M/s Mindmill Software Ltd., New Delhi V. ITO, New Delhi

ITA 242/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6735 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Principle of natural justice; Reasonable cause; Wrong claim; Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.242/DEL./2016 (ASSESSMENT YEAR : 2008-09) M/S. MINDMILL SOFTWARE LIMITED, VS. ITO, WARD 6 (4 ), J 1/28, FIRST FLOOR, KHIRKI EXTENSION, NEW DELHI . MALVIYA NAGAR, NEW DELHI 110 017. (PAN : AAACM8388C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGARWAL, ADVOCATE AND SHRI SHAILESH GUPTA, CA REVENUE BY : SHRI S.K. JAIN, DR DATE OF HEARING : 02.01.2017 DATE OF ORDER : 10.02.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. MINDMILL SOFTWARE LIMITED (HEREINA FTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.10.2015 PASS ED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-19, NEW DELHI QUA THE ASSESSMENT YEAR 2008-09 CONFIRMING THE PENALTY LEVI ED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT T HE ACT) ON THE GROUNDS INTER ALIA THAT :- ITA NO.242/DEL./2016 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN NOT QUASHING THE PENALTY ORDER DATED 30.03.2014, PASSED BY THE ASSESSING OFFICER UNDER SECTION 271 (1) (C) OF THE INCOME-TAX ACT, 1961, BEING BEYOND JURISDICTION, BAD IN LAW AND VOID AB-INITIO. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN NOT QUASHING THE PENALTY ORDER DATED 30.03.2014, PASSED BY THE ASSESSING OFFICER UNDER SECTION 271 (1) (C) OF THE INCOME-TAX ACT, 1961 FOR CONCEALMENT OF INCOME WHEREAS THE APPELLANT HAS NOT CONCEALED THE PARTICULARS OF INCOME AND HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF SUCH INCOME AND HENCE THE APPELLANT IS NOT LIABLE TO ANY PENALTY U/S 271 (1) (C) OF THE INCOME TAX ACT; 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN NOT QUASHING THE PENALTY ORDER EVEN THOUGH THE LEARNED ASSESSING OFFICER HAD NOT BROUGHT OUT OR PROVED ANY CONCEALMENT OF INCOME BY THE APPELLANT BUT HAS JUST RELIED ON ADDITION BEING MADE IN ASSESSMENT ORDER AS THE BASIS TO IMPOSE PENALTY ; 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT WHEREAS THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS ON GROUNDS OF FILING INACCURATE PARTICULARS OF INCOME, PENALTY WAS FINALLY IMPOSED FOR CONCEALMENT OF INCOME. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT SHOW CAUSE NOTICE ISSUED U/S 274 OF INCOME TAX ACT DID NOT SPECIFICALLY STATE TH E GROUNDS MENTIONED IN SECTION 271 (1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME; ITA NO.242/DEL./2016 3 6. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN SUSTAINING PENALTY ON ADDITION MADE ON ACCOUNT OF INTEREST DISALLOWED BY TREATING THE BUILDING AS BEING UNDER CONSTRUCTION EVEN THOUGH THE BUILDING WAS COMPLETE AND READY FOR BEING LET OUT. 7. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN SUSTAINING PENALTY ON ACCOUNT OF INTEREST DISALLOWED BY COMPLETELY IGNORING OBSERVATION OF LEARNED COMMISSIONER (APPEALS) IN QUANTUM PROCEEDINGS THAT BOTH POSSIBILITIES APPEARED PLAUSIBLE THAT EITHER BUILDING COULD BE COMPLETE OR COULD BE CONSIDERED UNDER CONSTRUCTION, HENCE WHEN BOTH VIEWS WERE PLAUSIBLE, PENALTY WAS CLEARLY NOT EXIGIBLE 8. THAT THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THERE WAS NO LOSS TO REVENUE ON ACCOUNT OF CLAIM OF INTEREST AS CLAIM PER SE HAD NOT BEEN ASSESSED AS BOGUS BUT IT WAS MATTER TIME WHEN THE EXPENSE COULD BE CLAIMED. THAT WHEREAS ASSESSEE CLAIMED EXPENSE DURING THE YEAR AND THE ASSESSING OFFICER WANTED TO GRANT CLAIM OF EXPENSE DURING NEXT YEAR. THAT HENCE IN VIEW OF SETTLED LEGAL POSITION IN SUCH MATTERS OF DIFFERENCE OF OPINION, PENALTY WAS CLEARLY NOT EXIGIBLE. 9. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN SUSTAINING PENALTY ON ADDITION MADE ON ACCOUNT OF ROC FEE PAID FOR INCREASE OF AUTHORIZED SHARE CAPITAL EVEN THOUGH ENTIRE INFORMATION REGARDING THE SAME WAS AVAILABLE BEFORE THE ASSESSING OFFICER IN THE FORM OF AUDITED ACCOUNTS. 10. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN L AW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN SUSTAINING PENALTY ON ADDITION MADE ON ACCOUNT OF ELECTRICITY EXPENSES BY STATING THAT CORRESPONDING REVENUE HAD NOT BEEN BOOKED AND BY DISREGARDING THE FACT THAT RIGHT TO REVENUE COULD NOT BE ITA NO.242/DEL./2016 4 RECOGNIZED UNLESS BILL FOR SAME WAS RAISED WHICH WAS ONLY DONE DURING NEXT YEAR, HENCE COULD NEVER BE RECOGNIZED AS INCOME DURING THE YEAR UNDER APPEAL. 11. THAT THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THERE WAS NO LOSS TO REVENUE ON ACCOUNT OF CLAIM OF ELECTRICITY EXPENSES AS CLAIM PER SE HAD NOT BEEN ASSESSED AS BOGUS BUT IT WAS MATTER TIME WHEN THE EXPENSE COULD BE CLAIMED. THAT WHEREAS ASSESSEE CLAIMED EXPENSE DURING THE YEAR AND THE ASSESSING OFFICER WANTED TO GRANT CLAIM OF EXPENSE DURING NEXT YEAR. THAT HENCE IN VIEW OF SETTLED LEGAL POSITION IN SUCH MATTERS OF DIFFERENCE OF OPINION, PENALTY WAS CLEARLY NOT EXIGIBLE. 12. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LA W IN NOT APPRECIATING THAT DESPITE CERTAIN EXPENSES BEING DISALLOWED, SINCE APPELLANT HAS NOT CONCEALED PARTICULARS OF INCOME AND HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF SUCH .INCOME, ABSOLUTELY NO PENALTY IS IMPOSABLE; 13. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LA W IN NOT ADJUDICATING ON GROUNDS RAISED BEFORE HIM STATING THAT WITHOUT PREJUDICE TO THE OTHER GROUNDS RAISED, CALCULATION OF AMOUNT OF ALLEGED CONCEALED INCOME OF RS.4895315/- IS INCORRECT. 14. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LA W IN NOT ADJUDICATING ON GROUNDS RAISED BEFORE HIM STATING THAT WITHOUT PREJUDICE TO THE OTHER GROUNDS RAISED, THE CALCULATION OF AMOUNT OF PENALTY IMPOSED ON ALLEGED CONCEALED INCOME IS ALSO INCORRECT. THAT ALLEGED TAX SOUGHT TO BE EVADED WORKS OUT TO BE RS.1512652/-, HENCE PENALTY @ 100% WOULD WORK OUT TO BE RS.1512652/- WHEREAS HAS BEEN WORKED OUT AT RS.2008652/-. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : ON T HE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F DISALLOWANCE ITA NO.242/DEL./2016 5 OF INTEREST EXPENSES, WRONG CLAIM OF DEDUCTION UNDE R SECTION 240A IN RESPECT OF RENT OF INFERIOR FITTINGS AND DEDUCTI ON CLAIMED U/S 35D WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE A CT, THE PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT . IN RESPONSE TO THE SHOW-CAUSE NOTICE, ASSESSEE FILED COMPREHENSIVE REPLY BY PLEADING THAT THE DIFFERENCE OF OPINION DOES NOT AT TRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT; THAT MERE DISALLOWANCE OF EXPENSES IS ALSO NOT A CONCEALMENT AND THERE WAS NO INTENTION OF THE ASSESSEE TO CONCEAL ANY INCOME OR TO AVOID TAX. FINDING THE SUBMISSIONS MADE BY THE ASSESSEE NOT AC CEPTABLE, THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DEL IBERATELY CLAIMED DEDUCTION OF RS.1,35,584/- AT 30% OF THE RE NT OF RS.4,42,248/- ON ACCOUNT OF RENT OF FURNITURE / INT ERIOR BY RENTAL SHOWING IT AS INCOME FROM HOUSE PROPERTY AND THIS D ISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT (A) AND THAT THE ASSESSEE HAS NOT SHOWN THE INCOME ON ACCOUNT OF ELECTRICITY CHARGES RECOVERED FROM THE TENANT AND AN AMOUNT OF RS.59,136/- WAS ADDED T O THE INCOME OF THE ASSESSEE WHICH HAS ALSO BEEN CONFIRMED BY TH E LD. CIT (A); AND SIMILARLY, DEDUCTION OF RS.22,000/ WAS RENTAL C LAIMED OUT OF FEE PAID TO ROC FOR AN INCREASE IN AUTHORIZED CAPIT AL IN VIOLATION OF THE ACT AND THE SAME HAS ALSO BEEN UPHELD BY THE LD . CIT (A) AND ITA NO.242/DEL./2016 6 THEREBY IMPOSED THE PENALTY TO THE TUNE OF RS.20,08 ,652/- U/S 271(1)(C) OF THE ACT. 3. ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT (A) BY WAY OF APPEAL WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT THE ASSESSEE HAS NOT MADE ANY CONCEALMENT OF INCOME NOR FURNISHED INACCURATE PART ICULARS; THAT THE BOOKS OF ACCOUNT HAS BEEN DULY AUDITED; THAT TH E PENALTY CANNOT BE IMPOSED ON THE BASIS OF INADVERTENT MISTAKE AND TO IMPOSE THE PENALTY THERE MUST BE SOME DELIBERATE DEFAULT; THAT IN THE SHOW CAUSE NOTICE, AVAILABLE AT PAGE 73 OF THE PAPER BOO K, NO SPECIFIC CHARGES HAVE BEEN MADE AGAINST THE ASSESSEE AND REL IED UPON THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ORS. 359 IT R 565 (KARN) . ITA NO.242/DEL./2016 7 6. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE TO REPEL THE ARGUMENT ADDRESSED BY THE LD. AR CONTENDED INTE R ALIA THAT WHEN THE ADDITION MADE AGAINST THE ASSESSEE HAS BEE N CONFIRMED, THE FACTUM OF FURNISHING OF INACCURATE PARTICULARS STANDS PROVED; THAT PENALTY HAS BEEN RIGHTLY IMPOSED AND RELIED UP ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. 327 ITR 510 (DEL.). 7. UNDISPUTEDLY, ADDITIONS MADE AGAINST THE ASSESSE E DURING QUANTUM PROCEEDINGS HAVE ALREADY BEEN CONFIRMED. I T IS SETTLED PRINCIPLE OF LAW THAT THE PENALTY CANNOT BE IMPOSED MERELY ON THE GROUND THAT ADDITIONS MADE IN THE INCOME OF THE ASS ESSEE HAS BEEN CONFIRMED RATHER TO PROCEED WITH IMPOSITION OF PENA LTY U/S 271(1)(C), THE AO HAS TO PROVE THAT THERE WAS CONCE ALMENT OF PARTICULARS OF INCOME OR ASSESSEE HAS FURNISHED INA CCURATE PARTICULARS OF SUCH INCOME. 8. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, THE FIRST QUESTION ARISES FOR DETERMINATI ON IN THIS CASE IS :- AS TO WHETHER THE SHOW CAUSE NOTICE HAS BEEN DRAWN AGAINST THE ASSESSEE BY LEVELING SPECIFIC CHARGES A S REQUIRED U/S 274 OF THE ACT STATING THE GROUNDS MENTIONED U/S 271(1)(C) OF THE ACT? ITA NO.242/DEL./2016 8 9. TO PROCEED FURTHER, WE WOULD LIKE TO REPRODUCE T HE NOTICE ISSUED BY THE REVENUE U/S 271(1)(C) OF THE ACT FOR READY PERUSAL :- NOTICE UNDER SECTION 274 READ WITH SECTION 271 F THE INCOME TAX ACT, 1961 INCOME TAX OFFICE, NEW DELHI TO MINDMILL SOFTWARE LTD J 1/29, 1 ST FLOOR, KIRKI EXTN. MALVIYA NAGAR, N. DELHI WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2008-09 IT APPEARS TO ME TH AT YOU:- *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 142(1)/143(2) OF THE IN COME TAX ACT, 1961 DATED .. *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF EXPLANATION 1,2,3,4 AND 5. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 4.00 A.M./P.M. ON 07.02.2011 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY O F BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIV E YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271. SD/- ASSESSING OFFICER, INCOME-TAX OFFICER, WARD 6(4), ROOM NO.418, C.R. BUILDING, NEW DELHI-2 *DELETE INAPPROPRIATE WORDS AND PARAGRAPHS. ITA NO.242/DEL./2016 9 10. BARE PERUSAL OF THE NOTICE ISSUED TO THE ASSESS EE U/S 271(1)(C) OF THE ACT REPRODUCED ABOVE GOES TO PROVE THAT ASSESSEE HAS NOT BEEN CALLED UPON TO EXPLAIN IF HE HAS CONCE ALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF SUCH INCOME RATHER A TICK HAS BEEN MARKED AGAINST BOTH T HE CHARGES MENTIONED IN THE PRINTED PROFORMA. HONBLE KARNATA KA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ORS. (SUPRA) DEALT WITH THE IDENTICAL ISSUE THREADBARE A ND CAME TO THE FOLLOWING CONCLUSION :- 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 LIABI LITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILIT IES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENAL TY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF T HE APPELLATE AUTHORITY OR REVISIONAL AUTHORITY. F) EVER IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATIO N 1(A) ITA NO.242/DEL./2016 10 & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BEC AUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO I NITIATE PROCEEDINGS UNDER SECTION 271(L)(C) IS A SINE QUA N ON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDI NGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTI ON 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AN D THE COMMISSIONER. 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 TAX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT H AS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILI TY CAME TO BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPE D FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLANATION OFFERED IS FOUND TO BE FALSE OR WHEN TH E ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERE D IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. ITA NO.242/DEL./2016 11 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 SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INI TIATE PENALTY PROCEEDINGS, IN APPEAL, IF THE APPELLATE AU THORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF I NCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOM E Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDIN GS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSIT ION OF PENALTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT O F THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS 'CONCEALMENT OF INCOME' AN D 'FURNISHING OF INCORRECT PARTICULARS' WOULD NOT OPE RATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS O PEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MER ITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESS MENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE ITA NO.242/DEL./2016 12 SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSME NT OR REASSESSMENT CANNOT BE DECLARED AS INVALID IN TH E PENALTY PROCEEDINGS. 11. SO, FOLLOWING THE LAW LAID DOWN BY HONBLE HIGH COURT, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ASSESSEE H AS NOT BEEN SPECIFICALLY MADE AWARE OF THE CHARGES LEVELED AGAI NST HIM AS TO WHETHER THERE IS A CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME ON HIS PART, THE P ENALTY U/S 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. 12. NOW, THE SECOND QUESTION ARISES FOR DETERMINATI ON IN THIS CASE IS :- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR ASSESSEE HAS FURNISHED INACCURATE PARTICU LARS OF SUCH INCOME? 13. FOR ARGUMENTS SAKE, EVEN IF IT IS ASSUMED THAT ASSESSEE HAS CONCEALED THE INCOME BY CLAIMING WRONG DEDUCTION, I T DOES NOT ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) IN A NY MANNER WHATSOEVER BECAUSE WHEN THE ASSESSMENT OF THE ASSES SEE IS COMPLETED U/S 143(3), IT IS FOR THE REVENUE TO ASSE SS THE CLAIM MADE BY THE ASSESSEE IN ACCORDANCE WITH THE LAW AND MERELY CLAIMING WRONG DEDUCTIONS AND DISALLOWANCE THEREOF BY THE AO DOES NOT AMOUNT TO CONCEALMENT OF INCOME. IN OTHER WORDS, THE REVENUE HAS FAILED TO PROVE THAT THE ASSESSEE HAS C ONCEALED ITA NO.242/DEL./2016 13 PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME SO AS TO ATTRACT THE PROVISIONS CONTAIN ED U/S 271(1)(C). HONBLE SUPREME COURT IN CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) HELD THAT : .. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY P ROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CA N MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 14. TO OUR MIND, WHEN THE ASSESSEE HAS CLAIMED ANY DEDUCTION BY NOT CONCEALING ANYTHING AND IN CASE THE DEDUCTIO N HAS BEEN DISALLOWED BY THE AO AND ASSESSMENT ORDER HAS BEEN CONFIRMED BY THE CIT (A) IT DOES NOT AMOUNT TO CONCEALMENT OF IN COME OR FURNISHING OF INACCURATE PARTICULARS. 15. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, IMPUG NED ORDER PASSED BY LD. CIT (A) IS NOT SUSTAINABLE IN THE EYE S OF LAW, HENCE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS HEREBY D ELETED AND CONSEQUENTLY APPEAL FILED BY THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF FEBRUARY, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBE R DATED THE 10 TH DAY OF FEBRUARY, 2017/TS ITA NO.242/DEL./2016 14 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-19, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.