Brij Kishor Prasad, Siliguri V. C.I.T-Circle-I, Kolkata, Siliguri

ITA 2482/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4793 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 24-10-2013
• Court: TRIBUNAL
• Department Lawyers: A K SINHA
• Assessee Lawyers: VARSHA JALAN
• Keywords: Unexplained cash credit; Business income; Principle of natural justice; Initiation of penalty proceedings
• Section: 68

Judgement Text

1 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.2482/KOL/2013 ASSESSMENT YEAR : 2009-10 BRIJ KISHORE PRASAD -VERSUS- D.C.I.T., CIRCLE-I, SILIGURI SILIGURI (PAN:AEQPP1157H) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: MISS VARSHA JALAN, ADVOCATE FOR THE RESPONDENT: SHRI A.K.SINHA, JCIT, SR.DR DATE OF HEARING : 12.05.2016. DATE OF PRONOUNCEMENT : 20.05.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 12.08.2013 OF CIT(A) SILIGURI, RELATING TO AY 2009-10. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF AO IMPOSING PENALTY ON THE A SSESSEE US/ 271(1)(C) OF THE ACT. 3. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALT Y WAS IMPOSED ON THE ASSESSEE BY THE AO ARE AS FOLLOWS : THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE IS ENGA GED IN THE BUSINESS OF EXPORTING AND TRADING IN RICE, WHEAT, COAL AND PULS ES ETC. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESEE HAD EFF ECTED SALES TO ONE PARTY NAMELY SHRI SAJJAN KUMAR MASKARA OF RS.,37,87,080/- ON 15. 01.2009, RS.21,27,730/- AND RS.16,59,350 AGAINST BILL NO.15 AND 14/08-09 RESPEC TIVELY. THE ASSESSEE ALSO RECORDED TOTAL RECEIPTS ON SALE PROCEEDS FROM SAJJAN KUMAR M ASAKARA RS.60,73,711/-. THE NET LIABILITY PAYABLE BY SAJJAN KUMAR MASKARA AS PER TH E BOOKS OF ACCOUNTS OF THE 2 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 ASSESEE WAS THUS RS.22,86,631/- AS ON 31.03.2009. O N VERIFICATION BY THE AO SHRI SAJJAN KUMAR MASKARA HAD SHOWN PURCHASES FROM THE A SSESSEE OF ONLY RS.34,23,711/- AND RS.26,70,045/- AS PER BILL NO.15/08-09 AND 14/0 8-09 RESPECTIVELY. HE HAD ALSO SHOWN THAT HE HAD PAID RS.60,73,711/- TO THE ASSESS EE AND FURTHER DEBITED ON ACCOUNT OF DEFECTIVE QUALITY OF SOYA OF RS.20,045/-. THERE WAS THUS A DIFFERENCE OF RS.22,86,631/- BETWEEN THE FIGURE OF SALES SHOWN BY THE ASSESSEE AND THAT SHOWN BY SAJJAN KUMAR MASKARA. THE ASSESSEE HAD SHOWN SALES MORE BY RS.22,86,631/- WHICH THE AO WANTED TO TREAT AS UNEXPLAINED CASH CREDIT U /S 68 OF THE ACT. 4. BESIDES THE ABOVE, THE ASSESSEE HAD SHOWN OUT STANDING DUES PAYABLE TO BHOLANATH RICE MILL OF RS.9,00,000/- BUT THE AFORESAID PARTY HAS SHOWN AS OUTSTANDING TO THE PARTY AS NIL. THE AO THEREFORE WANTED TO TREAT THE AFORESAID SUM OF RS.9,00,000/- AS A BENEFIT THAT ACCRUED TO THE ASSESSEE AS A RESULT OF CESSATION OF LIABILITY AND WANTED TO BRING THE SAME TO TAX. FURTHER THE AO WAS ALSO OF THE VIEW THAT THE GROSS PROFIT FROM UNSUPPRESSED SALES HAD TO BE MADE FOR THE FOLLOWING REASONS :- AS PER LEDGER OF THE ASSESSEE A SALES OF RS. 37,87 ,080/-TO SRI SAJJAN KUMAR MASKARA WAS SHOWN BUT INFORMATION RECEIVED FROM SAJJAN KUMA R MASKARA REVEALED THAT THE ASSESSEE HAD ACTUALLY MADE TOTAL SALES OF RS. 60,7 3,711./- THUS, RS, 23,06,676/- HAS BEEN SUPPRESSED ON ACCOUNT OF SALES. THE ASSESSE VI DE THIS OFFICE LETTER NO: DCIT/CIR- 1/SLG/2011-12/571. DATED: 22.12.2011 WAS INFORMED T HAT THE G.P OF. SUCH SALES PROCEED WAS PROPOSED TO BE ADDED BACK TO THE TOTAL INCOME. NO COMPLIANCE WERE MADE TO THE LETTER AND NO EXPLANATION WERE FURNISHED. THE ASSESSE HAS SHOWN A G.P. OF 3.19%, THUS AN AMOU NT OF RS. 73,583/- [3.19% OF RS. 23,06,676/ IS ADDED BACK TO THE ASSESSE AS UNDISCLO SED INCOME FROM SUPPRESSED SALES. 5. THE AO ULTIMATELY ADDED THE AFORESAID SUM TO TH E TOTAL INCOME OF THE ASSESSEE. 6. IN THE ORDER OF THE ASSESSMENT THE AO HAD NOT INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. NEVERTHELESS THE AO PROCEEDE D TO ISSUE SHOW CAUSE NOTICE TO THE ASSESSEE FOR IMPOSING PENALTY U/S 271(1) (C) OF THE ACT. THE AO ULTIMATELY HELD THAT THE ASSESSEE HAS DELIBERATELY AND WILFULLY FUR NISHED INACCURATE PARTICULARS IN THE RETURN OF INCOME IN RESPECT OF THE ADDITIONS REFERR ED TO EARLIER AND IMPOSED PENALTY OF RS.13,44,986/- WHICH WAS 125% OF THE TAX SOUGHT TO BE EVADED. 3 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 7. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS PREFERRED T HE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUN SEL FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT B EFORE MAKING THE IMPUGNED ADDITIONS THE AO HAD ISSUED SHOW CAUSE NOTICE TO TH E ASSESSEE AND HAD ALSO PROPOSED APPROPRIATE PENAL PROCEEDINGS WAS PROPOSED TO BE I NITIATED OR WILL BE INITIATED. AFTER MAKING THE ADDITIONS THE AO HAS NOT RECORDED SATISF ACTION THAT THE ASSESSEE WAS GUILTY OF CONCEALING OR FURNISHING INACCURATE PARTICULARS OF INCOME AND HAS ALSO NOT THEREAFTER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. BESIDES THE ABOVE, THE LD. COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT IN T HE SHOW-CAUSE NOTICE ISSUED BEFORE LEVYING PENALTY THE AO HAS NOT STRUCK OFF THE IRRE LEVANT PORTIONS NAMELY WHETHER THE ASSESSEE IS GUILTY OF HAVING CONCEALED PARTICULARS OF INCOME OR OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF ITAT, KOLKATA BENCH IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS ACIT VIDE ITA NO.1303/KOL/2010 ORDER DATED 06.11.20 15 WHEREIN THIS TRIBUNAL TOOK A VIEW THAT IN A CASE WHERE SHOW CAUSE NOTICE BEFOR E IMPOSING PENALTY DOES NOT SPELL OUT AS TO WHETHER PENALTY PROCEEDINGS ARE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME, THEN THE VERY INITIATION OF PENALTY PROCEEDINGS ARE INVALID AND THE CONSEQUENT ORDER IMPOSING PENALTY ON THE ASSESSEE IS LIABLE TO BE QUASHED. THE LD. DR PLACED RELIANCE ON THE ORDERS OF THE REVENUE AUTHORITIES. 9. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, IN T HE ORDER OF THE ASSESSMENT THE AO HAS NOT INITIATED PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE EVEN IN THE ASS ESSMENT PROCEEDINGS THE AO HAS NOT MADE ANY REFERENCE TO THE PROVISION OF SECTION 271( 1)(C) OF THE ACT IN THE SHOW CAUSE NOTICE ISSUED BEFORE MAKING THE IMPUGNED ADDITIONS IN RESPECT OF WHICH PENALTY WAS 4 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 IMPOSED. THE AO HAS MERELY OBSERVED THAT APPROPRIAT E PENAL PROCEEDINGS WAS PROPOSED TO BE INITIATED. THEREAFTER THERE HAS BEEN NO ACTUAL INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF THE ASSESSMENT. THE REQ UIREMENTS OF LEVYING OF PENALTY U/S 271 (1)(C) OF THE ACT IS THE SATISFACTION OF THE AO IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT THAT ANY PERSON HAS CONCEALED PARTICU LARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. SUCH SATISFA CTION CAN EMANATE ONLY FROM INITIATION OF PENALTY PROCEEDINGS WHILE CONCLUDING THE ASSESSMENT. IN THE ABSENCE OF INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF A SSESSMENT THE PROCEEDINGS U/S 271(1)(C) OF THE ACT HAVE TO BE HELD ILLEGAL AND IN VALID AND ARE LIABLE TO BE QUASHED. 10. APART FROM THE ABOVE, WE ALSO FIND THAT IN THE SHOW CAUSE NOTICE ISSUED BEFORE IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, THE AO H AS NOT STRUCK OFF THE IRRELEVANT PORTIONS NAMELY WHETHER THE PENALTY IS SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALING PARTICULARS OF INCOME. THIS TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS ACIT (SUPRA) H AS HELD THAT IMPOSITION OF PENALTY ON SUCH DEFECTIVE SHOW CAUSE NOTICE IS IMPR OPER AND LIABLE TO BE CANCELLED. THE FOLLOWING ARE THE RELEVANT OBSERVATIONS RELIED IN THIS REGARD :- 8. THE NEXT ARGUMENT THAT THE SHOW CAUSE NOTICE U /S.274 OF THE ACT WHICH IS IN A PRINTED FORM DOES NOT STRIKE OUT AS TO WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURATE PARTICULARS OF INCOME O R CONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SHOW C AUSE NOTICE U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THERE FORE NOT SPELT OUT AS TO WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FU RNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. 8.1 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HA S HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOW N THAT CERTAIN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOUL D NOT SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PRO CEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT W AS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 5 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 8.2 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN T HE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER OF IMPOSING PENALTY U/S.271( 1)(C) OF THE ACT. NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDING S CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORI TY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTION ED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUE D UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTEN CE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE O F RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT I S PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTI ON 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY O N HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PRO CEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET 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 PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS S ERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% 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 SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, 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 INACCURATE PARTICULARS OF INCO ME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CAS ES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF TH E PENALTY PROCEEDINGS 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 G UILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE 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 SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, 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 T O THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PR OCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLE S OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROU ND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHI CH 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 IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDE R WAS PASSED AND FURTHER DISCOVERY 6 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CA NNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL IN COME 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 COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HA S TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS T HE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PRO FORMA WITHO UT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FO LLOWS:- 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 LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 . E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISI ONAL AUTHORITY. F) EVEN 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 EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOU LD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271 (L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECA USE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND 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 O N ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOULD H AVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. 7 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATI ON OFFERED IS NOT BONA FIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. 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 S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN A PPEAL, IF THE APPELLATE AUTHORITY 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 SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANAT E FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT OF THE PROCEE DINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORREC T PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) IT IS CLEAR FROM THE AFORESAID DECISION THAT ON THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HOLD THAT THE ORDERS IMPOSING PENALT Y IN ALL THE ASSESSMENT YEARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPO SED IS CANCELLED. 11. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDER S IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. 8 ITA NO.2482/KOL/2013-BRIJ KISHORE PRASAD-A.Y.2009-1 0 12. IN THE RESULT APPEAL BY THE ASSESSEE IS ALLOWE D. O RDER PRONOUNCED IN THE COURT ON 20.05.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20.05.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.BRIJ KISHORE PRASAD, PAKURTALA MORE, ASHRAM PARA, SILIGURI-734401. 2. D.C.I.T., CIRCLE-1, SILIGURI. 3. CIT(A)-SILIGURI 4. CIT-SILIGURI. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES