Moving Picture Company India Ltd., New Delhi V. DCIT, New Delhi

ITA 2896/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0274 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RINKU SINGH SENIOR
• Keywords: Invalid notice; Opportunity of being heard; Principle of natural justice; Question of law; Initiation of penalty proceedings; Reasonable cause; Set aside
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2896/DEL./2015 (ASSESSMENT YEAR : 2008-09) M/S. MOVING PICTURE COMPANY INDIA LTD., VS. DCIT, C IRCLE 5 (1), 405, SKYLARK BUILDING, NEW DELHI. 60, NEHRU PLACE, NEW DELHI 110 019. (PAN : AAACM6292R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY SOOD, CA REVENUE BY : MS. RINKU SINGH, SENIOR DR DATE OF HEARING : 13.03.2019 DATE OF ORDER : 29.03.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. MOVING PICTURE COMPANY INDIA L TD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 20.03.2015 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- 6, DELHI AFFIRMING THE PENALTY ORDER DATED 25.03.2013 PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), QUA THE ASSESSMENT YEAR 2008-09 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSION OF INCOME TAX (APPEALS)-6 IS BAD AT LAW WRONG IN FACTS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ITA NO.2896/DEL./2015 2 2. THAT UNDER THE FACTS AND CIRCUMSTANCES THE COMMISSIONER OF INCOME TAX (APPEALS), HAS ERRED IN CONFIRMING THE PENALTY OF RS.12,22,662/- OUT OF THE PENALTY OF RS.12,71,285/- IMPOSED BY THE ASSESSING OFFICER BEING 100% OF TAX ON THE INCOME SOUGHT TO BE EVADED BY THE ASSESSEE COMPANY. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF PROVIDING SERVICES IN THE LINE OF PRODUCTION OF FIL MS, DOCUMENTARY FILMS, RENDERING SERVICES IN MEDIA AND ENTERTAINMEN T INDUSTRY. ON THE BASIS OF ASSESSMENT PASSED UNDER SECTION 143 (3 ) OF THE ACT AT THE LOSS OF RS.1,07,51,103/- AS AGAINST THE RETURNE D LOSS OF RS.1,48,65,293/- BY MAKING ADDITION OF RS.41,14,190 /- (RS.38,56,852/-, RS.1,57,354/- & RS.99,984/- ON ACC OUNT OF INTEREST RECEIVED FROM SHAREHOLDERS ON DELAYED PAYMENT TOWAR DS PART OF SHARE CAPITAL, ON ACCOUNT OF DISALLOWANCE U/S 14A A ND ON ACCOUNT OF DISALLOWANCE ON ACCOUNT OF AMOUNT WRITTEN OFF RE SPECTIVELY), AO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BY WAY OF ISSUANCE OF NOTICES U/S 274 READ WITH SECTIO N 271(1)(C) OF THE ACT. DECLINING THE CONTENTIONS RAISED BY THE A SSESSEE, AO PROCEEDED TO LEVY THE PENALTY OF RS.12,71,285/- ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS W ITHIN THE MEANING OF EXPLANATION 1 TO SUB-SECTION (1) OF SECT ION 271(1)(C) OF THE ACT. ITA NO.2896/DEL./2015 3 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DIRECTED THE AO TO RECOMPUTE TH E PENALTY ON UNDER SECTION 271(1)(C) ON ACCOUNT OF ADDITION OF R S.38,56,852/- AND RS.99,984/- ON ACCOUNT OF INTEREST RECEIVED FRO M SHAREHOLDERS AND DISALLOWANCE OF AMOUNT WRITTEN OFF RESPECTIVELY BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE ASSESSE E HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT AP PEAL. 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. BY MOVING A SEPARATE APPLICATION, ASSESSEE SOUGH T TO RAISE ADDITIONAL GROUND ON THE GROUND THAT THE SAME GOES TO THE ROOT OF THE CASE WHICH ARE AS UNDER :- THAT UNDER THE FACTS AND CIRCUMSTANCES THE ASSESSI NG OFFICER HAS WHILE ISSUING SHOW CAUSE NOTICE FOR PENALTY, ER RED IN, NOT SPECIALLY POINTING OUT THAT WHETHER THE PENALTY WAS PROPOSED ON CONCEALMENT OF PARTICULARS OF INCOME, OR FOR FURNIS HING PARTICULARS OF INCOME, INITIATION OF PENALTY LEVIED UNDER SECTION 271(1)(C) WAS THUS VITIATED AND PENALTY U/S 271(1)( C) IMPOSED NEEDS TO BE DELETED. 6. KEEPING IN VIEW THE FACT THAT THE ADDITIONAL GRO UND SOUGHT TO BE RAISED BY THE ASSESSEE, WHICH IS A LEGAL GROUND AND CAN BE RAISED AT ANY STAGE OF THE PROCEEDINGS, IS OTHERWISE NECES SARY FOR ITA NO.2896/DEL./2015 4 COMPLETE ADJUDICATION OF THE CONTROVERSY AT HAND, T HE APPLICATION FOR ADDITIONAL GROUND IS HEREBY ALLOWED. 7. UNDISPUTEDLY, ADDITION MADE BY THE AO ON THE BAS IS OF WHICH PENALTY HAS BEEN LEVIED ACCEPTED BY THE ASSES SEE. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE COMPANY IS A LOSS MAKI NG COMPANY. 8. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACT S & CIRCUMSTANCES OF THE CASE, ORDER PASSED BY THE LOWE R REVENUE AUTHORITIES AND ARGUMENTS ADDRESSED BY THE LD. AUTH ORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, THE S OLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INC OME DURING ASSESSMENT PROCEEDINGS? 9. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT AO IN ORDER TO INITIATE T HE PENALTY PROCEEDINGS HAS PRIMA FACIE FAILED TO SATISFY HIMSE LF THAT AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAVE FURNISHED INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER AS WELL AS IN THE SHOW CAUSE NOTICE ISSUED UN DER SECTION 271(1)(C) / 274 OF THE ACT AND RELIED UPON THE DECI SION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY-359ITR 565 AND CIT VS. SSAS EMERAL A ITA NO.2896/DEL./2015 5 MEADOWS -73 TAXMANN.COM 241 (KAR.) (REVENUES SLP D ISMISSED IN 242 TAXMAN 180). 10. IN ORDER TO PROCEED FURTHER, WE WOULD LIKE TO PERUSE THE NOTICE DATED 22.12.2010 ISSUED BY AO U/S 274 READ W ITH SECTION 271(1)(C) OF THE ACT TO INITIATE THE PENALTY PROCEE DINGS WHICH IS EXTRACTED AS UNDER FOR READY PERUSAL:- NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. INCOME TAX OFFICE NEW DELHI. DATED: 22.12.2010 TO, M/S MOVING PICTURE COMPANY INDIA LTD., C/O OBEROI SOOD & KAPOOR, 606, VISHAL BHAWAN 95, NEHRU PLACE, NEW DELHI-110 019. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2008-09 IT APPEARS TO ME THAT YOU:- X HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WI TH A NOTICE UNDER SECTION 142(1)/143(2) OF THE INCOME TA X 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 11. 00 AM/PM 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 OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPR ESENTATIVES YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UN DER SECTION 271(1)(C). SD/- ASSESSING OFFICER (A.S. NEHRA) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 5 (1), NEW DELHI. DELETE INAPPROPRIATE WORDS AND PARAGRAPHS. ITA NO.2896/DEL./2015 6 11. BARE PERUSAL OF PARA 3 OF THE ASSESSMENT ORDER , AVAILABLE AT PAGES 52 TO 54 OF THE PAPER BOOK, GOES TO SHOW THAT AT TIME OF FRAMING ASSESSMENT ITSELF, AO HAS NOT SATISFIED HIM SELF IF THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME OR HAS CONCEALED THE PARTICULARS OF INCOME. FOR READY PER USAL, OPERATIVE PART OF THE ASSESSMENT ORDER IS EXTRACTED AS UNDER :- I AM FULLY SATISFIED THAT THE ADDITIONS AS ABOVE A MOUNT TO FILING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME BY THE ASSESSEE AND DESERVE PENALTY U/S 271(1)(C). PENALT Y PROCEEDINGS ARE INITIATED SEPARATELY BY ISSUE OF PENALTY SHOW C AUSE NOTICE. 12. FURTHER MORE, PERUSAL OF THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) IN ORDER TO INITIATE THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE GOES TO PROVE THAT EVEN AT THE STAGE OF ISSUING THE NOTICE, AO WAS NOT AWARE AS TO WHETHER HE IS IS SUING NOTICE TO INITIATE THE PENALTY PROCEEDINGS EITHER FOR CONCEA LMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME BY THE ASSESSEE RATHER ISSUED VAGUE AN D AMBIGUOUS NOTICE BY INCORPORATING BOTH THE LIMBS OF SECTION 2 71(1)(C). WHEN THE CHARGE IS TO BE FRAMED AGAINST ANY PERSON SO AS TO MOVE THE PENAL PROVISIONS INTO MOTION AGAINST HIM, HE/SHE SH OULD BE SPECIFICALLY MADE AWARE OF THE CHARGES TO BE LEVELE D AGAINST HIM/HER. ITA NO.2896/DEL./2015 7 13. HONBLE HIGH COURT OF KARNATAKA IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) WHILE DECIDING THE IDENTICAL ISSUE HELD THAT WHEN THE AO HAS FAILE D TO ISSUE A SPECIFIC SHOW-CAUSE NOTICE TO THE ASSESSEE AS REQUI RED U/S 274 READ WITH SECTION 271(L)(C), PENALTY LEVIED IS NOT SUST AINABLE. THE OPERATIVE PART OF THE JUDGMENT IS REPRODUCED AS UND ER:- 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDIN GS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGAR DING 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 S AID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HA S PASSED THE ORDER. HOWEVER, IF THE EXISTENCE 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 N ATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHE R EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTI ON 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 EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FORM WHERE ALL THE GRO UND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASS ESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NAT URE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILI TY. AS 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 ASS ESSEE. 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 ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE M AY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES T HE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE O FFENCES. BUT ITA NO.2896/DEL./2015 8 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 NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROU NDS 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 SPECI FICALLY 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 SHOU LD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER . IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENA LTY TO IMPOSE PENALTY ON THE 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 PE NALTY WOULD OFFEND PRINCIPLES 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 N OT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IM POSITION 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 ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUB SEQUENT TO THE IMPOSITION OF PENALTY CANNOT 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 I N THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOM E UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISS UING 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 INACCURA TE PARTICULARS. THE APEX COURT IN THE CASE OF T ASHOK POI V. CIT [2 007] 292 ITR 11 /161 TAXMAN 340 AT PAGE 19 HAS HELD THAT CON CEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN T HE CASE OF CIT V. MANU ENGG. [1980] 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING (P) LTD . [2008] 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 BE ING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASS ESSING 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 ST ANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES W ILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. ITA NO.2896/DEL./2015 9 14. HONBLE APEX COURT IN CASE OF CIT VS. SSAS EM ERALA MEADOWS - (2016) 73 TAXMANN.COM 248 (SC) WHILE DISM ISSING THE SLP FILED BY THE REVENUE QUASHING THE PENALTY BY TH E TRIBUNAL AS WELL AS HONBLE HIGH COURT ON GROUND OF UNSPECIFIED NOTICE HAS HELD AS UNDER:- SECTION 274, READ WITH SECTION 271(1)(C), OF THE I NCOME-TAX ACT, 1961 - PENALTY - PROCEDURE FOR IMPOSITION OF (CONDI TIONS PRECEDENT) - ASSESSMENT YEAR 2009-10 - TRIBUNAL, RE LYING ON DECISION OF DIVISION BENCH OF KARNATAKA HIGH COURT RENDERED IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 1TR 565/218 TAXMAN 423/35 TAXMANN.COM 250, ALLO WED APPEAL OF ASSESSEE HOLDING THAT NOTICE ISSUED BY AS SESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271 (1 )(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271 (1 )(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E., WHETHER FOR C ONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME - HIGH COURT HELD THAT MATTER WAS COVERED BY AFORESAID DECISION OF DIVISION BENCH AND, THEREFORE, THERE WA S NO SUBSTANTIAL QUESTION OF LAW ARISING FOR DETERMINATI ON - WHETHER SINCE THERE WAS NO MERIT IN SLP FILED BY REVENUE, S AME WAS LIABLE TO BE DISMISSED - HELD, YES [PARA 2] [IN FAVOUR OF ASSESSEE] 15. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVE NUE TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. AR FOR THE ASSES SEE CONTENDED THAT ASSESSEE HAS NEVER RAISED ANY SUCH QUESTION OF INVALID NOTICE DURING PENALTY PROCEEDINGS NOR BEFORE THE LD. CIT ( A) WHICH HAS CAUSED NO PREJUDICE TO THE ASSESSEE AS THE ASSESSEE HAS UNDERSTOOD THE PURPORT AND IMPORT OF THE NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT AND RELIED UPON THE DECISION RENDERED BY THE HONBLE MADRAS HIGH COURT IN SUNDARAM FINANCE LTD. VS. CIT (2018) 403 ITR 407 (MADRAS), IN WHICH SLP HAS ALSO BEEN ITA NO.2896/DEL./2015 10 DISMISSED BY HONBLE SUPREME COURT IN THE CASE CITE D AS SUNDARAM FINANCE LTD. VS. CIT (2018) 99 TAXMANN.COM 152 (SC) AND ALSO RELIED UPON THE JUDGMENT OF CIT VS. SMT. KAUSHALYA 216 ITR 660 (BOMBAY) & TRIMURTI ENGINEERING WORKS VS. ITO (2012) 138 ITD 189 (DEL.) . 16. HONBLE MADRAS HIGH COURT IN SUNDARAM FINANCE LTD. (SUPRA) UPHELD THE ORDER PASSED BY THE TRIBUNAL CON FIRMING THE PENALTY LEVIED ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT IN WHICH SPECIFIC CHARGE WAS NOT POINTED OUT BY RETURNING THE FOLLOWING FINDINGS :- 16. WE HAVE PERUSED THE NOTICES AND WE FIND THAT T HE RELEVANT COLUMNS HAVE BEEN MARKED, MORE PARTICULARLY, WHEN T HE CASE AGAINST THE ASSESSEE IS THAT THEY HAVE CONCEALED PA RTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCO ME. THEREFORE, THE CONTENTION RAISED BY THE ASSESSEE IS LIABLE TO BE REJECTED ON FACTS. THAT APART, THIS ISSUE CAN NEVER BE A QUESTION OF LAW IN THE ASSESSEE S CASE, AS IT IS PURELY A QUESTI ON OF FACT. APART FROM THAT, THE ASSESSEE HAD AT NO EARLIER POI NT OF TIME RAISED THE PLEA THAT ON ACCOUNT OF A DEFECT IN THE NOTICE, THEY WERE PUT TO PREJUDICE. ALL VIOLATIONS WILL NOT RESULT IN NULLIFYING THE ORDERS PASSED BY STATUTORY AUTHORITIES. IF THE CASE OF THE ASSESSEE IS THAT THEY HAVE BEEN PUT TO PREJUDICE AND PRINCIP LES OF NATURAL JUSTICE WERE VIOLATED ON ACCOUNT OF NOT BEING ABLE TO SUBMIT AN EFFECTIVE REPLY, IT WOULD BE A DIFFERENT MATTER. TH IS WAS NEVER THE PLEA OF THE ASSESSEE EITHER BEFORE THE ASSESSING OF FICER OR BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNA L OR BEFORE THIS COURT WHEN THE TAX CASE APPEALS WERE FILED AND IT W AS ONLY AFTER 10 YEARS, WHEN THE APPEALS WERE LISTED FOR FINAL HE ARING, THIS ISSUE IS SOUGHT TO BE RAISED. THUS ON FACTS, WE COU LD SAFELY CONCLUDE THAT EVEN ASSUMING THAT THERE WAS DEFECT I N THE NOTICE, IT HAD CAUSED NO PREJUDICE TO THE ASSESSEE AND THE ASSESSEE CLEARLY UNDERSTOOD WHAT WAS THE PURPORT AND IMPORT OF NOTICE ISSUED UNDER SECTION 274 R/W. SECTION 271 OF THE ACT. THEREFORE, PRINCIPLES OF NATURAL JUSTICE CANNOT BE READ IN ABS TRACT AND THE ASSESSEE, BEING A LIMITED COMPANY, HAVING WIDE NETW ORK IN VARIOUS FINANCIAL SERVICES, SHOULD DEFINITELY BE PR ECLUDED FROM RAISING SUCH A PLEA AT THIS BELATED STAGE. ITA NO.2896/DEL./2015 11 17. THUS, FOR THE ABOVE REASONS, SUBSTANTIAL QUEST IONS OF LAW NOS.1 AND 2 ARE ANSWERED AGAINST THE ASSESSEE AND I N FAVOUR OF THE REVENUE. THE ADDITIONAL SUBSTANTIAL QUESTION OF LAW, WHICH WAS FRAMED IS REJECTED ON THE GROUND THAT ON FACTS THE SAID QUESTION DOES NOT ARISE FOR CONSIDERATION AS WELL A S FOR THE REASONS SET OUT BY US IN THE PRECEDING PARAGRAPHS. 17. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT IN THE INSTANT CASE, NOT ONLY THE NOTICE ISSUED TO THE ASSESSEE UN DER SECTION 274 READ WITH SECTION 271(1)(C) IS DEFECTIVE BUT AO HAS NOT EVEN MADE HIMSELF SATISFIED AT THE TIME OF MAKING DISALLOWANC E / ADDITION IN ASSESSMENT ORDER IF THE ASSESSEE HAS FURNISHED INAC CURATE PARTICULARS OF INCOME OR HAS CONCEALED PARTICULARS OF HIS INCOME RATHER TO BE ON THE SAFER SIDE HE HAS INVOKED BOTH THE LIMBS OF SECTION 271(1) OF THE ACT. SO, WE ARE OF THE CONSI DERED VIEW THAT THIS IS NOT MERELY A CASE OF SERVING A DEFECTIVE NO TICE UNDER SECTION 274 READ WITH SECTION 271(1) ON THE ASSESSEE RATHER IT IS A CASE OF NON-APPLICATION OF MIND ON THE PART OF THE AO TO MA KE HIMSELF SATISFIED AS TO UNDER WHICH LIMB OF SECTION 271(1)( C) OF THE ACT, HE IS GOING TO INITIATE/LEVY THE PENALTY ON THE ASSESS EE. PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED MERELY ON THE BA SIS OF FACT THAT IN THE PENALTY ORDER, THE AO HAS RIGHTLY LEVIED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME BECAUSE WHEN VERY INITIATION OF THE PENALTY PROCEEDINGS ARE VITIATED, AS DISCUSSED IN THE PRECEDING PARAS, THE PENALTY ORDER IS NOT SUSTAINAB LE. ITA NO.2896/DEL./2015 12 18. SO, IN THESE CIRCUMSTANCES, WHEN AO HIMSELF IS NOT SATISFIED SINCE THE TIME OF FRAMING ASSESSMENT AS TO UNDER WH ICH LIMB OF SECTION 271(1)(C) OF THE ACT, PENALTY IS TO BE LEV IED, HE CANNOT BE PERMITTED UNDER LAW TO WASH OF HIS HANDS BY TAKING RECOURSE TO EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT BY PL ACING THE ENTIRE ONUS ON THE ASSESSEE TO PROVE THAT THERE IS NO CONC EALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCO ME. 19. PARA 3 OF THE ASSESSMENT ORDER FURTHER MAKES IT CLEAR THAT AT NO POINT OF TIME RIGHT FROM PASSING OF THE ASSESSME NT ORDER AND EVEN AT THE TIME OF ISSUANCE OF THE NOTICE U/S 274 READ WITH SECTION 271(1)(C), AO HAS NOT MADE HIMSELF SATISFIED OR CLE AR ENOUGH IF THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME OR HAS CONCEALED THE PARTICULARS OF INCOME. SO, THE ARGUM ENTS RAISED BY LD. DR FOR THE REVENUE AND THE DECISION RELIED UPON ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CA SE. 20. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE C ASE OF SUNDARAM FINANCE LTD. (SUPRA), AS RELIED UPON BY LD . DR FOR THE REVENUE IS NOT APPLICABLE TO THE FACTS AND CIRCUMST ANCES OF THE CASE. HOWEVER, DECISION RENDERED BY HONBLE APEX COURT IN CIT VS. SSAS EMERALA MEADOWS (SUPRA) AND HONBLE KARNATAKA HIGH COURT IN CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS AND CI RCUMSTANCES OF ITA NO.2896/DEL./2015 13 THE CASE AS THE AO HAS MISERABLY FAILED TO SPECIFY IN THE NOTICE ISSUED UNDER SECTION 274 READ WITH 271(L)(C) OF THE ACT, 'AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INC OME , SO IN THESE CIRCUMSTANCES, PENALTY LEVIED BY THE AO AND C ONFIRMED BY LD. CIT (A) IS NOT SUSTAINABLE IN THE EYES OF LAW. CONSEQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF MARCH, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF MARCH, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-6, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.