RAJARAM STOCK BROKING CO. (MUMBAI), MUMBAI V. ITO WD 4(2)(1), MUMBAI

ITA 2250/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8899 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 10-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Assessee Lawyers: DINKEL HARIA
• Keywords: Unexplained cash credit; Unexplained expenditure; Peak credit; Agreed addition; Accommodation entries; Set aside
• Section: 271(1)(c); 143(3); 274; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUM BAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.2250/MUM/2018 ( ASSESSMENT YEAR: 2004-05 ) RAJARAM STOCK BROKING CO. (MUMBAI) PRIVATE LIMITED 919, P.J.TOWER DALAL STREET, FORT MUMBAI-400 023 VS. ITO,WARD-4(2)(1) AAYKAR BHAWAN M.K.ROAD MUMBAI-400 007 PAN/GIR NO. A ABCR1110Q APPELLANT ) .. RESPONDENT ) ASSESSEE BY SMT. DINKEL HARIA, AR REVENUE BY SHRI. MICHAEL JERALD, DR DATE OF HEARING 21/07 /2020 DATE OF PRONOUNCEME NT 29 / 0 7 /2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)9, MUMBAI, DATED 12/03/2018 AND PERTAINS TO ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1.1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER AND CO NFIRMING THE PENALTY U/S 271(1)(C) AMOUNTING TO RS. 2.96,254/-. 1.2) THE APPELLANTS SUBMIT THAT ON THE FACTS AND CI RCUMSTANCES OF THE CASE AS WELL AS IN THE LAW, THE ORDER IMPOSING PENA LTY U/S 271(1)(C) IS BAD IN LAW AND THEREFORE, THE SAME OUGHT TO HAVE BEEN QUASHED. ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 2 1.3) THE APPELLANTS SUBMIT THAT ON THE FACTS AND TH E CIRCUMSTANCES OF THE CASE AS WELL AS IN THE LAW THE PENALTY OUGHT TO HAVE BEEN DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX ( APPEAL). 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELE TE OR MODIFY ALL OR ANY THE ABOVE GROUNDS AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAD FILED RETURN OF INCOME FOR AY 2004-05 ON 01/11/2004, DECL ARING TOTAL INCOME OF RS.3,30,925/- AND THE ASSESSMENT WAS COMP LETED U/S 143(3) OF THE I.T.ACT, 1961 ON 28/12/2006 DETERMINI NG TOTAL INCOME AT RS.27,16,226/- INTER-ALIA BY MAKING ADDITIONS TOWARDS UNEXPLAINED CASH CREDITS U/S 68 OF THE I.T.ACT, 1961 FOR RS.18 LACS TOWARDS UNSECURED LOANS TAKEN FROM CERTAIN PARTIES. THE ASS ESSEE CARRIED MATTER IN APPEAL BEFORE FIRST APPELLATE AUTHORITY A ND THE LD.CIT(A), VIDE ORDER DATED 17/01/2012, HAS CONFIRMED ADDITION OF UNEXPLAINED CASH CREDIT. THE ASSESSEE CARRIED MATTER IN FURTHER APPEAL BEFORE TRIBUNAL AND THE ITAT, MUMBAI, VIDE ORDER DATED 05/ 02/2013 IN ITA NO. 4049/MUM/2009 HAS SET ASIDE THE ISSUE TO THE FI LE OF THE LD. AO TO DECIDE THE ADDITIONS AFTER ALLOWING FRESH OPPORT UNITIES OF HEARING TO THE ASSESSEE. THEREAFTER, THE ASSESSMENT HAS BEE N COMPLETED U/S 143(3) R.W.S. 254 OF THE I.T.ACT, 1961 ON 27/03 /2014, WHEREIN THE ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH CREDIT WAS RESTRICTED TO RS.8,06,132/-. 4. SUBSEQUENTLY, THE HAS INITIATED PENALTY PROCEEDI NGS U/S 271(1)(C) OF THE I.T.ACT, 1961 AND CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY SHALL NOT BE LEVIED FOR C ONCEALMENT OF PARTICULARS OF INCOME. THEREAFTER, THE ORDER IMPOSI NG PENALTY WAS PASSED ON 30/09/2014 LEVYING PENALTY @ 100% TAX SOU GHT TO BE EVADED, IN RESPECT OF ADDITIONS MADE TOWARDS UNEXPL AINED CASH ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 3 CREDIT OF RS.8,88,762/- AND LEVIED PENALTY OF RS. 2 ,96,254/-. THE RELEVANT FINDINGS OF THE LD. AO ARE AS UNDER:- 3.1. SEPARATE PENALTY PROCEEDINGS WERE ALSO IN ITIATED BY ISSUING NOTICE U/S.274 R.W.S,271 OF THE INCOME TAX ACT ,1961 ON 27 .03.2014. THE ASSESSEE FURNISHED REPLY VIDE DT.28.04.2014. 3.2 IT WAS STATED BY THE ASSESSEE THAT AN ORDER U/ S.27L(1)(C) IN IMPOSING A PENALTY OF RS. 6,45,750/- WAS MADE AGAINST THE AS SESSEE AND THE QUESTION OF PASSING ANY FURTHER ORDER OF PENALTY UN DER THE PROVISION OF SECTION 271(1) IN RESPECT OF THE SAME ALLEGED CONC EALED INCOME DOES NOT ARISE AND AS SUCH THE NOTICE ISSUED U/S.274 R.W .S,271(1)(C)) IS BAD IN LAW. IT WAS FURTHER ARGUED BY THE ASSESSEE THAT THE ASSESSEE HAD WITHDRAWN HIS RIGHT TO CROSS EXAMINE THE WITNESS ON LY IF THE ASSESSMENT WAS COMPLETED ON THE BASIS OF CONDITIONAL OFFER OF AGREED ADDITION OF RS.806132/- AND NOT OTHERWISE. THE ASSESSES WAS NOT ALLOWED AND OPPORTUNITY TO CROSS EXAMINE. 3.3. THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN CARE FULLY CONSIDERED. AS PER THE DIRECTION OF THE HON'BLE ITAT, THE SET ASID E ASSESSMENT IN THIS CASE WAS COMPLETED AND THE AMOUNT OF ADDITION U/S.6 8 OF THE I.T.ACT 1961 WAS MADE AT RS.8,06,132/-. THIS AMOUNT OF ADDI TION WAS MADE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND AS PER THE ASSESSEE'S WORKING. THE CONTENTION OF THE ASSESSEE THAT THE AG REED ADDITION WAS CONDITIONAL DOES NOT CARRY MUCH WATER. THE ADDITION S WERE MADE AFTER VERIFYING ALL THE MATERIAL ON RECORD AND CONSIDERIN G ALL THE SUBMISSIONS OF THE ASSESSEE. THE ADDITION WAS MADE ON THE BASIS TH AT CASH OR CHEQUE FROM OTHER BANKS WERE DEPOSITED AND LOANS WERE ADVA NCED TO THE ASSESSEE COMPANY BY M/S,RUCHITA ENTERPRISES AND M/S .ANTIMA CORPORATION. ACCOUNTS IN THE NAMES OF THESE CONCERN S WERE OPENED WITH AN AIM TO PROVIDE ACCOMMODATION ENTRIES. 4. THE ABOVE DISCUSSION CLEARLY SHOWS THAT THE AS SESSEE HAS CONCEALED INCOME AND FURNISHED INACCURATE PARTICULARS OF INCO ME. HENCE, IT IS A FIT CASE FOR LEVYING PENALTY U/S.271(1)(C) OF THE ACT, THE MINIMUM AND MAXIMUM PENALTY WORKS OUT TO @100% OF TAX SOUGHT TO BE EVADED AND RS.8,88,762/- @300% OF TAX SOUGHT TO BE EVADED BY T HE ASSESSEE. 5. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A ), THE ASSESSEE HAS CHALLENGED IMPOSITION OF PENALTY ON LEGAL GROUN DS AND ARGUED THAT PENALTY LEVIED BY THE LD. AO, CONSEQUENT TO IN VALID NOTICE IS VOID AB-INITIO AND LIABLE TO BE QUASHED. THE ASSESSEE HAS ALSO CHALLENGED PENALTY IMPOSED ON ADDITIONS TOWARDS UNE XPLAINED CASH ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 4 CREDITS, ON THE GROUND THAT THE ASSESSEE HAS VOLUNT ARILY SURRENDERED ADDITIONS, NOT FOR ANY OF THE REASONS, BUT TO BUY PEACE AND TO END LITIGATIONS. THEREFORE, THE SAME CANNOT BE CONSIDER ED AS CONCEALMENT OF PARTICULARS OF INCOME. THE LD.CIT(A) AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AN D ALSO BY RELIED UPON VARIOUS JUDICIAL PRECEDENTS CONFIRMED PENALTY LEVIED BY THE LD. AO U/S 271(1)(C) OF THE ACT, ON THE GROUND THAT EVE N THOUGH, THE ITAT HAD SET ASIDE THE MATTER ESPECIALLY FOR THE PU RPOSE OF PROVIDING OPPORTUNITY TO THE ASSESSEE FOR CROSS-EXAMINING OF M/S KAILASH KABRA, THE FACT IS THAT THE ASSESSEE COULD NOT AVAI L THE SAID OPPORTUNITY LEGITIMATELY FOR WHATSOEVER REASONS. FR OM THE ABOVE, IT IS VERY CLEAR THAT THE ASSESEE HAS SURRENDERED PEAK CREDIT OF UNSECURED LOANS, WHEN IT WAS NOT ABLE TO SUBSTANTIA TE UNSECURED LOANS TAKEN FROM THOSE PARTIES, BUT NOT VOLUNTARILY TO BUY PEACE OR TO END LITIGATIONS. THEREFORE, THERE IS NO ERROR IN TH E FINDINGS RECORDED BY THE LD. AO, WHILE LEVYING PENALTY U/S 271(1)(C) OF THE I.T.ACT, 1961. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER:- 5. I HAVE PERUSED THE FARTS OF THE CASE RIN D APPELLANT'S SUBMISSIONS CAREFULLY. 1 FIND THAT IN ORIGINAL ASSESSMENT ORDER U/S 143(3), THE ADDITION WAS MADE IN RESPECT OF PEAK CASH CREDIT FROM 3 PART IES, I.E. (I) M/S DEEPAK CORPORATION, (II) M/S RUCHITA ENTERPRISES, & (HI) M/S ANTIMA CORPORATION. THE ASSESSEE HAD CLAIMED THAT THESE AR E CONCERNS OF ONE SHN KAILASH KABRA IN HIS STATEMENT, ON OATH, SHRI K AILASH KABRA HAD ADMITTED TO HAVE GIVEN FUNDS TO ASSESSEE COMPANY TH ROUGH HIS PROPRIETARY CONCERN M/S DEEPAK CORPORATION. AS FOR THE OTHER TWO CONCERNS, VIZ. M/S RUCHITA ENTERPRISES & M/S ANTIMA CORPORATION, SHRI KAILASH KABRA STATED THAT THE TRANSACTIONS WERE DON E BY THE ASSESSEE COMPANY BUT THE CHEQUES WERE SIGNED BY HIM ON BEHAL F OF THE ASSESSEE COMPANY. THEREFORE, SHRI KAILASH KABRA DISOWNED THE SAID TWO CONCERNS AS OWNED BY HIM. DURING APPELLATE PROCEEDINGS BEFOR E CIT(A), THE DIRECTOR OF ASSESSEE COMPANY REQUESTED FOR CROSS EX AMINATION OF SHRI KAILASH KABRA AT THE REMAND STAGE, BUT SHRI KAILASH KABRA DID NOT PRESENT HIMSELF ON APPOINTED DAYS. BASED ON THE FAC TS, THE CIT(A) CONFIRMED THE ADDITION OF RS. 18.00,000/-. SUBSEQUE NTLY, THE HON'BLE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO ALLOW ON E MORE OPPORTUNITY TO ASSESSES COMPANY TO CROSS EXAMINE SHRI KAILASH KABR A. IN THE ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 5 ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 254, THE A SSESSING OFFICER ISSUED SUMMONS U/S 131 TO MR. DEVAKIKRISHNA R. KENI , DIRECTOR OF ASSESSES COMPANY FOR APPEARING FOR CROSS EXAMINATIO N OF MR. KAILASH KABRA, THE ASSESSES TRIED TO SEND HIS AUTHORISED RE PRESENTATIVE FOR CROSS EXAMINATION, WHICH WAS NOT ALLOWED BY THE ASSESSING OFFICER. LATER, BY LETTER DATED 04.03.2014, THE ASSESSEE COMPANY CITIN G OLD AGE AND ILL HEALTH OF DESIGNATED DIRECTORS, MR. DEVAKIKRISHNA R. KENI & MRS. SUMANGALA D. KENI AND TO BUY MENTAL PEACE, REQUESTE D TO RESTRICT THE DISALLOWANCES TO RS.8,06,132/-, WHICH WAS THE PEAK UNEXPLAINED CREDIT FROM M/S RUCHITA ENTERPRISES & M/S ANTIMA CORPORATI ON. ACCORDING TO ASSESSEE, THE CASH CREDIT FROM M/S DEEPAK CORPORAT ION \VAS EXPLAINED SINCE MR. KAILASH KABRA HAD EARLIER CATEGORICALLY A DMITTED THAT SAID CONCERN WAS HIS PROPRIETARY CONCERN. IN THE SAID LETTER DATED 04.03.2014, THE ASSESSEE OFFERED THE NET ADDITION OF RS. 8,06,1 32/-PROVIRIED NO PENALTY HE LEVIED AND NO ADVERSE INFERENCE IS DRAWN . 1 HOWEVER FIND THAT FIRSTLY, THE SAID LETTER DATED 04.03.2014 DOES NOT BEAR THE ACKNOWLEDGEMENT STAMP OF THE AO'S OFFICE; AND SECON DLY, EVEN IF THE ASSESSEE MIGHT HAVE MADE SUCH OFFER SUBJECT TO COND ITION THAT NO PENALTY BE LEVIED, IT WAS FOR THE AO TO ACCEPT SUCH CONDITION OR NOT. THE FACT IS THAT THE AO IN HIS ORDER U/S 143(3) R.W.S. 254 HAS INDEED RESTRICTED THE ADDITION FOR UNEXPLAINED EXPENDITURE TO RS. 8.0 6.132/-. HOWEVER, HE HAS INITIATED PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE ACT AS WELL. I FIND THAT WHILE THE HON'BLE ITAT'S HAD SET ASIDE THE MAT TER ESPECIALLY FOR THE PURPOSE OF PROVIDING OPPORTUNITY TO THE ASSESSE FOR CROSS EXAMINATION OF MR. KATLASH KABRA, THE FACT IS THAT SHE ASSESSEE CO ULD NOT AVAIL THE SAID OPPORTUNITY LEGITIMATELY FOR WHATSOEVER REASONS. TH E APPELLANT'S OBJECTION TO NOT ALLOWING CROSS - EXAMINATION BY ITS AUTHORIS ED REPRESENTATIVE COULD NOT HAVE BEEN SUSTAINED, BECAUSE THE ASSESSEE HAD B EEN ISSUED SUMMONS U/S 131 OF THE ACT FOR THE PURPOSE, WHICH I S ALWAYS PERSONAL AND, THEREFORE, IN WHICH CASE, THE ASSESSEE HIMSELF WAS REQUIRED TO ATTEND PERSONALLY IN VIEW OF SECTION 288(1) OF THE ACT. HENCE, THE AO CANNOT BE BLAMED FOR NOT ALLOWING CROSS EXAMINATION TO THE ASSESSE. IN ANY CASE, THE FACT IS THAT THE ASSESSEE ITSELF HAS AGREED TO THE ADDITION TO THE TUNE OF RS. 8,06,132/- WHICH IS QUIET A MEANING FUL ADMISSION AND THEREFORE, IT IS UNDISPUTED NOW THAT THE SAID AMOUN T CONSTITUTED UNEXPLAINED CASH CREDIT IN HANDS OF THE APPELLANT. IN THE MATTER OF PENALTY IMPOSABLE IN CASE OF SURRE NDER OF INCOME TO BUY MENTAL PEACE, THE APPELLANT HAS RELIED UPON SOME CA SE LAWS, E.G. CIT VS. MARSH TALWAR 335 1TR 200 (DEL.}, CIT VS. SLN TRADER S 243 CTR 407 (KAR), RAMRUITH JAGANNATH VS. STATE OF MAHARASHTRA 57 STC 46 (BOM) ETC. I FIND THE SAME TO BE DISTINGUISHABLE, SINCE I N PRESENT CASE, THE INCOME SURRENDERED IS NOTHING BUT THE PEAK CREDIT I N RESPECT OF 2 \ CONCERNS I.E. M/S RUCHITA ENTERPRISES & M/S ANTIMA CORPORATION, WHICH WERE ALREADY PART OF ADDITION MADE IN ORIGINAL ASSE SSMENT ORDER. HENCE, IN EFFECT, THE APPELLANT HAD ASKED FOR RELIEF IN RESPECT OF CASH C REDIT FROM 3 RD CONCERN I.E. M/S DEEPAK CORPORATION, BASED ON CERT AIN EXPLANATION WHICH WAS ACCEPTED BY THE AO, THERE WAS NO PLAUSIBL E EXPLANATION AVAILABLE WITH THE ASSESSEE IN RESPECT OF M/S RUCHI TA ENTERPRISES & M/S ANTIMA CORPORATION, THAT'S WHY, IT HAS AGREED TO SA ID ADDITION. IN SUCH CASE, ANY CONDITION ATTACHED UNILATERALLY BY THE AS SESSED TO SUCH ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 6 ACCEPTANCE OF ADDITION IN THE GUISE OF BUYING MENTA L PEACE, CANNOT BE THE GROUND TO DISCARD THE PENALTY PROCEEDINGS U/S 2 71(L) (C) OF THE ACT. THE APPELLANT COMPANY HAD TAKEN INTEREST, TREE LOAN S FROM THESE TWO CONCERNS, AND THERE WAS LARGE SCALE CASH DEPOSITS I N SAID CONCERNS, WHICH IS SUFFICIENT TO PROVE THAT THE APPELLANT'S O WN UNACCOUNTED FUNDS WERE ROUTED THROUGH SAID CONCERNS, IN SUCH CASE, I FIND THAT THE IMPOSITION OF PENALTY U/S 271(1)(C) WAS NOT UNCALLE D FOR. IN FACT, I FIND AO TO BE VERY GENEROUS IN THAT HE HAS LEVIED ONLY 100% PENALTY WHEREAS THE LITIGATION BY ASSESSEE WAS QUIET PROTRACTED AND FIN ALLY, ENDED IN A WHIMPER WITH ASSESSEE' REFUSAL TO AVAIL OPPORTUNITY ACCORDED BY TRIBUNAL. ACCORDINGLY, THE PENALTY OF RS. 2.96.254/- DESERVES TO BE CONFIRMED, AND THEREFORE, THE GROUNDS OF APPEAL ARE DISMISSED. 6. THE LD. AR FOR THE ASSESSEE REFERRING TO ADDITIO NAL GROUNDS FILED CHALLENGING THE VALIDITY OF NOTICE ISSUED U/S 274 R.W.S 271 OF THE I.T.ACT, 1961, DATED 27/03/2014 SUBMITTED THAT THE LD. AO HAS ISSUED A VAGUE NOTICE WITHOUT STRIKING OF NON APPLI CABLE OR IRRELEVANT PORTION IN THE NOTICE, WHICH IS EVIDENT FROM THE FA CT THAT THE LD. AO HAS NOT APPLIED HIS MIND TO THE FACTS BEFORE INITIA TING PENALTY UNDER WHICH LIMB THE PROPOSED PENALTY PROCEEDINGS HAS BEE N INITIATED. THE LD. AR, FURTHER SUBMITTED THAT EVEN IN ASSESSMENT O RDER, THE LD. AO HAS NOT ARRIVED AT CLEAR SATISFACTION TO THE LIMB U NDER WHICH PENALTY IS PROPOSED, WHICH IS EVIDENT FROM THE FACT THAT, H E SIMPLY MENTIONED THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, SEPARATELY INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME. FURTHER, WHILE LEVYING PENALTY IN THE ORDER DATED 30/09/2014, THE LD. AO H AS LEVIED PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME AND FOR FU RNISHING INACCURATE PARTICULARS OF INCOME. FROM THE ABOVE, I T IS VERY CLEAR THAT THERE IS NO CLARITY FROM THE SIDE OF THE LD. AO UND ER WHICH LIMB, THE PROPOSED PENALTY PROCEEDINGS HAS BEEN INITIATED. IN THIS REGARD, THE LD. AR FOR THE ASSESSE HAS RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNA THA COTTON & GINNING FACTORY (2013) 359 ITR 565 AND THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 7 (2016) 242 TAXMANN 180 (SC). THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT, IN THE C ASE OF CIT VS SAMSON PERINCHERY IN ITA NO. 1154/MUM/2015, DATED 0 5/12/2017. 7. THE LD. DR ON THE OTHER HAND, STRONGLY SUPPORTIN G ORDER OF THE LD.CIT(A) SUBMITTED THAT THE ADDITIONAL GROUNDS OF APPEAL FILED BY THE ASSESSEE SHOULD NOT BE ADMITTED, BECAUSE THE AS SESSEE HAS NOT ADDUCED ANY REASONS FOR NOT TAKING THE GROUND CHALL ENGING THE VALIDITY OF PENALTY PROCEEDINGS BEFORE THE LD.CIT(A ). IF AT ALL, THE ADDITIONAL GROUNDS OF APPEAL IS ADMITTED, THEN THE APPEAL MAY BE SET ASIDE TO THE FILE OF THE LD.CIT(A) TO DECIDE THE IS SUE OF LEGALITY OF NOTICE ISSUED U/S 274 R.W.S 271 OF THE I.T.ACT, 196 1. AS REGARDS, PENALTY LEVIED ON ADDITIONS TOWARDS UNEXPLAINED CAS H CREDITS U/S 68 OF THE ACT, THE FACTS BROUGHT OUT BY THE LD. AO, AS WELL AS THE LD.CIT(A) ARE VERY CLEAR, THE ASSESEE HAS SURRENDER ED ADDITION TOWARDS UNEXPLAINED CASH CREDIT ON THE BASIS OF PEA K CREDIT, WHEN IT WAS NOT ABLE TO SUBSTANTIATED ITS CLAIM OF UNSECURE D LOANS TAKEN FROM VARIOUS PARTIES, IN LIGHT OF PROVISIONS OF SEC TION 68 OF THE I.T.ACT, 1961. THEREFORE, THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE LD.CIT(A), WHILE CONFIRMING PENALTY LEVIED U/S 271( 1)(C) OF THE I.T.ACT, 1961. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CAREFULLY CONSIDERED CASE LAWS RELIED UPO N BY THE ASSESSEE. AS REGARDS, ADDITIONAL GROUNDS OF APPEAL FILED BY THE ASSESSEE CHALLENGING VALIDITY OF NOTICE ISSUED U/S 274 R.W.S. 271, WE FIND THAT THE ADDITIONAL GROUNDS TAKEN BY THE ASSES EE GOES TO QUESTION THE JURISDICTION OR AUTHORITY OF THE LD. A O, IMPOSING THE ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 8 PENALTY IN LIGHT OF NOTICE ISSUED U/S 274 R.W.S. 27 1 OF THE I.T.ACT, 1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONAL GROUNDS OF APPEAL FILED BY THE ASSESSEE DESERVE TO BE ADMITTED AND HENCE, THE SAME IS ADMITTED FOR ADJUDICATION. 9. HAVING SAID SO, LET US EXAMINE THE LEGAL GROUND TAKEN BY THE ASSESSE CHALLENGING VALIDITY OF NOTICE ISSUED U/S 2 74 R.W.S 271 OF THE ACT. THE ASSESSEE HAS FILED COPY OF NOTICE ISSUED U /S 274 R.W.S. 271(1)(C) OF THE ACT, DATED 27/03/2014, WHICH IS EN CLOSED IN THE PAPER BOOK FILED AT PAGE NO.7. ON PERUSAL OF NOTICE ISSUED BY THE LD. AO, WE FIND THAT THE LD. AO HAS ISSUED PRINTED FORM OF NOTICE WITHOUT STRIKING OFF, OR TICKING RELEVANT PORTION OF THE NO TICE, WHICH IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. FURTHE R, ON PERUSAL OF ASSESSMENT ORDER PASSED BY THE LD. AO, WE FIND THAT THE LD. AO HAS INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF PA RTICULARS OF INCOME. BUT, IN THE PENALTY ORDER PASSED ON 30/09/2 014, THE LD. AO HAS LEVIED PENALTY U/S 271(1)(C) OF THE ACT FOR CON CEALMENT OF PARTICULARS OF INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME. FROM THE ABOVE, IT IS VERY CLEAR THAT THE L D. AO HAS NOT ARRIVED AT CLEAR SATISFACTION AS TO UNDER WHICH LIM B OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT, THE PROPOSED PENALTY PROCEEDINGS HAS BEEN INITIATED, WHICH IS EVIDENT FROM THE FACT THA T THERE IS NO CLEAR SATISFACTION IN THE ASSESSMENT ORDER AND THE NOTICE IS ABSOLUTELY SILENT ON THIS ASPECT. THE SAID LAPSE IS CONTINUED EVEN IN PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, WHICH IS EVI DENT FROM THE FACT THAT WHERE THE PENALTY HAS BEEN LEVIED ON BOTH LIMB S. IT IS A WELL SETTLED PROPOSITION OF LAW THAT PENALTY CANNOT BE I NITIATED FOR THE LIMB, WHICH IS DIFFERENT FROM THE LIMB FOR WHICH PROPOSED PENALTY PROCEEDINGS HAS BEEN INITIATED. FURTHER, IF THE PEN ALTY PROCEEDINGS ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 9 HAS BEEN INITIATED FOR ONE LIMB AND LEVIED UNDER DI FFERENT LIMB, THEN THE WHOLE PENALTY PROCEEDINGS BECOME VITIATE. FURTH ER THE LD. AO HAS TO ARRIVED AT CLEAR SATISFACTION REGARDING THE LIMB UNDER WHICH, HE PROPOSED TO LEVY PENALTY BEFORE ISSUE OF NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT. THIS LEGAL PROPOSITION IS SUP PORTED BY THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND WAS UPHELD BY THE HON'BLE SUPREME COURT, IN THE CASE OF CIT VS M/S SSA 'S EMERALD MEADOWS (SUPRA). HONBLE JURISDICTION BOMBAY HIGH COURT IN THE CASE CIT VS SAMSON PERINCHERY (SUPRA) HAS HELD THAT IF NOTICE ISSUED FOR ONE LIMB AND PENALTY LEVIED FOR ANOTHER LIMB THEN, THE WHOLE PROCEEDINGS BECOME VOID AB-INITO AND LIABLE T O BE QUASHED. IN THIS CASE, ON PERUSAL OF FACTS, WE FIND THAT THE LD . AO HAS FAILED TO ARRIVE AT CLEAR SATISFACTION, AS REGARDS, THE LIMB UNDER WHICH THE PROPOSED PENALTY PROCEEDINGS HAS BEEN INITIATED AND SAID LAPSE WAS EVEN CONTINUED IN THE ORDER IMPOSING PENALTY. THERE FORE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER IMPOSING PENALTY PASSED BY THE LD. AO U/S 271(1)(C) OF THE ACT IS ILLEGAL AND BAD IN LAW. THEREFORE, WE QUASHED PENALTY ORDER PASSED BY THE LD. AO AND D IRECT THE LD. AO TO DELETE CONSEQUENT PENALTY LEVIED U/S 271(1)(C ) OF THE I.T.ACT, 1961. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS: 29/07 /2020 SD/- (RAM LAL NEGI) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO.2250/MUM/2018 RAJARAM STOCK BROKING CO.(MUMBAI) PVT.LTD. 10 MUMBAI ; DATED: 29/07/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//