Shri Ravi Badalia, Kolkata V. A.C.I.T.-CC-XXVII, Kolkata, Kolkata

ITA 2846/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4584 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2013
• Court: TRIBUNAL
• Department Lawyers: BANIBRATA DUTTA CIT SR D R DEP
• Assessee Lawyers: S L KOCHAR
• Keywords: Search and seizure; Document seized; Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings; Documents seized
• Section: 153A; 132; 15

Judgement Text

I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER I.T.A. NOS. 2846, 2847, 2848 & 2849/KOL/ 2013 ASSESSMENT YEARS: 2006-2007, 07-08, 08-09 & 2009-20 10 SRI RAVI BADALIA,.................................. ........................................APPELLANT C/O. S.L. KOCHAR, ADVOCATE, 86, CANNING STREET, KOLKATA [PAN : ADJPB 0934 C] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX, ...........,. .....................RESPONDENT CENTRAL CIRCLE-XXVII, POORVA, KOLKATA APPEARANCES BY: SHRI S.L. KOCHAR, ADVOCATE AND SHRI ANIL KOCHAR, AD VOCATE, FOR THE ASSESSEE SHRI BANIBRATA DUTTA, ADDL. CIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 18, 2016 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 02, 2016 O R D E R PER BENCH :- THESE FOUR APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST FOUR SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF I NCOME TAX(APPEALS), CENTRAL-II, KOLKATA, ALL DATED 07.11.2013, WHEREBY HE CONFIRMED THE PENALTIES OF RS.1,53,000/-, RS.2,69,280/-, RS.4,07, 880/- AND RS.5,09,850/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271( 1)(C) OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 2006-07, 2007-08, 2008-09 AND 2009- 10 RESPECTIVELY. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO BELONGS TO BADALIA GROUP. THE SAID GROUP IS ENGAGED IN THE BUS INESS OF GEMS, JEWELLERY AND DIAMONDS. A SEARCH AND SEIZURE ACTION UNDER SECTION 132 WAS CONDUCTED ON 10.10.2009 IN THE CASES BELONGING TO BADALIA GROUP INCLUDING THE CASE OF THE ASSESSEE. DURING THE COUR SE OF SEARCH, CASH AND JEWELLERIES WERE FOUND FROM THE RESIDENTIAL AS WELL AS OFFICE PREMISES AND I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 2 OF 10 BANK LOCKERS. IN HIS STATEMENT RECORDED UNDER SECTI ON 132(4) DURING THE COURSE OF SEARCH, THE ASSESSEE AGREED TO SURRENDER HIS UNDISCLOSED INCOME OF RS.5,00,00,000/- FOR THE RELEVANT FIVE YE ARS AS UNDER:- ASSESSMENT YEAR AMOUNT 2006 - 07 RS. 5,00,000/ - 2007 - 08 RS. 8,00,000/ - 2008 - 09 RS. 12,00,000/ - 2009 - 10 RS. 15,00 ,000/ - 2010 - 11 RS.4,60,00,000/ - CONSEQUENT TO THE SEARCH, NOTICES UNDER SECTION 153 A WERE ISSUED BY THE ASSESSING OFFICER, IN RESPONSE TO WHICH, THE ASSESS EE FILED HIS RETURNS OF INCOME FOR THE RELEVANT SIX YEARS INCLUDING ALL THE FOUR YEARS UNDER CONSIDERATION OFFERING THEREIN THE INCOME SURRENDER ED DURING THE COURSE OF SEARCH. IN THE ASSESSMENTS COMPLETED UNDER SECTI ON 153A/143(3) VIDE ORDERS DATED 28.12.2011, THE INCOME AS RETURNED BY THE ASSESSEE FOR ALL THE FOUR YEARS UNDER CONSIDERATION WAS ACCEPTED BY THE ASSESSING OFFICER. HE, HOWEVER, INITIATED PENALTY PROCEEDINGS UNDER SE CTION 271(1)(C) KEEPING IN VIEW THE EXPLANATION 5A INSERTED IN SECT ION 271(1)(C) AS THE SAME WAS APPLICABLE IN THE CASE OF THE ASSESSEE, WH EREIN THE SEARCH WAS INITIATED UNDER SECTION 132 AFTER 1 ST DAY OF JUNE, 2007. THE EXPLANATION OFFERED BY THE ASSESSEE IN THIS REGARD TO THE NOTIC ES ISSUED DURING THE COURSE OF PENALTY PROCEEDINGS WAS NOT FOUND ACCEPTA BLE BY THE ASSESSING OFFICER AND HE PROCEEDED TO IMPOSE PENALTIES OF RS. 1,53,000/-, RS.2,69,280/-, RS.4,07,880/- AND RS.5,09,850/- FOR ASSESSMENT YEAR 2006- 07, 2007-08, 2008-09 AND 2009-10 RESPECTIVELY BY RE LYING ON EXPLANATION 5A TO SECTION 271(1)(C). 3. THE PENALTIES IMPOSED BY THE ASSESSING OFFICER U NDER SECTION 271(1)(C) FOR ALL THE FOUR YEARS UNDER CONSIDERATIO N WERE CHALLENGED BY THE ASSESSEE IN THE APPEALS FILED BEFORE THE LD CIT (APPEALS) AND SINCE THE SUBMISSIONS MADE BY THE ASSESSEE IN SUPPORT OF HIS CASE WERE NOT FOUND I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 3 OF 10 ACCEPTABLE BY HIM, THE LD. CIT(APPEALS) PROCEEDED T O CONFIRM THE PENALTIES IMPOSED BY THE ASSESSING OFFICER FOR ALL THE FOUR YEARS UNDER CONSIDERATION FOR THE FOLLOWING REASONS GIVEN IN PA RAGRAPH NO. 5 OF HIS IMPUGNED ORDER PASSED FOR A.Y. 2006-07, WHICH ARE I DENTICAL FOR THE REMAINING THREE YEARS:- 5. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE PENALTY ORDER. IT IS OBSERVED THAT A SE ARCH & SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF APPELLANT ON 10.10.2009. IN THE COURSE OF SEARCH, CERTAIN DOCUMENTS AND ASSE TS WERE FOUND AND SEIZED. THE APPELLANT OWNED THE UNDISCLOSED INC OME TO THE EXTENT OF RS.5 CRORE IN HIS HAND FOR DIFFERENT ASSE SSMENT YEARS AND ACCORDINGLY IN THE COURSE OF SEARCH, ADDITIONAL INCOME OF RS.5 CRORES WAS ADMITTED. FOR THE ASSESSMENT YEAR 2 006-07 ADDITIONAL INCOME OF RS.5,00,000/- WAS DISCLOSED. I N THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED T HE DETAILS OF UNDISCLOSED INCOME WHICH WAS DECLARED ON THE BASIS OF SEIZED DOCUMENTS AND ASSETS. IN THE RETURN OF INCOME FILED U/S 153A, THE SAID DECLARED INCOME OF RS.5,00,000/- WAS TAKEN INT O CONSIDERATION. THE ASSESSMENT WAS COMPLETED U/S. 15 3A/143(3) OF THE ACT AT THE RETURNED INCOME. HOWEVER, IT IS A FACT ON RECORD THAT THE APPELLANT DID NOT DISCLOSE THE AFORESAID I NCOME OF RS.5 LAKH IN THE RETURN OF INCOME FILED U/S. 139(1) OF T HE ACT. IN THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS CONTENDED THAT THE PENALTY U/S. 271(1)(C) IS NOT LEVIABLE IN HIS CASE BECAUSE THE ADDITIONAL INCOME WAS DISCLOSED IN THE COURSE O F SEARCH U/S 132(4) OF THE ACT AND THE SAME INCOME WAS ASSESSED BY THE AO. THAT, NO PAPER OR EVIDENCE WAS FOUND REGARDING UNDI SCLOSED INCOME. IT IS ALSO ARGUED BY THE APPELLANT THAT THE RETURN FILED U/S. 153A IS EQUIVALENT TO THE RETURN FILED U/S. 13 9(1) AND HENCE EVEN THE PENALTY IS NOT LEVIABLE BY APPLYING PROVIS IONS OF EXPLANATION 5A OF SECTION 271(1)(C). HOWEVER, ON CA REFUL CONSIDERATION OF THE FACTS AND GOING THROUGH THE AM ENDED PROVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANAT ION 5A, I AM NOT INCLINED TO AGREE WITH THE SUBMISSION OF THE AP PELLANT THAT FOR THE YEAR UNDER APPEAL THE PENALTY IS NOT LEVIAB LE U/S 271(1)(C). THE PROVISIONS OF EXPLANATION 5A OF SECT ION 271(1)(C) READS AS UNDER : [EXPLANATION 5A - WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF - (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING(HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQU IRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 4 OF 10 IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANS ACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY P REVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, - (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED T O HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME.] 5.1 ON PERUSAL OF EXPLANATION 5A OF SECTION 271(1)( C) SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2009 APPLICA BLE WITH RETROSPECTIVE EFFECT FROM 01.06.2007, IT IS APPAREN T THAT IN A CASE OF AN ASSESSEE WHERE THE SEARCH IS INITIATED O N OR AFTER 1ST DAY OF JUNE, 2007 AND SUCH AN ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR HAVING ANY INCOME BASED ON ANY ENTRY IN AN Y BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND RELATES TO ANY PREVI OUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THE REIN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S : 271(1)(C), BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN THE CASE OF APPELLANT, THERE IS NO DISPUTE THAT THE SEARCH WAS CONDUCTED AFTER 01.06.2007 AND THE INCOME RELATES TO THE PREV IOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH. THE APPE LLANT HAD FILED RETURN OF INCOME FOR SUCH PREVIOUS YEAR BUT D ID NOT DECLARE THE INCOME THEREIN. UNDER THE CIRCUMSTANCES, EVEN I F THE APPELLANT HAS DECLARED THE UNDISCLOSED INCOME IN TH E RETURN FILED U/S. 153A, HE WILL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME FOR THE PURPOSE OF IMPOSITION OF PENALTY . AS PER EXPLANATION 5A TO SECTION 271(1)(C), NO IMMUNITY HA S BEEN PROVIDED FROM THE PENALTY IF THE UNDISCLOSED INCOME WAS DECLARED U/S 132(4) IN THE COURSE OF SEARCH PROCEED INGS AS PROVIDED EARLIER BY EXPLANATION 5 OF THIS SECTION. IN VIEW OF ABOVE, I AM OF THE OPINION THAT THE AO WAS JUSTIFIE D IN IMPOSING THE PENALTY U/S. 271(1)(C) OF THE ACT. HIS ACTION I S IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. HENCE, THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C) AMOUNTING TO RS.1,53,000/- IS CON FIRMED. THE GROUND NO. 1 IS DISMISSED. I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 5 OF 10 AGGRIEVED BY THE ORDERS OF THE LD. CIT(APPEALS), TH E ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE BEFORE US HAS RAISED A PRELIMINARY ISSUE CHALLENGIN G THE VALIDITY OF THE PENALTY ORDERS PASSED BY THE ASSESSING OFFICER ON THE GROUND THAT IN THE ABSENCE OF ANY SPECIFIC MENTION IN THE SHOW-CAUSE N OTICES ISSUED UNDER SECTION 274 OF THE ACT FOR THE YEARS UNDER CONSIDER ATION BY THE ASSESSING OFFICER AS TO WHETHER THE ASSEESSEE IS GUILTY OF HA VING FURNISHED INACCURATE PARTICULARS OF INCOME OR OF HAVING CON CEALED PARTICULARS OF SUCH INCOME, THE INITIATION OF PENALTY PROCEEDINGS ITSELF WAS BAD IN LAW AND THE PENALTY ORDERS PASSED IN PURSUANCE THEREOF ARE LIABLE TO BE QUASHED BEING INVALID. HE HAS INVITED OUR ATTENTION TO THE SHOW-CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER FOR THE YEA RS UNDER CONSIDERATION UNDER SECTION 274 IN THE PRINTED FORM TO POINT OUT THAT THE IRRELEVANT PORTION, VIZ. FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF SUCH INCOME WAS NOT STRUCK OFF BY T HE ASSESSING OFFICER AND THIS POSITION CLEARLY EVIDENT FROM THE SAID NOT ICES HAS NOT BEEN DISPUTED EVEN BY THE LD. D.R. IT IS OBSERVED THAT T HE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHA RYA VS.- ACIT (IN ITA NO. 1303/KOL/2010) CITED BY THE LD. COUNSEL FOR THE ASSESSEE HAD AN OCCASION TO CONSIDER A SIMILAR ISSUE IN THE IDENTIC AL FACT SITUATION AND THE ORDER PASSED BY THE ASSESSING OFFICER IMPOSING PENA LTY UNDER SECTION 271(1)(C) WAS HELD TO BE INVALID BY THE TRIBUNAL RE LYING ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANOTHER VS.- MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 AFTER DISCUSSING THE PROPOSITION LAID DOWN THEREIN IN GRE AT DETAIL IN PARAGRAPH NO. 8 TO 8.2 OF ITS ORDER DATED 06.11.2015, WHICH R EAD AS UNDER:- 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 OR C ONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SHOW CAUSE NOTIC E U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THEREFORE NOT SPELT OUT AS TO WHETHER THE PENALTY I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 6 OF 10 PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING 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), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING P ROPOSED TO BE IMPOSED FOR CONCEALMENT 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 THE REQUIRE MENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEEDINGS 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 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 FOLL OWING 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 AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CO NTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF T HE 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, IN FACT, IT I S PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED I N SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSI NG PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGH T TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF TH E 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 DEPARTMENT SENDING A P RINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS 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 SPE CIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTIC E IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASS ESSEE. 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 PROCE EDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING H IM GUILTY 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 CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 7 OF 10 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. I T IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON T HE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAIN ED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALT Y PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, T HE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUS T BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HAND S OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FU RTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALI DATE 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 T OTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME ARE DIFFERENT. 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 FU RNISHING 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 INACCURAT E PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN T HE 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 P ENALTY HAS 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 I NVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PRO FORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE A S 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 I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 8 OF 10 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 ITSE LF 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. 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 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 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 APPEA L, 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 O F THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS ' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSES SEE 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. I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 9 OF 10 (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 PENALTY IN ALL THE ASSESSMENT YEARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANC ELLED. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF P ENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDERS IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. 5. IN OUR OPINION, THE DECISION OF THE COORDINATE B ENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF SUVAPRASANNA BHATT ACHARYA VS.- ACIT RENDERED VIDE ITS ORDER DATED 06.11.2015 IN ITA NO. 1303/KOL/2010 BY RELYING ON THE DECISION OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT & ANOTHER VS.- MANJUNATHA COTTON & GINNING FAC TORY REPORTED IN 359 ITR 565 IS SQUARELY APPLICABLE IN THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE SHOW-CAUSE NOT ICES ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 FOR THE YEARS U NDER CONSIDERATION NOT BEING IN ACCORDANCE WITH LAW, THE PENALTY ORDERS PA SSED BY THE ASSESSING OFFICER IN PURSUANCE THEREOF ARE LIABLE TO BE CANCE LLED BEING INVALID. WE ACCORDINGLY CANCEL THE ORDERS PASSED BY THE ASSESSI NG OFFICER IMPOSING PENALTIES UNDER SECTION 271(1)(C) FOR THE YEARS UND ER CONSIDERATION AND ALLOW THE APPEALS OF THE ASSESSEE. 6. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 02, 2016. SD/- SD/- (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 2 ND DAY OF SEPTEMBER, 2016 COPIES TO : (1) SRI RAVI BADALIA, C/O. S.L. KOCHAR, ADVOCATE, 86, CANNING STREET, KOLKATA-700 001 (2) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXVII, POORVA, KOLKATA, I.T.A. NOS. 2846 TO 2849/KOL./2013 ASSESSMENT YEARS: 2006-2007 TO 2009-2010 PAGE 10 OF 10 (3) CIT(APPEALS), CENTRAL-II, KOLKATA (4) CIT, KOLKATA- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.