Chandra Narayan Mohta, Kolkata V. Income Tax Officer, Ward - 34(3), Kolkata, Kolkata

ITA 2519/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4629 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 10-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-11-2013
• Court: TRIBUNAL
• Department Lawyers: DEBASISH LAHIRI
• Assessee Lawyers: NIRAV SHETH ACA LD
• Keywords: Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3)

Judgement Text

ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 1 IN THE INCOME TAX APPELLATE TRIBUNALA BENCH, KOL KATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBE R AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2519/KOL/ 2013 A.Y: 2006-07 CHANDRA NARAYAN MOHTA VS. I.T.O WARD 34(3),KOLKAT A PAN: AEPPM3828K (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI NIRAV SHETH, ACA, LD.AR FOR THE ASSESSEE SHRI DEBASISH LAHIRI , JCIT, SR. D.R FOR THE REVENUE DATE OF CONCLUDING THE HEARING : 10-08- 2016 DATE OF PRONOUNCING THE ORDER : 24-08-2016 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), X X, KOLKATA DATED 17-07-2013 FOR THE ASSESSMENT YEAR 2 006- 07, WHEREIN HE CONFIRMED THE IMPUGNED PENALTY IMPOS ED BY THE AO U/S. 271(1) ( C) OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND DEALING IN THE BUSINESS OF TRADING O F CABLES. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING A T RS. 2,72,490/- ON 31-10-2006. UNDER SCRUTINY, NOTICES U/ SEC 143(2)/142(1) WERE ISSUED. DURING SUCH PROCEEDINGS , THE AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.6 ,69,520/- TO ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 2 THAT EFFECT AN ASSESSMENT ORDER DT: 31-10-2008 WAS PASSED U/SEC 143(3) OF THE ACT. DURING SUCH PROCEEDINGS THE AO O BSERVED THAT THE ASSESSEE CLAIMED TOWARDS COMMISSION PAYMEN T OF RS.8,23,730/- IN RESPECT OF SIX PERSONS. BEFORE TH E AO THE ASSESSEE FILED DETAILS OF COMMISSION AGENTS WITH TH EIR NAMES AND ADDRESS. BUT THE ASSESSEE HAS FAILED TO P RODUCE THEM BEFORE THE AO FOR VERIFICATION OF THE SAME. HO WEVER, THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE DISALLOWED THE SUM OF RS.3,97,030/- AND ADDED THE S AME BY TREATING IT AS BOGUS COMMISSION EXPENSES, THEREB Y HE INITIATED PENALTY PROCEEDINGS BY ISSUING NOTICE DT . 31-10- 2008 U/S.274 R.W.S 271(1) ( C) OF THE ACT AND IMPOS ED PENALTY OF RS.1,21,491/- BY AN ORDER DATED 29-06-20 11. AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). THE CIT-A FOUND THAT THE ASSESSEE WAS NOT A BLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF EXPENDITURE INCU RRED TOWARDS COMMISSION PAYMENT IN THE ASSESSMENT PROCEEDINGS AND HELD THAT SUCH EXPENSES ARE NOT GEN UINE. ACCORDINGLY, HE CONFIRMED THE PENALTY IMPOSED BY TH E AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY R AISING THE FOLLOWING GROUNDS:- 1. FOR THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE PENALTY IMPOSED RS. 1, 21,491/- U/SEC. 271(1)(C) BY THE INCOME TAX OFFICER IS BAD I N LAW AND IN FACTS AND CIRCUMSTANCES OF THE CASE. 2. FOR THAT THE AUTHORITIES BELOW ERRED IN LAW AN D ON FACTS IN IGNORING THE FACT THAT COMMISSION WAS PAID BY A/ C PAYEE CHEQUES, THE PAYEES WERE EXISTING INCOME TAX ASSESS EE AND HAD SHOWN THE AMOUNT AS THEIR INCOME IN RETURNS FIL ED AND THE AMOUNTS WERE PAID FOR BONAFIDE BUSINESS PURPOSES. 3. FOR THAT THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) ERRED IN LAW AND ON FACTS IN OVERLOOKING THE SETTL ED PRINCIPLES ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 3 OF LAW THAT IN PENALTY PROCEEDINGS THE AUTHORITIES MUST CONSIDER THE MATTER A FRESH AS THE QUESTION HAS TO CONSIDERED FROM A DIFFERENT ANGLE AND THAT WHERE THE TAX PAYE RS CONDUCT AN EXPLANATION IS BONAFIDE PENALTY U/SEC. 271(1) (C ) SHALL NOT BE LEVIED. 4. FOR THAT THE AUTHORITIES BELOW OVERLOOKED THE VARIOUS JUDGMENTS HOLDING THAT IMPOSING OF PENALTY IS NOT AUTOMATIC BUT IS A MATTER OF DISCRETION AND THE ASSESSING AUT HORITY HAVE TO BE FAIR AND OBJECTIVE. 5. FOR THAT THE ORDERS OF THE AUTHORITIES BELOW L EVYING PENALTY WITHOUT CONSIDERING JUDGMENT HOLDING THAT MERELY B ECAUSE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM WA S NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/SEC. 271(1)(C). 6 FOR THE ORDERS OF THE AUTHORITIES BELOW LEVYING PENALTY WITHOUT FURTHER PROOF OF MALAFIDE INTENTION OR FRA UDULENT CONDUCT ON THE PART OF APPELLANT WERE UNJUDICIOUS A ND ARBITRARY AND BAD IN LAW AND THE SAME DESERVES TO BE QUASHED. 3. BEFORE US THE LD.AR RELIED ON THE ORDER PASSED B Y THE CO-ORDINATE BENCH OF THE ITAT, KOLKATA IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS. ACIT IN ITA NO. 1303/K OL/2010 FOR THE AY 2006-07 BY AN ORDER DATED 06-11-2015. ON THE CONTRARY, THE LD. DR HAS RELIED ON THE ORDERS OF THE LOWER AUTHOR ITIES. HE ALSO RELIED ON THE ORDER IN THE CASE OF MAK DATA P.LTD R EPORTED IN (2013) 38 TAXMANN.COM 448(SC) AND IN THE CASE OF DHARMENDR A TEXTILE PROCESSORS REPORTED IN (2008) 13 SCC 369(SC). 4. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE QUESTION BEFORE US IS AS TO WHETHER THE PENALTY ORDER PASSED BY THE AO AND CONFIRMED BY THE LD.CIT(A) FA LLS 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 ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 4 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE A CT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. FURTHER SUBMITTED BY THE LD.AR THE AFORESAI D DECISION WILL SQUARELY APPLICABLE TO THE PRESENT CASE AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 5. AS RIGHTLY POINTED OUT BY THE LD.AR, THE CO-ORDI NATE BENCH OF ITAT, KOLKATA IN THE CASE OF SUVAPRASANNA BHATTACH ARYA SUPRA BY AN ORDER DATED 06-11-2015 CONSIDERED THE JUDGMENT OF HONBLE KARNATAKA 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 THI S ASPECT WE FIND THAT IN THE SHOW CAUSE NOTICE U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THEREFORE NOT SPELT OUT AS T O WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOM E. 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 PRINTED FO RM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY TH E 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 WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WI LL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE 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. ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 5 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 AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS I NITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIE NTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHOR ITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, I N FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE C ONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 M AKES 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 DEPARTME NT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCE S OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NAT URE 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 IS SUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPE CIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SH OW 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 PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS 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 NEED LESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIO NED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E 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 U PON TO ANSWER. IT IS NOT OPEN TO 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 PROCEEDI NGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEN D PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 6 SAME GROUND. WHERE THE BASIS OF THE INITIATION OF P ENALTY 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 REFERE NCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF TH E 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 COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INA CCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISH ING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSES SING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER I S 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 PA I REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME A ND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. 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 MARKE TING REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLE AR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS T O BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURA TE PARTICULARS OF INCOME. THE STANDARD PRO FORMA WITHOUT STRIKING OF THE RELE VANT 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 AUTH ORITY OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT L EAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNI BLE FROM THE SAID ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 7 ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CON CEALMENT BECAUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDIN GS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFI CER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAI NED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMI SSIONER. 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 AUTH ORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNL ESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS O N ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT H AS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO B E ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINE D BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 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 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 TOT AL 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 PR OCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFAC TION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APP ELLATE 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., W HETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T 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 JUST ICE IS OFFENDED. ON ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 8 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 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 OF INCOR RECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PR OCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDING S ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESS MENT 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 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 ASSESSMENT Y EARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELL ED. 6. IN THE PRESENT CASE, THE NOTICE DT. 31-10-2008 ISSUED TO ASSESSEE BY THE AO U/SEC 274 R/W 271 OF THE ACT DOE S NOT SHOW ON WHICH GROUND THE PENALTY IS SOUGHT TO BE IMPOSED, T HEREFORE THE LAW LAID DOWN BY THE HONBLE HIGH COURT SUPRA AND FOLLOWED BY SUVAPRASANNA BHATTACHARYA VS. ACIT OF CO-ORDINATE BE NCH SUPRA AND IN VIEW OF THE SAME, WE HOLD THAT THE ORDER DT: 29- 06-2011 LEVYING PENALTY IS NOT VALID. RESPECTFULLY FOLLOWING THE OR DER ABOVE, WE CANCEL THE PENALTY OF RS.1,21,491/- LEVIED U/S. 271(1) ( C ) BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). ITA NO. 2519/KOL/13 CHANDRA NARAYAN MOHTA 9 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 24 /08/2016 1 . THE APPELLANT/ASSESSEE : CHANDRA NARAYAN MOHTA MEM INDUSTRIES, PODDAR COURT, GATE NO.4, 18 RABINDRA SARANI, KOL-1. 2 THE RESPONDENT/DEPARTMENT - INCOME TAX OFFICER, WARD 34(3), AAYKAR POORVA, SHANTIPALLY, KOL-107. 3 4. / THE CIT(A) THE CIT 5 . DR, KOLKATA BENCH 6 . GUARD FILE . **PP/SPS TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS SD/ - WASEEM AHMED ACCOUNTANT MEMBER SD/ - S.S.VISWANETHRA RAVI J JUDICIAL MEMBER DATE 24 /08/2016 COPY OF THE ORDER FORWARDED TO: TO:-