ACCOUNT OF INVESTMENT FLUCTUATION FUND 2,95,641/- 04 PROVISION FOR STANDARD ASSETS. 4,44,500/- 05 AMORTIZATION ON PREMIUM ON GOVT. SECURITIES (HTM) 6,12,119/- TOTAL 3,16,27,769/- 3 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF ADDITIONS M ADE DURING ASSESSMENT. THE ASSESSING OFFICER VIDE ORDER DATED 28.03.2 013 LEVIED PENALTY OF RS. 96,75,037/- U/S 271 (1) (C ) OF THE ACT. FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE FILED RET URN OF INCOME ON 30.09.2008 DECLARING TOTAL INCOME OF RS. 75,85,490/-. THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT MADE ADDITIONS ON FOLLOWING COUNTS: SR. NO HEAD OF ADDITION AMOUNT 01 INTEREST PERTAIN TO PRIOR PERIOD PRIOR TO 31.03.2006 RECEIVING DURING THE YEAR 1,75,84,142/- 02. DEDUCTION CLAIMED ON ACCOUNT OF INVESTMENT FLUCTUATION FUND. 17,32,500/- 03 AMORTIZATION ON PREMIUM ON GOVT. SECURITIES. (HTM) 6,12,119/- 04 FORFEITED AMOUNT OF DIVIDEND 40,02,265/- 05 PROVISIONS OF LOSS ASSETS AND CONTINGENCIES. 15, 83,000/- 06 PENAL INTEREST RECEIVED DIRECTLY CREDITED TO RES ERVE FUND 10,87,242/- 07 LOSS OF SINHGAD URBAN CO OPERATIVE BANK 16,16,18 7/- 08 PROVISIONS FOR OVERDUE INTEREST RESERVE 17,40,00 0/- 09 FORFEITED SUNDRY CREDITORS AMOUNT DIRECTLY CREDITED TO RESERVE FUND 1,88,877/- 10 PROVISIONS FOR AUDIT FEES 1,19,277/- 11 EXCESS CASH AMOUNT DIRECTLY CREDITED TO RESERVE FUND 20,547/- 12 DEDUCTION CLAIMED U/S 80P(2) 50,000/- 13 SERVICE TAX LIABILITY NOT PAID BEFORE DUE DATE 6 53/- TOTAL 3,03,36,809/- IN RESPECT OF THE ADDITIONS MADE DURING ASSESSMENT, THE ASSESSING OFFICER LEVIED PENALTY OF RS. 80,84,867/- U/S 271 (1) (C ) OF THE ACT VIDE ORDER DATED 23.03.2013. 3. AGAINST LEVY OF PENALTY IN BOTH THE ASSESSMENT YEARS, THE ASSESSEE FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ). THE 4 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 COMMISSIONER OF INCOME TAX( APPEALS) VIDE IMPUGNED ORDER FOR THE ASSESSMENT YEAR 2007-08 DELETED THE LEVY OF PENALTY IN R ESPECT OF ALL THE ADDITIONS EXCEPT PENALTY LEVIED IN RESPECT OF ADDITION OF PRIOR PERIOD INTEREST. SIMILARLY, IN THE FIRST APPEAL BY ASSESSEE FOR ASSESSMENT YEAR 2008-09, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE LEVY O F PENALTY IN RESPECT OF ALL THE ADDITIONS EXCEPT PENALTY LEVIED ON ADDITI ON OF PRIOR PERIOD INTEREST. NOW BOTH, THE ASSESSEE AND THE DEPARTMENT ARE IN APPE AL BEFORE THE TRIBUNAL. THE ASSESSEE IN ITS APPEALS FOR BOTH THE ASSESS MENT YEARS, HAVE ASSAILED CONFIRMING THE LEVY OF PENALTY ON PRIOR PERIOD INTERE ST, WHEREAS THE DEPARTMENT IN ITS APPEALS HAS IMPUGNED THE DELETING OF P ENALTY ON OTHER ADDITIONS, BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE A SSESSEE HAS FILED ADDITIONAL GROUNDS OF APPEAL FOR BOTH THE IMPUGNED ASS ESSMENT YEARS CHALLENGING VALIDITY OF NOTICE ISSUED U/S 274 R.W.S 271 (1) (C ) OF THE ACT. 4. SHRI S.N PURANIK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT THE ASSESSING OFFICER, WHILE RECORDING SATISFACTION FOR LEVY OF P ENALTY DURING ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2007-08 HA S OBSERVED THAT PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER, WHILE ISSUING NOT ICE U/S 274 R.W.S 271 (1) ( C ) OF THE ACT, THE ASSESSING OFFICER HAS NOT STRUCK OFF IRRELEVANT LIMB OF CHARGE FOR LEVY OF PENALTY. THUS, THE NOTICE IS AMBIGUOUS AS FAR AS THE CHARGE FOR LEVYING PENALTY IS CONCERNED. AT THE TIME OF PASSING ORDER U/S 271 (1) (C) OF THE ACT, THE ASSESSING OFFICER IN C ONCLUDING PARAGRAPH OF THE ORDER HAS OBSERVED THAT ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND HAS CONCEALED ITS INCOME. TH E OBSERVATIONS OF 5 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 THE ASSESSING OFFICER WHILE RECORDING SATISFACTION FOR INITIATING PENALTY PROCEEDINGS AND WHILE LEVYING PENALTY ARE INCONSISTENT. THE LD. AR FURTHER SUBMITTED THAT WHILE PASSING ASSESSMEN T ORDER FOR ASSESSMENT YEAR 2008-09, THE ASSESSING OFFICER AT THE TIM E OF MAKING EACH AND EVERY ADDITION HAS RECORDED SATISFACTION FOR LEVY OF P ENALTY U/S 271 (1) ( C) OF THE ACT BY OBSERVING THAT, PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OR CONCEA LMENT OF ITS INCOME. THESE REMARKS ITSELF SHOW THAT THE ASSESSING OFFICE R IS NOT SURE AS TO WHETHER THE PENALTY IS TO BE LEVIED FOR CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WHILE ISSUING NOT ICE U/S 274 R.W.S 271 (1) ( C) OF THE ACT FOR THE ASSESSMENT YEAR 200 8-09, AGAIN THE ASSESSING OFFICER HAS MENTIONED THAT PENALTY PROCEEDINGS A RE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCUR ATE PARTICULARS OF INCOME. THE ASSESSING OFFICER HAS NOT STRUCK OFF IRRELEVANT LIMB OF CHARGE IN THE PROFORMA NOTICE. AT THE TIME OF PASSING OF THE ORDER LEVYING PENALTY U/S 271 (1) ( C ) OF THE ACT FOR ASSESSMENT YEAR 2008- 09, THE ASSESSING OFFICER HAS LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 4.1 THE LD. AR SUBMITTED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT EXPRESSIO NS HAVING DIFFERENT CONNOTATIONS. CONCEALMENT OF INCOME AND FURNISHIN G OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT OFFENCES. THE ASSESSING OFFICER HAS TO BE CONSISTENT AND SPECIFIC IN MENTIONING CHARG E FOR LEVY OF PENALTY AT THE TIME OF RECORDING SATISFACTION AND AT THE T IME OF PASSING OF ORDER LEVYING PENALTY. THE LD. AR POINTED THAT EVEN THE NO TICE ISSUED U/S 274 R.W.S 271 (1) ( C) FOR BOTH ASSESSMENT YEARS IS VAGUE . THE NOTICE DOES 6 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 NOT SPECIFY THE CHARGE FOR LEVY OF PENALTY. THE LD. AR SUBM ITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S. SHRI SA MSON PERINCHERY IN ITA NO. 1154 OF 2014 DECIDED ON 05.01.2017 DELETED LEVY OF PENALTY WHERE SATISFACTION WAS NOT PROPERLY RECORDED AND NOTIC E U/S 274 R.W.S 271 (1) (C ) MENTIONED BOTH THE CHARGES FOR LEVYING PENALTY. THE LD. AR PLACED RELIANCE ON VARIOUS DECISIONS OF THE TRIBUNAL WHEREIN PENALTY LEVIED U/S 271 (1) (C ) OF THE ACT WAS DELETED UNDER SIMILAR CIRCUMSTANCES. 4.2 THE LD. AR SUBMITTED THAT SIMILAR ADDITIONS WERE MADE DU RING ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2009-2 010. PENALTY PROCEEDINGS WERE ALSO INITIATED U/S 271 (1) ( C) OF THE ACT IN RESPECT OF SUCH ADDITIONS. SUBSEQUENTLY, THE ASSESSING OFFICER VIDE ORDER DA TED 31.03.2014 DROPPED THE PENALTY PROCEEDINGS. THE LD. AR PLACED ON R ECORD COPY OF ORDER PASSED BY ASSISTANT COMMISSIONER OF INCOME TAX DATED 31 .03.2014 DROPPING PENALTY PROCEEDING, AT PAGE NO. 43 OF THE PAPER BOOK. 5. ON THE OTHER HAND, SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF ASSESSING OFFICER IN RE CORDING SATISFACTION FOR INITIATING PENALTY PROCEEDINGS AND THE SUBS EQUENT ORDERS LEVYING PENALTY U/S 271 (1) (C ) OF THE ACT. THE LD. DR SUBMITT ED THAT A PERUSAL OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEA R 2007-08 WOULD SHOW THAT ASSESSING OFFICER HAS RECORDED SATISFACTION FOR IN ITIATING PENALTY PROCEEDING FOR FURNISHING INACCURATE PARTICULARS OF INCOME. T HUS, ASSESSING OFFICER HAS SPECIFIED THE CHARGE FOR INITIATING PENALTY PROCEE DING. THEREAFTER, WHILE PASSING ORDER LEVYING PENALTY U/S 271 (1) ( C) OF THE A CT, THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS FURNISHED INACCUR ATE PARTICULARS OF INCOME. CONCEALMENT OF INCOME IS COROLLARY TO FURNISHING OF INAC CURATE PARTICULARS OF INCOME. THUS, THERE IS NO AMBIGUITY IN RECORDIN G SATISFACTION 7 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 AND LEVYING PENALTY. THE LD. DR PRAYED FOR DISMISSING THE A PPEALS OF THE ASSESSEE. 6. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW HAVE BEEN PERUSED. THE ASSESSEE HAS PRIMARILY ASSAILED LEVY OF PENALTY ON THE GROUND THAT THE CHARGE MENTIONED WHILE RECORDING SATISFACTION AT THE TIME OF PASSING OF THE ASSESSMENT ORDERS AND AT THE TIME OF PASSING OF THE PE NALTY ORDER ARE INCONSISTENT. FURTHER, LD. AR OF THE ASSESSEE HAS POINTED THAT NOTICE ISSUED FOR LEVY OF PENALTY U/S 274 R.W.S 271 (1) (C ) OF THE ACT IN B OTH ASSESSMENT YEARS DOES NOT CLEARLY SPECIFY THE CHARGE FOR THE LEVY OF PENALTY. 7. A PERUSAL OF THE ASSESSMENT ORDER DATED 24.12.09 FOR THE ASSESSMENT YEAR 2007-08 SHOW THAT THE ASSESSING OFFICER HAS RECORD ED SATISFACTION FOR INITIATING PENALTY PROCEEDING U/S 271 (1) (C ) OF THE ACT FOR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. AT THE TIME OF PASSING O F THE ORDER U/S 271 (1) (C) OF THE ACT, THE ASSESSING OFFICER OBSERVED AS UNDER I AM SATISFIED THAT THE ASSESSEE BANK HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND IT HAS CONCEALED ITS INCOME AND THEREBY MADE ITSELF LIABLE FOR LEVY OF PENALTY UNDER SECTION 271 (1) ( C) OF THE ACT THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT FOR ASSES SMENT YEAR 2008-09 VIDE ORDER DATED 24.12.10 HAS RECORDED S ATISFACTION FOR INITIATING PENALTY PROCEEDINGS U/S 271 (1) ( C) OF THE ACT I.E FOR EACH AND EVERY ADDITION. THE ASSESSING OFFICER WHILE RECORDING SATISFACT ION FOR LEVYING PENALTY USED STEREOTYPE EXPRESSIONS FOR EACH ADDITION. TH E SAME READS AS UNDER : PENALTY PROCEEDINGS U/S 271(1) ( C) OF THE ACT AR E SEPARATELY INITIATED FOR FURNISHING INACCURATE PARTICULARS OR CONCEALMENT OF ITS INCOME. 8 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 WHILE PASSING ORDER OF LEVY OF PENALTY U/S 271 (1) (C ) OF THE ACT DATED 28.03.2013, THE ASSESSING OFFICER IN THE CONCLUDING PARAGRAP H OF THE ORDER REMARKED : I AM SATISFIED THAT THE ASSESSEE BANK HAS FURNISH ED INACCURATE PARTICULARS OF ITS INCOME AND IT HAS CONCEALED ITS INCOME AND THEREBY MADE ITSELF LIABLE FOR LEVY OF PENALTY UNDER SECTION 271 (1) (C ) OF T HE ACT. A PERUSAL OF THE SATISFACTION RECORDED BY THE ASSESSING O FFICER AT THE TIME OF ASSESSMENT AND WHILE PASSING PENALTY ORDER FOR BOT H THE ASSESSMENT YEARS, MAKES IT EVIDENT THAT THE ASSESSING OFFICER IS NOT SURE ABOUT THE CHARGE FOR LEVY OF PENALTY. 8. IN THE NOTICE ISSUED U/S 274 R.W.S 271 (1) (C ) OF THE A CT AGAIN THE ASSESSING OFFICER HAS ERRED IN MENTIONING BOTH THE CHARGES FOR LEVY OF PENALTY. IT WOULD BE RELEVANT TO MENTION HERE THAT IN THE NOTICE BOTH THE CHARGES I.E CONCEALMENT OF INCOME AND FURNISHING INACCUR ATE PARTICULARS OF INCOME ARE LINKED BY CONJUNCTION OR . THUS, THE NOTICE DOES NOT CLEARLY SPECIFY THE CHARGE FOR LEVY OF PENALTY. 9. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. SHRI SAMSON PERINCHERY WHILE DELETING PENALTY UNDER SIMILAR CIRCUMSTANCES HELD : 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V /S. CIT 292 ITR 11 [ RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY( SUPRA)- WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHI NG OF INACCURATE PARTICULARS OF INCOME IN SECTION 271 (1) (C ) OF TH E ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271 (1) (C ) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE O THER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/ NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON T HE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7. THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT-ASSESSEE BY THE DECISION OF THE KARNATAK A HIGH COURT IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY ( SU PRA). NOTHING HAS 9 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD W ARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN T HE CASE OF MANJUNATH COTTON & GINNING FACTORY ( SUPRA). 10. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH COTTON & GINNING FACTORY (SUPRA) REPORTED IN 3 59 ITR 565 HAS HELD: 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDING S CAN BE INITIATED ON VARIOUS GROUNDS SET OUT THEREIN. IF THE ORDER PA SSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDI NGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COU LD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION O F THE AUTHORITY 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 O F CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE P ERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE M ADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY O N HIM AS SECTION 274 MAKES IT CLEAR THAT THE ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEE T THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALT Y. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FORM WHERE ALL THE GRO UNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQ UIREMENT 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 PER CENT. TO 300 PER CENT. OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPE CIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE IS OFF ENDED IF THE SHOW- CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEED INGS, 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 INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRA CT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE T WO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDING S ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDIN GS 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 THE SATISFACTION OF THE EXISTENCE OF T HE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONF INED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE G ROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CL AIM, 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 AUT HORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS O THER THAN WHAT THE ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE, THOUGH THE INITIATION OF 10 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FIN AL ORDER IMPOSING PENALTY WOULD OFFEND THE PRINCIPLES OF NATURAL JUST ICE 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 PENALTY PROCEEDINGS IS NOT IDE NTICAL 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 I N THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDE R WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSI TION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PA SSED, 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 INCOME ARE DIF FERENT. 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 COUR T IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAG E 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COUR T IN THE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 122 ITR 3 06 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKET ING P. LTD. REPORTED IN [2008] 171 TAXMAN 156, HAS HELD THAT LEVY OF PEN ALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSIT ION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASS ESSING 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 PROF ORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN IN FERENCE AS TO NON- APPLICATION OF MIND. 11 . THUS, IN VIEW OF THE FACTS OF THE CASE AND JUDGMENTS DISCU SSED ABOVE, WE HOLD THAT THE NOTICE ISSUED U/S 274 R.W.S 271 (1) ( C ) OF THE ACT IS BAD IN LAW AND SUBSEQUENT PROCEEDINGS ARISING THER EFROM ARE VITIATED. 12. ON MERITS, THE LD. AR HAS POINTED THAT SIMILAR ADDITIONS WERE MADE IN ASSESSMENT YEAR 2009-10 AND PENALTY PROCEEDING S U/S 271 (1)(C) WERE INITIATED. HOWEVER, THE PENALTY PROCEEDINGS WERE SUBSEQUENTLY DROPPED. THIS FACT HAS NOT BEEN CONTROVER TED BY THE LD. DR. THE ASSESSEE HAS ALSO FURNISHED COPY OF THE ORDER D ATED 11 ITA NOS. 2078 & 2079/PUN/2014 ITA NOS. 2139 & 2140/PUN/2014 31.03.2014 PASSED U/S 271 (1) (C) OF THE ACT FOR ASSESSMEN T YEAR 2009-10 DROPPING PENALTY PROCEEDINGS. UNDER SUCH CIRCUM STANCES, IT WOULD NOT BE LOGICAL TO UPHOLD THE PENALTY IN ASSESSMENT YEAR UNDER APPEAL. 13. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED WHE REAS APPEALS OF THE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 24 TH DAY OF MARCH, 2017. SD/- SD/- ( /R.K PANDA) ( ! ' /VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 24 TH MARCH, 2017. SB ()*#+,!-!'+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS), AURANGABAD 4. THE PR. CIT-I, AURANGABAD. #$ %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 6. './01 / GUARD FILE. 23456789 *: / BY ORDER, /ASSISTANT REGISTRAR * () , / ITAT, PUNE.