Bidhan Chandra Roay, Howrah V. Income Tax Officer, Ward - 54(4), Kolkata, Kolkata

ITA 2499/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4520 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 29-10-2013
• Court: TRIBUNAL
• Department Lawyers: K ALYAN NATH JCIT LD
• Assessee Lawyers: SUNIL SURA NA FCA LD
• Keywords: Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3); 142(1); 27

Judgement Text

ITA NO.2499/KOL/2013 BIDHAN CH.ROY 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NOS. 2499/KOL/2013 A.YS. 2005-06 BIDHAN CHANDRA ROY VS. I.T.O 54(4), KOLKATA PAN: ACQPR4035C (APPELLANT) (RESPON DENT) FOR THE APPELLANT/ASSESSEE : SHRI SUNIL SURA NA, FCA, LD.AR FOR THE RESPONDENT/DEPARTMENT: SHRI KALYAN NATH, JCIT, LD.DR DATE OF HEARING: 25-05-2016 DATE OF PRONOUNCEMENT: 27-07-20 15 ORDER SHRI S.S. VISWANETHRA RAVI, JM THIS APPEAL OF THE ASESSEE ARISES OUT OF THE ORDER OF THE CIT(A)-XXXVI, KOLKATA IN APPEAL NO. 170/CIT(A)-XXXVI/KOL/54(4)/10 -11/856 DATED 28-08- 2013 FOR THE ASSESSMENT YEAR 2005-06 CONFIRMING THE ORDER OF PENALTY LEVIED U/S. 271(1) ( C) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT). 2. THE ONLY GROUND IN THIS APPEAL IS AS TO WHETHER CIT-A JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) IN THE C IRCUMSTANCES OF THE CASE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING AND DERIVING HIS INCOME FROM PROFESSION, DEED PREPARAT ION AND OTHER SOURCES ETC... THE ASSESSEE FILED HIS RETURN OF INCOME ON 11-07-2005 D ECLARING TOTAL INCOME OF RS.1,47,500/-. UNDER SCRUTINY, NOTICES U/SEC 143(2) AND 142(1) WERE ISSUED. DURING SUCH PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE MA DE INVESTMENTS IN MUTUAL FUNDS TO A TUNE OF RS.13,78,075/- WHICH THE ASSESSEE DID NOT DISCLOSE TO THAT EXTENT AND ITA NO.2499/KOL/2013 BIDHAN CH.ROY 2 FILED REVISED STATEMENT AND AN ASSESSMENT ORDER DT: 19-12-07 WAS PASSED U/SEC 143(3) ADDING SUCH AMOUNT TO THE TOTAL INCOME OF TH E ASSESSEE.. THE ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS U/S. 271(1) (C) FOR NOT DISCLOSING THE INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD. CIT(A) THE CONTENTION OF THE ASSESSEE WAS THAT HE WAS NOT AWARE OF ACCOUNTING PROCEDURE. BUT, ON BEING ASKED BY THE AO IN THE SCRUTINY PROCEEDINGS, THE ASSESSEE DISCLOSED AND OFFERED THE SAID AMOUNT FOR TAXATION. THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER IN IMPOSING PENALTY U/S. 271(1)( C) OF THE ACT. AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE US. 4. DURING THE COURSE OF ARGUMENTS THE LD. AR FOR TH E ASSESSEE SUBMITTED THAT THE CASE UNDER CONSIDERATION IS COVERED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COT TON AND GINNING FACTORY, 359 ITR 565 (KARN), AND ALSO BY THE ORDER OF THE TRIBUN AL IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS. ACIT, CIR-55, KOLKATA DATED 06-11- 2015 WHICH CONSIDERED DECISION OF THE HONBLE KARNATAKA HIGH COURT SUPRA AND PASSED DETAILED ORDER THE SAID ISSUE. ON THE CONTRARY, THE LD.DR HAS RELIED O N THE ORDERS OF THE LOWER AUTHORITIES. 5. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE QUESTION BEFORE US IS WHETHER THE PENALTY ORDER PAS SED BY THE LD. AO AND CONFIRMED BY THE LD.CIT(A) IS FALLS FOR OUR CONSIDERATION IN PURSUANCE OF THE LAW LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT SUPRA . THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT S HOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND IT WAS SUBMITTED BY ITA NO.2499/KOL/2013 BIDHAN CH.ROY 3 THE LD.AR THE AFORESAID DECISION WILL SQUARELY APPL ICABLE TO THE PRESENT CASE AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 6. AS RIGHTLY POINTED OUT BY THE LD.AR, THE BENCH B KOLKATA TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHARYA V S. ACIT BY AN ORDER DATED 06-11-2015 CONSIDERED THE JUDGMENT OF HONBLE KARN ATAKA HIGH COURT SUPRA THE RELEVANT PORTION OF WHICH REPRODUCED HEREUNDER: 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 T O WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURA TE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SHOW CAUSE NOTICE U/S.274 OF THE A CT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THEREFORE NOT SPELT OUT AS TO WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FU RNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS O F 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), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEAL MENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINT ED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SA TISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PEN ALTY PROCEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB I S BAD IN LAW. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID D ECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO B E HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 8.2 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN THE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER O F 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 PAS SED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDI NGS IS INITIATED, ITA NO.2499/KOL/2013 BIDHAN CH.ROY 4 IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFAC TION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTEN CE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORD ER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN E XPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDING S ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTION ED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THE Y INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AN D SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPA RTMENT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SECT ION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INIT IAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 10 0% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO B E HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD S ATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINC IPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAG UE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON TH E ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY AT TRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PE NALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSE E GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATIS FACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1 )(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PEN ALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SA ID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOUL D 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 I S CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIM E OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT AS SESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PE NALTY PROCEEDINGS ITA NO.2499/KOL/2013 BIDHAN CH.ROY 5 MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PE NALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAIN ED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALT Y SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUN D ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS N OT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS O F THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASS ED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, W AS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COU RSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME 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 COUR T IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HEL D THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HI GH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AN D THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REP ORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS T O BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BE ING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING O FFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE N OTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PRO FORMA WITHO UT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NO N-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 LIABILIT IES. ITA NO.2499/KOL/2013 BIDHAN CH.ROY 6 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 PROCEEDING S UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 27 1(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) I T SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LE GAL 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 PRO CEEDINGS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSM ENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE 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 TH E 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 TA X AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PE NALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, I T IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORIT IES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILI TY CAME TO BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE F AILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN O RDER 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 A LL FACTS ITA NO.2499/KOL/2013 BIDHAN CH.ROY 7 RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N 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 AMBI GUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATIS FACTION, 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 O F INCORRECT PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENA LTY 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 PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEP ENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING O F INCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN T HE 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 LE VIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) ITA NO.2499/KOL/2013 BIDHAN CH.ROY 8 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 D EFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGH T TO BE IMPOSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIG H COURT, WE HOLD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSM ENT YEARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. 7. IN THE PRESENT CASE, THE NOTICE DT:18-12-2007 IS SUED BY THE AO U/SEC 274 R/W 271 OF THE ACT DOES NOT SHOW ON WHICH GROUND THE PE NALTY IS SOUGHT TO BE IMPOSED, THEREFORE THE LAW LAID DOWN BY THE HONBLE HIGH COU RT SUPRA AND FOLLOWED BY SUVAPRASANNA BHATTACHARYA VS. ACIT OF COORDINATE B ENCH SUPRA AND IN VIEW OF THE SAME, WE HOLD THAT THE ORDER DT:15-09-2010 LEVY ING PENALTY IS NOT VALID. RESPECTFULLY FOLLOWING THE ORDER ABOVE, WE CANCEL T HE PENALTY LEVIED U/S. 271(1) ( C) BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT( A). 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 27 /07/2 016 SD/- WASEEM AHMED ACCOUNTANT MEMBER SD/- S.S.VISWANETHRA RAVI J JUDICIAL MEMBER DATE 27/07/2016 ITA NO.2499/KOL/2013 BIDHAN CH.ROY 9 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT/ASSESSEE : BIDHAN CHANDRA ROY, 37/1/1, UMESH BANERJEE LANE, HOWRAH-7111101 ARCHANA ROY, 56E, RAJA RAM CHANDRA G HAT ROAD, PANIHATI (N), 24 PARAGANAS, PIN-700114 2 THE RESPONDENT/DEPARTMENT- THE INCOME TAX OFFICE R, WARD 54(4), 3, GOVERENMENT PALACE, KOLKATA-700001 2 GARIAHAT ROAD SOUTH, KOL-68. 3 4.CIT /THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS