Shri Arun Kumar Lila, Bhopal V. THE ACIT -1(2), Bhopal

ITA 230/IND/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2188 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 15-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M D PATWA; ASISH GOYAL AR SHRI
• Keywords: Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3); 153A; 132; 139

Judgement Text

SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 1 OF 12 , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE , .., BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER ITA NO.226 TO 230/IND/2016 ASSESSMENT YEAR: 2005-06, 2007-08 TO 2009-11 / O R D E R PER CHANDRAMOHAN GARG, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-31, NEW DEL HI, CAMP. BHOPAL (IN SHORT CIT), DATED 23.12.2015 PASSED I N THE FIRST APPEAL NO.464 TO 468/13-14 OF THE ACT, FOR THE A.Y. 2005- 06, 2007-08 TO 2009-11. SHRI ARUN KUMAR LILA BHOPAL / VS. A CIT, 1( 2 ), BHOPAL (APPELLANT ) (REVENUE ) P.A. NO. AARPL5228N APPELLANT BY SHRI M.D. PATWA , & SHRI ASISH GOYAL (AR) REVENUE BY SHRI MOHD. JAVED SR.DR DATE OF HEARING: 11.07.2017 DATE OF PRONOUNCEMENT: 10.08.2017 SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 2 OF 12 2 . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06, 2007-08 TO 2009-11 ARE IDE NTICAL ISSUES. THE ASSESSEE HAD APPEALED AGAINST THE ORDER OF LD. CIT(A) IN CONFIRMING THE IMPOSITION OF PENALTY U/S 271(1)(C) OF RS.25,000/-, RS.1,20,000/-, RS.3,10,000/- , RS.3,10,000/- AND RS .5,00,000/- FOR A.Y. 2005-06, 2007-08 TO 2009-11 RESPECTIVELY W ITHOUT ACCEPTING THE EXPLANATION OFFERED AND ALSO NOT TAKI NG INTO CONSIDERATION THE FACT THAT THE ASSESSEE HAD RETURN ED INCOME AS SHOWN IN THE RETURN FILED U/S 153A IS ACCEPTED AND NO ADDITION WAS MADE IN THE ASSESSMENT. FURTHER, THE INCOME SURREND ERED IN THE STATEMENT TAKEN U/S 132 (4) DURING THE COURSE OF SE ARCH WAS MADE WITH THE UNDERSTANDING THAT THE SURRENDERED INCOME DURING THE COURSE OF SEARCH WOULD NOT ATTRACT PENALTY U/S 271( 1)(C) FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME WILL BE INITIATED. 3. FOR THE SAKE OF BREVITY AND COMPLETENESS WE ARE TA KING UP THE CASE OF ITA NO.226/IND/2016 FOR ASSESSMENT YEAR 200 5-06. AS WE HAVE ALREADY STATED THAT THE GROUNDS RAISED BY THE ASSESSEE IN ALL 5 APPEALS ARE SIMILAR AND IDENTICAL EXCEPT AMOUNT OF PENALTY. THE GROUNDS RAISED FOR ASSESSMENT YEAR 2005-06 READS AS UNDER; THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE IMPOSITION OF PEN ALTY U/S 271(1)(C) OF RS.25,000/- WITHOUT ACCEPTING THE EXPLANATION OFFER ED BY THE ASSESSEE AND WITHOUT APPRECIATING THE FACT THAT THE RETURNED INCOME AS SHOWN IN THE RETURN FILED U/S 153A IS ACCEPTED AND NO ADDITI ON WAS MADE IN THE ASSESSMENT. FURTHER, THE INCOME SURRENDERED IN THE STATEMENT TAKEN U/S 132(4) DURING THE COURSE OF SEARCH WAS MADE WIT H THE ONLY SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 3 OF 12 UNDERSTANDING THAT IF THE INCOME IS SURRENDERED DUR ING THE COURSE OF SEARCH, NO PENALTY U/S 271(1)( C) FOR CONCEALMENT O F INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WILL BE INITIATED . 4. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RE LEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. THE LD. COUNSEL OF THE ASSESSEE FIRST OF ALL SUBMITTED THAT IN THE PEN ALTY ORDER AT PARA- 4 IT HAS BEEN MENTIONED THAT PENALTY PROCEEDINGS U /S 271(1)(C) OF THE I.T ACT 1961 WAS INITIATED FOR FURNISHING INAC CURATE PARTICULARS OF INCOME WHEREAS IN PARA 6 AT PAGE 2 THE AO MENTI ONED THAT IN VIEW OF ACT, THE TREATMENT ACCORDED BY THE AO IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT HE SATISFIED THAT THE A SSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME AND THERE IS A CASE AGAINST THE ASSESSEE FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. THE LD. COUNSEL FURTHER POINTED OUT THAT IN THE 2 ND PART OF PAGE-6 THE ASSESSING OFFICER MENTIONED THAT CONSIDERING THE TO TALITY OF THE CASE AND CIRCUMSTANCES OF THE CASE PENALTY IS HEREBY LEV IED FOR CONCEALMENT OF INCOME. 5. AFTER DRAWING OUR ATTENTION TOWARDS ABOVE NOTED FA CTS THE LD.DR VEHEMENTLY POINTED OUT THAT THE PROCEEDINGS W ERE INITIATED FOR THE CHARGE OF FURNISHING OF INACCURATE PARTICU LARS OF INCOME WHEREAS THE PENALTY HAS BEEN LEVIED FOR THE CHARGE OF CONCEALMENT OF INCOME, THEREFORE THE CHARGE FOR WHICH PENALTY WAS INITIATED AND CHARGE FOR WHICH PENALTY HAS BEEN LEVIED IS QUITE D ISTINCT AND THE SAME HAS BEEN CHANGED, THEREFORE, IN VIEW OF RATIO OF THE DECISION OF ITAT. INDORE IN THE CASE OF ACIT V/S MP TOURISM DEV ELOPMENT CORPORATION REPORTED AS 26 ITJ 225 (ITAT, INDORE) T HE PENALTY IS NOT VALUED AND SUSTAINABLE. SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 4 OF 12 6. IN THE SECOND LIMB OF ARGUMENT THE LD.COUNSEL SUBM ITTED THAT THE CONCEALMENT OF INCOME FOR IMPOSING PENALTY HAS TO BE SEEN FROM THE RETURN OF INCOME AND IN THE PRESENT CASE RETURN FILED BY THE ASSESSEE U/S 153A OF THE ACT HAS BEEN TREATED ACCEP TED AND RETURN U/S 139 OF THE ACT WERE NOT ADDITIONAL INCOME OFFER ED, TAX WAS PAID AND THE A.O ACCEPTED THE RETURNED INCOME AND IN THE FINAL ORDER WITHOUT MAKING ANY ADDITION, THEREFORE THE PENALTY COULD NOT BE LEVIED ON THE ASSESSEE. FOR THIS PROPOSITION THE LD . COUNSEL PLACED RELIANCE ON THE ITAT, PUNE IN THE CASE OF SMT. PRAM ILA D. ASHTEKAR VS.ITO (2013) 39 TAXMANN.COM 103 (PUNE-TRIB.). 7. LASTLY, THE LD. COUNSEL SUBMITTED THAT A SEARCH WA S CONDUCTED AFTER 31.05.2007 THE PROVISION OF SECTION 271(1)(C) OF THE ACT READ WITH EXPLANATION 5A SHALL BE APPLICABLE WHICH REQUI RES THAT SEARCH HAS TO BE CONDUCTED ON ORDER AFTER 1.6.2007; ASSESS EE IS FOUND TO BE OWNER OF INTER ALIA, ANY INCOME WERE SHOWN IN TH E BOOKS/DOCUMENTS/TRANSACTIONS; THE ASSESSEE CLAIMS T HAT SUCH ENTRY IN BOOKS REPRESENTS HIS INCOME AND DUE DATE F OR FILING RETURN FOR SUCH YEAR HAS ELAPSED AND RETURN NOT FILED OR R ETURN IS FILED BUT SUCH INCOME IS NOT OFFERED TO TAX. THE LD. COUNSEL FURTHER SUBMITTED THAT IN SUCH A CASE EVEN IF INCOME IS DEC LARED BY HIM IN RETURN ON OR AFTER, HE SHALL DEEMED TO HAVE CONCEAL ED THE PARTICULARS OF HIS INCOME FOR FURNISHED IN ACCURATE PARTICULARS OF THE INCOME. 8 . THE LD. COUNSEL SUBMITTED THAT IN THE PRESENT CAS E, INSURANCE POLICIES WERE NOT FOUND IN THE NAME OF FAMILY MEMBE RS AND THESE PERSONS ARE SEPARATE AS THEY ARE FILING THEIR RETUR N OF INCOME. THE SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 5 OF 12 LD. COUNSEL FURTHER STATED THAT ONLY IN ONE-TWO YEA RS INSURANCE POLICIES IN THE NAME OF ASSESSEE OR IN THE NAME OF MINOR CHILDREN OF THE ASSESSEE WERE FOUND. THE LD. COUNSEL STRENUOUSL Y CONTENDED THAT ALMOST ALL INSURANCE POLICIES FOUND IN THE NAM E OF BROTHERS SHALL BE PRESUMED TO BE PERTAINS TO THEM AND DURING SEARCH THE ASSESSEE COOPERATED BY THE REVENUE AUTHORITIES, SUR RENDERED INCOME TO BUY PEACE OF MIND INSPITE OF THE FACT THA T THE REAL OWNERS AND BENEFICIARIES OF THE POLICIES ARE OTHER FAMILY MEMBERS IN WHOSE NAMES THE AMOUNT WAS INVESTED. THE LD. COUNSEL SUB MITTED THAT THE ASSESSEE SURRENDERED AMOUNT ON BEHALF OF FAMILY MEMBERS WHICH WAS OFFERED IN THE RETURN AND TAX PAID THEREO N AND THE ASSESSEE WAS NOT OWNER IN THE RECORD AND BOOKS, THE REFORE, PENALTY CANNOT BE LEVIED AGAINST THE ASSESSEE BY TAKING SUP PORT OF EXPLANATION AT 5A OF THE ACT. 9. REPLYING TO THE ABOVE THE LD.DR STRONGLY SUPPORTED TO ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE H IMSELF DURING THE SEARCH OPERATION SURRENDERED THE AMOUNT ON WHIC H THE PENALTY HAVE BEEN LEVIED AND THIS AMOUNT NOT BROUGHT TO THE NOTICE OF THE DEPARTMENT EARLIER THEREFORE, THE PENALTY HAS BEEN LEVIED RIGHTLY WHICH IS SUSTAINABLE. 10. ON BEING ASKED BY THE BENCH THE LD.DR FAIRLY ACCE PTED THAT THE INSURANCE POLICIES FOUND DURING THE SEARCH OPER ATION WERE IN THE NAME OF FAMILY MEMBERS OF THE ASSESSEE WHICH IN CLUDED HIS BROTHERS, THEIR WIVES AND THEIR CHILDREN AND THE AS SESSEE COULD NOT TO BE CONSIDERED AS BENEFICIARY OWNER OF SUCH POLIC IES WHICH ARE SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 6 OF 12 BEING TAKEN AS BASIS OF ANY ENTRY IN BOOKS/DOCUMENT S OF THE TRANSACTIONS. 11. ON CAREFULLY CONSIDERATION OF RIVAL SUBMISSIONS WE OBSERVE THAT THE LD.DR COULD NOT BE CONTRADICT THE FACT THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED ON THE BASIS OF SUR RENDER PERTAINING TO INSURANCE POLICIES OF FAMILY MEMBERS ON THE CHAR GE OF FURNISHING OF INACCURATE PARTICULARS AND IN THE F IRST PART OF PENALTY ORDER PARA 6 THE A.O OBSERVED THAT HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME AND THERE A CASE AGAINST THE ASSESSEE FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT AND FINALLY IN THE SECOND PART OF PENALTY ORDER THE ASS ESSEE OBSERVED THAT ACCEPTING THE TOTALITY OF FACTS AND CIRCUMSTA NCES OF THE CASE, PENALTY U/S 271(1)(C) AMOUNTING TO RS.25,000/-, IS HEREBY LEVIED FOR ASSESSMENT YEAR 2005-06 FOR CONCEALMENT OF INCOME. 12 . IN THIS SITUATION, WE ARE INCLINED TO HOLD THAT T HE A.O INITIATED PENALTY PERTAINS OF ALLEGATION OF FURNISHING OF PAR TICULARS BY THE ASSESSEE AND WHEREAS IN THE LAST PARA OF PENALTY OR DER IT IS VIVID THAT THE PENALTY HAS BEEN LEVIED WITH A DISTINCT AL LEGATION I.E. CONCEALMENT OF INCOME. IN THIS SITUATION THE PROPO SITION LAID BY ITAT, INDORE IN THE CASE OF ACTI V/S MP TOURISM DEV ELOPMENT CORPORATION (SUPRA) COMES FIT PLAY IN FAVOUR OF THE ASSESSEE WHEREIN AFTER CONSIDERING THE RATIO OF RELEVANT DECISION O N THE ISSUE IS AS UNDER; 2 . IN ALL THESE APPEALS, EITHER THE A.O. HAS IMPOSED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS WHILE THE A.O. HA S M.P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 13 IMPOSE D THE PENALTY FOR CONCEALMENT OF INCOME OR THE A.O. HAS INITIATED PEN ALTY FOR CONCEALMENT OF INCOME WHILE THE A.O. HAS LEVIED THE PENALTY FOR FU RNISHING INACCURATE SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 7 OF 12 PARTICULARS. THEREFORE, AS PER THE DECISIONS OF HON BLE SUPREME COURT AND VARIOUS HIGH COURTS, THE A.O. MUST COME TO THE CONC LUSION THAT THE A.O. HAS TO SATISFY WHETHER PENALTY HAS BEEN IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THUS, SATISFACTION OF THE A.O. ABOUT CONCEALMENT OF PARTI CULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IS ESSE NTIAL BEFORE LEVYING ANY PENALTY U/S 271(1) OF THE I.T. ACT, 1961. LD. DR S UBMITTED THAT WITH INSERTION SUB-SECTION (1B) IN SECTION 271 W.E.F. 1. 4.1989, THE DIRECTION OF INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF A .O. SHALL BE DEEMED TO SATISFACTION. 3. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH PARTIES. WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 271(1)(C). WE N OTED THAT PENALTY U/S 271(1)(C) IS LEVIABLE IF AO IS SATISFIED IN THE COU RSE OF ANY PROCEEDINGS UNDER THE INCOME TAX ACT THAT ANY PERSON M.P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 14 HAS CONCEALED PAR TICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. FROM THE ASSESSMENT ORDER WE NOTED THAT THERE IS NO INDICATION WHICH SP EAKS OF AO BEING SATISFIED DURING THE COURSE OF THE ASSESSMENT THAT THE ASSESSEE HAS COMMITTED DEFAULT AS STIPULATED U/S 271(1)(C). NO D OUBT, LEGISLATURE HAS INSERTED SUB-SECTION (1B) IN SEC. 271 BY FINANCE AC T, 2008 W.R.E.F. 1.4.1989 PROVIDED THAT DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF ASSESSMENT SHALL BE DEEMED TO CONSTITUTE S UCH SATISFACTION. IN THE ASSESSMENT WE FIND THAT THERE IS NO SUCH DIRECTION. DIRECTION IS GIVEN ONLY TO THE STAFF TO ISSUE AO, DN & CHALLAN & PEN. NOTI CE U/S 271(1)(C). THIS, IN OUR OPINION, DOES NOT TANTAMOUNT TO A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) AS THE AO HAS NOT UTTERED ANYTHING IN THE ASSESSMENT ORDER IN THIS REGARD. THE ACTION OF THE AO, IN OUR OPINION, IS TOTALLY ILLEGAL AND DOES NOT MEET THE REQUIREMENT O F SEC. 271(1)(C) EVEN AFTER THE AMENDMENT MADE BY THE FINANCE ACT, 2008. IN THE CASE OF MS. MADHUSHREE GUPTA BRITISH AIRWAYS PLC VS. UNION M.P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 15 OF INDIA, 317 ITR 107 (DEL), THE SCOPE OF AMENDMENT WAS EXPLAINED BY THE HON'BLE DEL HI HIGH COURT AS UNDER : IN OUR OPINION, THE IMPUGNED PROVISION ON LY PROVIDES THAT AN ORDER INITIATING PENALTY CANNOT BE DECLARED BAD IN LAW BECAUSE IT STATES THE PENALTY PROCEEDINGS ARE INITIATED, IF OTHERWISE IT IS DISCERNIBLE FROM RECORD THAT THE AO HAS ARRIVED AT PRIMA FACIE SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS. THE ISSUE IS OF DISCERNIBILITY OF THE SATISFACTION ARRIVED AT BY THE AO DURING THE COURSE OF PROCEEDING BEFORE HIM. THE PRESENCE OF PRIMA FACIE SATISFACTION FOR INITIATION OF PENALTY PROCEE DINGS WAS AND REMAINS A JURISDICTIONAL FACT WHICH CANNOT BE WISHED AWAY AS THE PROVISION STANDS EVEN TODAY, I.E. POST AMENDMENT. IF THERE IS NO M ATERIAL TO INITIATE PENALTY PROCEEDINGS; AN ASSESSEE WILL BE ENTITLED TO RECOUR SE TO A COURT OF LAW. 4. THIS IS THE SETTLED LAW THAT THE PENALTY PROCEEDING S AND ASSESSMENT PROCEEDINGS ARE DIFFERENT. THE PENALTY PROCEEDINGS CAN BE INITIATED ON TWO CHARGES I.E. I) CONCEALMENT OF PARTICULARS OF INCOM E AND II) FURNISHING OF INACCURATE PARTICULARS OF INCOME. BOTH THE CHARGES ARE ENTIRELY DIFFERENT. IF THE PROCEEDINGS ARE INITIATED ON CHARGE OF CONCEALM ENT, THEN M.P. STATE SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 8 OF 12 TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 1 6 PENALTY CANNOT BE LEVIED ON THE CHARGE OF FURNISHING OF INACCURATE PA RTICULARS OF INCOME AND VICE VERSA. THUS, THERE MUST BE A CLEAR FINDING ABO UT THE CHARGE FOR WHICH PENALTY IS IMPOSED OR INITIATED. IT IS INCUMBENT UP ON THE AO TO STATE WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF SUCH FINDINGS, THE ORDER WOULD BE BAD IN LAW. THE CASE O F NEW SORATHIA ENGINEERING CO. LTD., 282 ITR 642, HONBLE GUJARAT HIGH COURT HAS HELD AS UNDER: - IT IS INCUMBENT UPON THE ASSESSING OFFICE R TO STATE WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICU LARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF I NCOME HAD BEEN FURNISHED BY THE ASSESSEE. HELD, THAT THE PENALTY O RDER AND THE ORDER OF THE COMMISSIONER (APPEALS) SHOWED THAT NO CLEAR CUT FINDING HAD BEEN REACHED. THE TRIBUNAL HAD FAILED TO APPRECIATE THIS LEGAL ISSUE. THE RATION IN CIT V. MANU ENGINEERING WORKS 132 ITR 306 (GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT BE UPHELD BY THE TRI BUNAL. THE ORDER WAS INVALID. IN THE CASE OF COMMISSIONER OF INCOME TAX V. RAJAN AND CO., 291 ITR 340 (DEL), WHEREIN IT IS HELD THAT THE PROVISIO N OF M.P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 17 SECTIO N 271 (1) (C) OF THE INCOME TAX 1961 WOULD REQUIRE PROPER APPLICATION OF MIND AND RECORDING OF AT LEAST A BARE MINIMUM OPINION ON THE PART OF A O THAT A CASE FOR INITIATION OF PENALTY PROCEEDING WAS MADE AS THERE WAS CONCEALMENT OF INCOME OR THAT INCORRECT PARTICULARS HAD BEEN FURNI SHED BY THE ASSESSEE WITH THE INTENTION TO AVOID PAYMENT OF TAXES. THIS VIEW IS SUPPORTED BY VARIOUS DECISIONS OF HIGH COURT THEREFORE IT IS NOT NECESSARY TO DISCUSS THE OTHER JUDGMENT ON THE ISSUE. 5. AO HAS NOT MADE OUT ANY SPECIFIC CHARGE EITHER OF CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY U/S 271(1) (C) C AN BE LEVIED FOR EITHER OF THE CHARGE. THE PENALTY ORDER SIMPLY STATES THAT PE NALTY IS ATTRACTED ON THIS ADDITION AS IT IS MANDATORY AND AUTOMATIC. IT DOES NOT STATE FOR WHAT DEFAULT PENALTY IS LEVIED SEC. 271(1) (C) (III) IS EXPRESSLY CLEAR THAT THE PENALTY CAN BE LEVIED FOR CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS THE PART ICULARS OF INCOME WHICH IS THE COMMON SUBJECT MATTER OF M.P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 18 BOTH THE CHARGES. THE WORD CONCEAL AS PER WEBSTERS DICTIONARY MEANS TO HIDE, WITHDRAW, OR R EMOVE FROM OBSERVATION; COVER OR KEEP FROM SIGHT; TO KEEP SECR ET; TO AVOID DISCLOSING OR DIVULGING. THAT MEANS NON DISCLOSURE OF PARTICULARS OF INCOME. ON THE OTHER HAND, WHERE PARTICULARS ARE DISCLOSED BUT SUCH DISC LOSURE IS NOT CORRECT, TRUE OR ACCURATE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. FOR EXAMPLE, IN CASE OF BUSINESSMAN, IF A P ARTICULAR TRANSACTION OF SALE IS NOT SHOWN IN THE BOOKS, IT WOULD AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME WHILE SALE IS SHOWN BUT AT A LESSER VALUE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 6. IT IS PERTINENT TO NOTE THAT THRUST OF THE LEGISLATURE IS UPON THE PARTICULARS OF INCOME WHICH ARE EITHER CONCEALED OR FURNISHED INACCURATELY BY T HE ASSESSEE. THEREFORE, SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 9 OF 12 ONE MUST UNDERSTAND THE MEANING OF THE WORDS PARTI CULARS OF INCOME. THE INCOME TAX TRIBUNAL HAD TO CONSIDER THE MEANING OF THE EXPRESSION FURNISHING OF INACCURATE PARTICULARS OF INCOME M. P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 19 APPEARING IN SECTION 271(1) (C) IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD, 122 T TJ 721 (PUNE). IT WAS HELD THAT THE EXPRESSION PARTICULAR REFERS TO FACTS, DETAILS, SPECIFICS OR THE INFORMATION ABOUT SOMEONE OR SOMETHING. THUS, THE D ETAILS OR INFORMATION ABOUT THE INCOME WOULD DEAL WITH FACTUAL DETAILS OF INCOME AND CANNOT BE EXTENDED TO AREAS WHICH ARE SUBJECTIVE SUCH AS STAT US OF THE TAXABILITY OF AN INCOME ADMISSIBILITY OF A DEDUCTION AND INTERPRE TATION OF LAW. ACCORDINGLY, IT WAS HELD THAT MERE REJECTION OF A L EGAL CLAIM WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THIS VIEW IS FORTIFIED BY THE SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETROPRODUCTS, 322 ITR 158 SC. IN THIS CASE, THE CL AIM OF ASSESSEE U/S 36(1) (III) WAS REJECTED BY THE AO AND THE ORDER OF AO WAS UPHELD BY THE TRIBUNAL. AS A RESULT THEREOF, THE PENALTY U/S 271( 1) (C) WAS IMPOSED ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY WAS HELD TO BE ILLEGALLY IMPOSED BY THE TRIBUNAL SINCE FACTUAL DETAILS OF INCOME FURNISHED BY THE ASSESSEE WERE FOUND TO BE CORREC T. THE M.P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 2 0 MATTER ULTIMATELY REACHED THE SC AND THE HONBLE COURT UPHELD THE VIE W OF THE TRIBUNAL BY HOLDING THAT MERE MAKING OF THE CLAIM, WHICH IS NO T SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNTING TO FURNISHING INACCURATE CLAIM OF FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. 7. EXPLANATION 1 TO SECTION 271(1) (C) CANNOT BE APPLI ED WHERE CHARGE AGAINST THE ASSESSEE IS FURNISHING OF INACCURATE PARTICUL ARS OF INCOME SINCE IT PROVIDES A DEEMING FICTION QUA CONCEALMENT OF PARTI CULARS OF INCOME ONLY AND CONSEQUENTLY CANNOT BE EXTENDED TO A CASE WHERE CHARGE AGAINST THE ASSESSEE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME. 8. ON THE OTHER HAND, WHERE CHARGE AGAINST THE ASSESSEE IS FURNIS HING INACCURATE PARTICULARS OF INCOME, THE AO HAS TO ESTABLISH EITH ER THAT ASSESSEE HAS NOT DISCLOSED THE PARTICULARS OF INCOME UNDER THE M AIN PROVISIONS OR THE CASE OF ASSESSEE FALLS WITHIN THE SCOPE OF THE DE EMING FICTIONS CREATED UNDER THE EXPLANATIONS. FOR EXAMPLE, THE ASSESSEE MIGHT NOT M.P. STATE TOURISM AND OTHERS (ITA NO.2/IND/2015 AND OTHERS) 2 1 DISCLOSE PARTICULAR SALES OR DIVIDEND INCOME OR INCOME FROM ANY SOURCE. SUCH INSTANCES WOULD FALL UNDER THE MAIN PROVISIONS ITSELF. IN SUCH CASE S, THE BURDEN IS ON THE AO TO ESTABLISH THE EXISTENCE OF THE CHARGE ON THE BASIS OF MATERIAL ON RECORD. 9. EXPLANATION 1 TO SECTION 271(1) (C) STAT ES THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION IS NOT ABSOLUTE O NE BUT IS REBUTTABLE ONE. IT ONLY SHIFTS THE ONUS ON THE ASSESSEE. EXPLA NATION 1 REFERS TO THE TWO SITUATIONS IN WHICH PRESUMPTION OF THE CONCEALMENT OF THE PARTICULARS OF INCOME IS DEEMED. IT IS NOT APPLICABLE WHERE THE CH ARGE AGAINST THE ASSESSEE IS FURNISHING INACCURATE PARTICULARS OF TH E INCOME. THE FIRST SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 10 OF 12 SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY F ACT MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME FAILS TO OFFER AN E XPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUND BY THE AO OR THE COMMIS SIONER TO BE FALSE. THE SECOND SITUATION IS WHERE M.P. STATE TOURISM AN D OTHERS (ITA NO.2/IND/2015 AND OTHERS) 22 THE ASSESSEE IN RESPEC T OF ANY FACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME OFF ERS AN EXPLANATION, WHICH, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONA FIDE ONE AND THAT ALL THE FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESUMPTION AVAILABLE UNDER EXPLANATION TO SECTION 271(1) (C), CANNOT BE DRAWN UNLESS THE CASE OF THE ASSESSEE FALLS UNDER EITHER OF THE CLAUSES (A) OR (B). 10. IN THE PRESENT CASES, THE AO HAS NOT BROUGHT OUT ANY S PECIFIC CHARGE FOR WHICH THE PENALTY HAS BEEN IMPOSED ON THE ASSESSEE U/S 271(1) (C) OF THE ACT. HE HAS NOT BROUGHT OUT WHETHER THE ASSESSEE HA S CONCEALED THE PARTICULARS OF INCOME OR WHETHER THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF INCOME. 11. IN SOME OF CASES, THE AO HAS NOT INITIATED THE PROCEEDINGS FOR ANY PARTICULAR CHARGE. THE PENALTY WAS INITIATED VIDE NOTICE AS NOTED ABOVE. M.P. STATE TOURISM AND OTHER S (ITA NO.2/IND/2015 AND OTHERS) 23 12. THE AO IN SOME CASES INITIATED T HE PENALTY WITHOUT ANY MENTION OF ANY PARTICULAR DEFAULT AND LEVIED THE SA ME AGAIN WITHOUT MENTIONING ANY SPECIFIC CHARGE. IN CIT V. ATUL MOHA N BINDAL (2009) 9 SCC 589, WHERE HONBLE SUPREME COURT WAS CONSIDERING TH E SAME PROVISION, IT OBSERVED THAT THE ASSESSING OFFICER HAS TO BE SATIS FIED THAT A PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. THUS THE SATISFACTION OF THE AO ABO UT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME IS ESSENTIAL BEFORE LEVYING ANY PENALTY U/S 271(1)( C). THE AO AS IS APPARENT FROM THE PENALTY ORDER HAS NOT SATISFIED A BOUT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. ON THIS BASIS ITSELF THE PENALTY STAND DELETED. 13. IN VIEW OF ABOVE WHEN WE LOGICALLY CONSIDER THE FA CTS AND CIRCUMSTANCES OF THE CASE, THEN WE FIND THAT THE PE NALTY HAS BEEN INITIATED ON THE DIFFERENT ALLEGATION AND PENALTY HAS BEEN IMPOSED OF ON A ENTIRELY DISTINCT CHARGE WHICH WAS NOT TAKE N AT THE TIME OF INITIATION OF PENALTY. IN THIS SITUATION, IN OUR CO NSIDERED VIEW THERE MUST BE CLEAR BEFITTING OBSERVATIONS OF THE AO ABOU T THE CHARGE FOR WHICH PENALTY PROCEEDINGS IS INITIATED AND THE CHAR GE ON WHICH PENALTY HAS BEEN IMPOSED. THE ASSESSEE SHOULD BE AL LOWED TO REFUTE SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 11 OF 12 THE ALLEGATIONS DURING THE PENALTY PROCEEDINGS AND ON THE STAND TAKEN BY AO WHILE INITIATING PENALTY PROCEEDINGS. WHERE THE CHARGE FOR INITIATION OF THE PENALTY PROCEEDINGS IS DISTIN CT ONE AND THE ASSESSEE IS FIGHTING AGAINST THE CHARGE WITH THEIR EXPLANATION AGAINST THAT CHARGE WHICH WAS BACKED UP BY AO FOR I NITIATION OF THE PENALTY AND IT IS THE NOT FOR A.O TO IMPOSE PENALT Y BY TAKING UP, ENTIRELY A DISTINCT CHARGE WHICH WAS NOT CONFRONTED OR SHOW CAUSED TO THE ASSESSEE. THE A.O CAN NOT BE ALLOWED TO ALL EGE ONE CHARGE AT THE TIME OF INITIATION OF PENALTY AND TO ALLEGE DIS TINCT AND ANOTHER CHARGE WHILE IMPOSING THE PENALTY BECAUSE IT WOULD RESULT INTO IMPOSING PENALTY ON THE ALLEGATION WHICH WAS NOT SH OW CAUSED TO THE ASSESSEE, WHICH WOULD DEFINITELY VIOLATE THE PR INCIPLES OF NATURAL JUSTICE AS HAS BEEN DONE BY THE A.O IN THE PRESENT CASE. THEREFORE FIRST LIMB OF SUBMISSIONS OF THE ASSESSEE IS ACCEPT ED AND WE HOLD THAT THE PENALTY IMPOSED BY THE AO BY TAKING CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR INITIATION OF PENALTY PROCEEDINGS COULD NOT BE VALUE BASED AND IMPOSING P ENALTY U/S 271(1)(C) OF THE ACT ON THE CHARGE OF CONCEALMENT O F INCOME IS NOT SUSTAINABLE AND HENCE, THE PENALTY IMPOSED BY CIT I S DISMISSED AND DELETED. 14. SINCE IN THE EARLIER PART OF THE ORDER WE HAVE FOU ND THAT THE PENALTY PROCEEDINGS INITIATED AGAINST ONE ALLEGATIO N AND PENALTY HAS BEEN IMPOSED OF ENTIRELY DIFFERENT ANOTHER ADDITION ALLEGATION THUS THE PENALTY IMPOSED BY THE AO IS NOT VALID AND SUST AINABLE AS THE SAME IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. WE, THEREFORE, BY FOLLOWING THE PROPOSITION LAID BY ITAT, INDORE BENC H IN THE CASE OF SHRI ARUN KUMAR LILA, ITA NO.226 TO 230/2016, A.Y 2 005-06, 2007-08 TO 2009-11 PAGE 12 OF 12 MP TOURISM DEVELOPMENT CORPORATION (SUPRA) HELD THA T PENALTY IS NOT SUSTAINABLE. HENCE, OTHER ARGUMENTS OF APPELLA NT ON MERITS BECOME ACADEMIC AND INFRUCTUOUS AND CANNOT ADJUDICA TING UPON THEM AS HAVING BECAUSE INFRUCTUOUS. 15. FURTHER, SINCE BOTH THE PARTIES ARE AGREED TO BE F ACT THAT IN THE VERY BEGINNING OF THE HEARING AND FACTS AND CIRCUMS TANCES OF THE 5 CASE ARE IDENTICAL AND SIMILAR, THEREFORE OUR CONCL USION DRAWN IN ITA 226/2016 FOR ASSESSMENT YEAR 2005-06 WOULD APPL Y MUTATIS MUTANDIS TO ITA NO.227 TO 230/IND/2016 FOR ASSESSMENT YEAR 2007-08 TO 2010-11 AND CONSEQUENTLY, THE PENALTY IM POSED IN THESE FOUR CASES ARE ALSO STAND DELETED . ACCORDINGLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10.08.201 7. SD/- (O.P. MEENA) SD/- (CHANDRA MOHAN GARG) /ACCOUNTANT MEMBER / JUDICIAL MEMBER INDORE; DATED : 10/08/2017 DEV/