Devilal Baijnath Prasad Zaveri, Patna V. ACIT, Central Circle-3, Patna

ITA 21/PAT/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4677 (ITAT-PATNA)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 16-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY KUMAR
• Assessee Lawyers: S C SANNIGRAHI
• Keywords: Rejection of books of accounts; Unexplained investment; Invalid notice; Search and seizure; Principle of natural justice; Retrospective amendment; Question of law
• Section: 271(1)(c); 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH , PATNA BEFORE SHRI CHANDRA MOHAN GARG, J M AND SHRI L .P. SAHU, AM ITA NO. 21 / PAT /20 1 9 ( ASSESSMENT YEAR :20 07 - 20 08 ) DEVILAL BAIJNATH PRASAD ZAVERI SUMATI PALACE, BORING ROAD, PATNA (BIHAR) - 800001 VS. ACIT, CE NTRAL CIRCLE - 3, PATNA PAN NO. : A ACFD 7899 J ( APPELLANT ) .. ( RESPONDENT ) AS SESSEE BY : SHRI S.C.SAN NIGRAHI , FCA REVENUE BY : SHRI A BHAY KUMAR , CITDR DATE OF HEARING : 2 8 /06/2019 DATE OF PRONOUNCEMENT : 26 /07/2019 O R D E R PER BENCH : A SSAILING THE ORDER OF CIT(A) - 3 , PATNA , DATED 29.11.2018 FOR THE ASSESSMENT YEAR 20 07 - 20 08 , THE ASSESSEE HAS FILED THE PRESENT APPEAL ON THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT, ON THE FACT & CIRCUMSTANCES OF THE CASE, THE CONFIRMATORY ORDER OF THE L EARNED COMMISSIONER OF INCOME TAX (APPEAL) - 3, PATNA BY SUSTAINING THE IMPOSITION OF PENALTY OF RS. 2,33,212/ - U/S. 271( 1 )(C) OF THE INCOME TAX ACT, 1961 IS TOTALLY BAD IN LAW & FACT AND AS SUCH PENALTY ORDER ON THIS POINT IS VOID AB - INITIO. 2. FOR THAT, ON THE FACT & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 3 FAILED TO APPRECIATE THE FACT THAT THE PENALTY U/S. 271( 1 )(C) WAS INITIATED BY THE LEARNED ASSESSING OFFICER IN THE ASSESSMENT ORDER BY WRITING 'PENALTY PROCEEDING U /S. 271( 1 )(C) OF THE INCOME TAX ACT, 1961 IS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME' WHICH PROVES THAT THE LEARNED ASSESSING OFFICER HAS NO IDEA UNDER WHICH LIMBS OF PENALTY SECTION 271( 1 )(C) WAS INITIATED AND TH AT CONFUSION OF THE LEARNED ASSESSING OFFICER ALSO PROVES THAT THE LEARNED ASSESSING OFFICER HAS MECHANICALLY INITIATE THE PENALTY PROCEEDING U/S. 271( 1 )(C) WITHOUT ANY SATISFACTION. HENCE, THE PENALTY PROCEEDING INITIATED ON CONFUSION HAVING NO IDEA WHETH ER THE INITIATION IS ON CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, THE INITIATION WHICH IS THE ROOT OF PENALTY PROCEEDING IS NOT A VALID & LEGAL INITIATION. AS SUCH, THE PENALTY PROCEEDING IS INVALID & VOID AB - INITIO. AS ITA NO . 2 1 / PAT /201 9 2 SUCH, THE PENALTY ORDER U/S. 271( 1 )(C) IS VOID FOR WANT VALID JURISDICTION. HENCE, THE ORDER OF PENALTY AND ITS CONFIRMATION ARE INVALID, NOT LEGAL AND NOT MAINTAINABLE AND AS SUCH FIT TO BE CANCELLED. WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEAL, 3. FOR THAT, ON THE FACT & CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER ALSO FAILED TO ISSUE VALID NOTICE U/S. 274 READ WITH SECTION 271 BY TICKING IN THE PRINTED FORM OF NOTICE WHICH WAS ISSUED & SERVED ON THE ASSESSEE CLEARLY INDICATES THAT THE SAID NOTICE NO DETAILS OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME OR BOTH ARE PROVIDED. AS A RESULT, THE ASSESSEE HAS NOT BEEN PROVIDED REASONABLE OPPORTUNITY FOR SUBMITTING HIS EXPLANATION. HENCE, THE LEARNED ASSESSING OFFICE R'S ACTION IN THE NOTICE IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND HENCE, SUCH NOTICE IS NOT PROPER & VALID NOTICE AND INVALID NOTICE ISSUED BY THE SENDER CANNOT GIVE THE SENDER THE VALID JURISDICTION FOR PASSING THE ORDER. HENCE, THE ORDER PASSED WI THOUT ACQUIRING VALID JURISDICTION BY ISSUING INVALID NOTICE U/S. 271( 1 )(C) CANNOT BE THE VALID ORDER AND HENCE, THE ORDER AS PASSED & CONFIRMED BY THE LEARNED ASSESSING OFFICER AND LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 3 IS TOTALLY WRONG, INVALID & IMPROPER. HENCE, THE CONFIRMATORY ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 3 IS FIT TO BE CANCELLED. CITATION : I. CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KARNATAKA) II.CIT & ANOTHER VS. SSA'S EMERAL D MEADOWS IN CC NO. 11485/2016 DATED 05.8.2016. 4. FOR THAT, ON THE FACT & CIRCUMSTANCES OF THE CASE, THE PENALTY IMPOSED U/S. 271( 1 )(C) AMOUNTING TO RS.2,33,212/ - & ITS CONFIRMATION BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) BY IGNO RING THE APPELLANT SUBMISSION BOTH ARE TOTALLY INVALID, UNJUSTIFIED AND ILLEGAL ORDER. HENCE, THE PENALTY U/S. 271( 1 )(C) AMOUNTING TO RS. 2,33,212/ - IS FIT TO BE DELETED. 5. FOR THAT, THE APPELLANT CRAVES, LEAVE TO ADD, MODIFY AND AMEND ANY OF THE GROUNDS OF THE APPEAL AT THE TIME OF HEARING. 2. THOUGH THE LD. AR HAS RAISED FIVE GROUNDS OF APPEAL , HOWEVER, T HE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE PENALTY MADE BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE ACT. ITA NO . 2 1 / PAT /201 9 3 3 . B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM RUNNING JEWELLERY SHOP AT SUMATI PLACE, BORING ROAD, PATNA. A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE I.T. ACT, 1961 WAS CARRIED OUT AT THE OFFICE PREMISES OF M/S DEVILAL BAIJNATH P RASAD ZAVERI, SUMATI PALACE, BORING ROAD, PATNA ON 15.03.2007. SURVEY U/S 133A OF THE I.T. ACT, WAS SIMULTANEOUSLY CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE . ASSESSMENT U/S . 143(3)/153A OF THE I.T. ACT, 1961 WAS COMPLETED ON A TOTAL INCOME OF RS.14 ,35,700/ - AS AGAINST THE RETURNED INCOME OF RS.7,47,722/ - VIDE ORDER DATED 26.12.2008. ACCORDINGLY, THE AO INITIATED PENALTY PROCEEDINGS U/S 271( 1 )(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE INCOME. THE ASSESSEE FILED APPEAL AGAI NST THE ASSESSMENT ORDER DATED 26.12.2008. THE LD. CIT(A ) - 3, PATNA IN APPEAL NO.285/CIT(A) - 3/PAT/2008 - 09, DATED 18.03.2016 HAS CONFIRMED THE ADDITION OF RS.3,33,561/ - ON ACCOUNT OF EXCESS STOCK AND THE ASSESSEE HAS ALSO ACCEPTED THE FIRST APPELLATE ORDER. AS THE QUANTUM APPEAL HAS REACHED ITS FINALITY THE AO LEVIED PENALTY OF RS.2,33,212/ - U/S.271( 1 )(C) VIDE ORDER DATED 29.03.2017 FOR CONCEALING THE PARTICULARS OF INCOME. 4 . A GGRIEVED BY THE ORDER OF AO IN LEVYING PENALTY U/S.271(1)(C) OF THE ACT , THE ASSES SEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. AGAINST WHICH, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 5 . LD.AR BEFORE US FILED A WRITTEN SUBMISSIONS AND SUBMITTED THAT N O SEARCH & SEIZURE OPERATION WAS CONDUCTED IN THE SHOP CUM OFFICE PREMISES OF THE ASSESSEE FIRM ON THE SAID DATE BY THE DEPARTMENT BUT A ITA NO . 2 1 / PAT /201 9 4 SURVEY OPERATION WAS CONDUCTED ON THE SAME DAY. THOUGH, THERE WAS NO EVIDENCE OR PRO OF WITH THE DEPARTMENT THAT THE ADDRESS OF TH E ASSESSEE FIRM, WAS IN THE RESIDENTIAL PREMISES EITHER IN THE PAST OR AT THE TIME OF SEARCH , HOWEVER, A COMMON WARRANT OR SEARCH WAS ISSUED DECLARING THE RESIDENTIAL PREMISES AS THE OFFICE PREMISES OF THE ASSESSEE BY THE DEPARTMENT . THE LD. AR FURTHER SUB MITTED THAT IF THE PROCEEDING WAS INITIATED ON THE CHARGE OF CONCEALMENT THEN PENALTY CANNOT BE LEVIED ON THE CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCOME AND VICE - VERSA. IT WAS ALSO THE CONTENTION OF LD. AR THAT IT IS AN ADMITTED LAW OF THE LAND THAT PENALTY U/S. 271( 1 )(C) IS NOT AUTOMATIC AND, THEREFORE, MERELY BECAUSE THAT ADDITION HAVE BEEN MADE IN ASSESSMENT ORDER WAS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 3, IT DOES NOT FOLLOW THAT THE ASSESSEE SHOULD NECESSARILY BE TRE ATED AS CONCEALED ITS INCOME OR SUBMITTING INACCURATE PARTICULARS OF INCOME QUA THE ADDITION. FURTHER, THE LD. AR SUBMITTED THAT THE ASSESSEE'S CLAIM HAS BEEN DENIED BY THE DEPARTMENT SHOULD NOT ENTAIL PENALTY. THIS IS MORE PARTICULARLY SO WHEN THE ASSESSE E'S CLAIM IS ALSO BASED ON A POSSIBLE LEGAL STAND. APART FROM THE ABOVE, LD. AR SUBMITTED THAT A SUBJECT CAN BE VISITED WITH A PENALTY ONLY IF THE DEFAULT SPECIFICALLY DESCRIBED IN THE LANGUAGE OF THE PENALTY PROVISIONS HAS BEEN COMMITTED. THI S IS BECAUSE THE MANDATE TO LEVY PENALTY CAN BE DERIVED ONLY FROM THE LANGUAGE IN THE PENALTY PROVISIONS AND NOT BY IMPLYING SOMETHING OUTSIDE IT. THEREFORE, LD. AR SUBMITTED THAT IN ORDER TO EXPOSE AN ASSESSEE TO PENALTY, UNLESS THE CASE ITA NO . 2 1 / PAT /201 9 5 IS STRICTLY COVER ED BY THE PENALTY PROVISIONS , THE PENALTY CANNOT BE INVOKED AND THE SAME DESERVES TO BE DELETED. 6 . AGITATING TO THE PENALTY NOTICE ISSUED U/S.271 OF THE I.T.ACT, 1961, DATED 26.12.2008 , LD. AR SUBMITTED THAT I N THE PENALTY ORDER DATED 29.03.2017, THE EXP RESSION USED IS CONCEALMENT BUT THE NOTICE ISSUED U/S.271 OF THE ACT DATED 26.12.2008 BEING NON - SPECIFIC ABOUT THE CHARGE AGAINST THE ASSESSEE. THEREFORE, SUCH UNSPECIFIED NOTICE IS VOID AB INITIO AND AS SUCH THE ASSESSING OFFICER HAS NOT ACQUIRED ANY VALI D JURISDICTION FOR ORDER U /S. 271( 1 )(C) OF THE ACT . TO SUPPORT HIS CONTENTION S , LD. AR RELIED ON THE FOLLOWING DECISIONS : - I) C IT VS. MANJUNATH COTTON AND GINNING FACTORY, 359 ITR 565 (KAR); II) CIT VS. M/S VEERABHADRAPPA SANGAPPA & CO, ITA NO. 5020/20 09 (KAR); AND (III) CIT VS. SSA'S EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 WHERE THE SPECIAL LEAVE PETITION OF THE REVENUE WAS DISMISSED BY THE HO'BLE APEX COURT, (IV) DILIP N. SHROFF VS. JCIT, 291 IT R 519 (SC). (V) ASHOK PAI VS. CIT, 292 ITR 11 (SC). (VI) CIT VS. RELIANCE PETROPRODUCTS (P) LTD., 322 ITR 158 (SC). 7 . FURTHER, LD. AR SUBMITTED THAT THE CIT(A) IN THE QUANTUM APPEAL HAS REDUCED THE ADDITION MADE BY THE AO AND SUSTAINED THE BAL ANCE ADDITION VIDE ITS ORDER DATED 18.03.2016, AGAINST WHICH THE ASSESSEE HAS NOT PREFERRED ANY SECOND APPEAL. MERELY, THE CIT(A) HAS REDUCED THE ADDITION IN THE QUANTUM APPEAL, LEVYING PENALTY @100% TAX SOUGHT TO BE EVADED , IS NOT SUSTAINABLE IN THE EYES OF LAW, WHICH MAY KINDLY BE DELETED. LD. AR ALSO SUBMITTED THAT THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KAUSHALYA & OTHERS, 216 ITR 660, RELIED ON BY THE CIT(A) IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS WHEN THE HONBLE APEX ITA NO . 2 1 / PAT /201 9 6 COURT LAID DOWN THE LAW ABOUT THE NOTICE AND THE CIRCUMSTANCES, THE SAME SHOULD BE DECLARED INAPPLICABLE AND INVALID. 8 . ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE IS NOT MAINT AINING A CONSISTENT AND SCIENTIFIC BASIS OF VALUATION OF CLOSING STOCK , AND, T HUS TRADING RESULT DOES NOT REFLECT A TRUE PICTURE OF THE PROFIT/INCOME OF THE ASSESSEE. LD. DR FURTHER SUBMITTED THAT METHOD OF VALUATION OF THE CLOSING STOCK OF THE ASSESSEE IS NOT PROPERLY MAINTAINED FOR THE ALL ASSESSMENT YEARS 2001 - 02 TO 2007 - 08, THEREFORE THE CORRECTNESS OR COMPLETENESS OF THE BOOKS OF ACCOUNTS IS NOT SATISFACTORY, THEREFORE , THE AO HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNTS . THE ASSESSEE FAILED TO SUBSTANT IATE ITS CLAIM PROPER LY , THEREFORE, THE AO HAS RIGHTLY TREATED THE EXCESS STOCK AS UNEXPLAINED INVESTMENT AND, THUS , THE PENALTY WAS RIGHTLY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT AND THE LD. CIT(A) RIGHTLY SUSTAINED THE SAME. LD. DR RELIED ON THE JUDGM ENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF M/S SUNDARAM FINANCE LIMITED, 353 ITR 375 (MADRAS). ACCORDINGLY, THE LD.DR SUBMITTED THAT THE APPEAL OF THE ASSESSEE DESERVES TO BE DISMISSED. 9 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIALS AVAILABLE ON RECORD AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IT IS UNDISPUTED FACT THAT A SEARCH & SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 15.03.2007. THE A O COMPLETED THE ASSESSMENT U/S. 143(3)/153A ON A TOTAL INCOME OF RS.14,35,700/ - AS AGAINST THE RETURNED ITA NO . 2 1 / PAT /201 9 7 INCOME OF RS.7,47,722/ - . THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALIN G THE INCOME. THEREAFTER IN APPEAL BEFORE THE CIT(A), THE ADDITION MADE BY THE AO WAS REDUCED AND APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED BY THE CIT(A) , THEREBY CONFIRMING THE EXCESS STOCK OF JEW E LLERY. THE ASSESSEE HAS ACCEPTED THE QUANTUM ORDER PASSED BY THE CIT(A). AS THE QUANTUM ORDER HAS REACHED ITS FINALITY, THE AO LEVIED PENALTY OF RS .2,33,212/ - BEING 100% OF TAX SOUGHT TO BE EVADED U/S.271(1 )(C) OF TH E ACT FOR CONCEALING THE INCOME, TO WHICH THE CIT(A) HAS UPHELD THE ACTION OF A O. IT IS A FACT THAT THE ASSESSEE HAS ACCEPTED THE ADDITION AT CIT(A)'S LEVEL AND DID NOT FURTHER CARRY THE MATTER TO HIGHER APPELLATE FORUM. ONCE ON THE FACTUAL FRONT THE ISSUE IS DECIDED, NOW COMES THE ISSUE OF PENALTY. IN THIS CASE, BEFORE LEVYING PENAL TY U/S.271(1)(C) OF THE ACT, THE AO HAS ISSUED A NOTICE U/S.271 OF THE ACT, DATED 26.12.2008 TO THE ASSESSEE AS TO WHY AN ORDER IMPOSING A PENALTY ON THE ASSESSEE SHOULD NOT BE MADE U/S.271(1)(C) OF THE ACT. HOWEVER, IN THE NOTICE ISSUED U/S 271 OF THE AC T, THE AO HAS NOT MENTIONED THE SPECIFIC CHARGE I.E. AS TO WHETHER IT WAS THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH IS EVIDENT FROM THE COPY OF THE SAID NOTICE DATED 26.12.2008 PLACED ON THE RECORD. FOR THE COMPLETEN ESS OF OUR ORDER, WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE PENALTY NOTICE ISSUED U/S.271 OF THE ACT, DATED 26.12.2008, AS UNDER : - *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR . FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. ITA NO . 2 1 / PAT /201 9 8 ON CAREFUL PERUSAL OF THE ABOVE, IT IS NOT CLEAR FROM THE SAID NOTICE ISSUED U/S. 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER AS TO WHETHER THE SHOW CAUSE NOTICE IS ISSUED TO THE ASSESSEE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. 10 . HON'BLE APEX COURT VIDE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS, (2016) 73 TAXMANN.COM 248(SC) DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT O F KARNATAKA , WHEREBY IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF THE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS (SUPRA) DECIDED BY HON'BLE HIGH COURT OF KARNATAKA IS REPRODUCED BELOW : - '2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (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 MA KES 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 CIRCUMSTANCES 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 HAD IN LAW AND. INVALID IN SPITE THE AMENDMENT OF SECTION 271(1 B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED, UN DER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUE D BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF ITA NO . 2 1 / PAT /201 9 9 SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., W HETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. .THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED 01 THE DERISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OR INCOME T AX - VS - MANJUNATHA C OTTON AND G INNING F ACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DE TERMINATION BY THIS COURT, THE APPEAL IS ACCORDINGLY DISMISSED.' 11 . BARE PERUSAL OF THE NOTICE ISSUED U/S 271(1)(C) OF THE ACT APPARENTLY GOES TO PROVE THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEE DINGS BY ISSUING THE NOTICE U/S. 271(1)(C) O F THE ACT WITHOUT SPECIFYING AS TO WHETHER THE ASSESSEE HAS CONCEALED ''PARTICULARS OF INCOME' OR ASSESSEE HAS FURNISHED 'INACCURATE PARTICULARS OF INCOME', SO AS TO PROVIDE ADEQUATE OPPORTUNIT IES TO THE ASSESSEE TO EXPLAIN THE SHOW CAUSE NOTICE. RATHER NO TICE IN THIS CASE HAS BEEN ISSUED IN A STEREOTYPED MANNER WITHOUT APPLYING ANY MIND WHICH IS BAD IN LAW, HENCE IS NOT A VALID NOTICE SUFFICIENT TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. 12 . THE PENALTY PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE ATTRA CTED WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS ALSO A WELL - ACCEPTED PROPOSITION THAT THE AFORESAID TWO LIMBS OF SECTION 271(1)(C) OF THE ACT CARRY DIFFERENT MEANINGS. THEREFORE, IT WAS IMPERATIVE FOR THE ASSESSING OFFICER TO STRIKE - OFF THE IRRELEVANT LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AGAINST HIM SO THAT HE CAN RESPOND ACCORDINGLY. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & G INNING FACTORY, 359 ITR 565 (KAR) OBSERVED THAT THE LEVY OF ITA NO . 2 1 / PAT /201 9 10 PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS PER HON'BLE HIGH COURT, WHERE THE ASSESSING OFFICER PROPOSED TO INVOKE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. THE HON'BLE HIGH COURT HELD THAT THE STANDARD PROFORMA OF NOTICE UNDER SECTION 274 OF THE ACT WITHOUT STRIKING OF THE IRRELEVANT CLAUSES WOULD LEAD TO AN INFERENCE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. JCIT, 291 ITR 519(SC) HAS ALSO NOTICED THAT WHERE THE ASSESSING OFFICER ISSUES NOTICE UNDER SECTION 274 OF THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIATE WORDS ARE NOT DELETED, THE SAME WOULD POSTUL ATE THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETHER HE WAS TO PROCEED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE HON'BLE SUPREME COURT, IN SUCH A SITUATIO N, LEVY OF PENALTY SUFFERS FROM NON - APPLICATION OF MIND. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITION AND, HAVING REGARD TO THE MANNER IN WHICH THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 271(1)(C) OF THE ACT DATED 26.12.2008 WITHOUT STRIKIN G OFF THE IRRELEVANT WORDS, THE PENALTY PROCEEDINGS SHOW A NON - APPLICATION OF MIND BY THE ASSESSING OFFICER AND IS, THUS, UNSUSTAINABLE. 13 . THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME COURT IN TH E CASE OF SSAS. EMARLD MEADOWS(SUPRA) AND, THEREFORE, THE DECISION OF HONBLE SUPREME COURT SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF M/S SUNDARAM FINANCE LIMITED (SUPRA) ITA NO . 2 1 / PAT /201 9 11 RELIED ON BY THE LD. DR , IS NOT APPLICABLE IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SSAS. EMARLD MEADOWS(SUPRA) , WE QUASH THE ORDER OF CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE A O U/S.271(1)(C) OF THE ACT OF RS.2,33,212/ - AND DIRECT THE AO TO DELETE THE SAME. ACCORDINGLY, THE SOLE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED . 14 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN PURSUANCE WITH RULE 34/4 OF ITAT RULES, 1963 BY PUTTING THE COPY OF THE SAME ON NOTICE BOARD ON 26 /07/2019 AT PATNA. SD/ - ( C.M.GARG ) SD/ - ( L.P.SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER PATNA ; DATED 26 / 0 7 /201 9 PKM , S R.P.S. COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) INCOME TAX APPELLATE TRIBUNAL , PATNA 1. THE APPELLANT - . DEVILAL BAIJNATH PRASAD ZAVERI SUMATI PALACE, BORING ROAD, PATNA (BIHAR) - 800001 2. THE RESPONDENT - ACIT, CENTRAL CIRCLE - 3,PATNA 3. THE CIT(A), 4. CIT 5. DR, ITAT, PATNA 6. GUARD FILE. //TRUE COPY//