TATA COMMUNICATION TRANSFORMATION SERVICES LIMITED, MUMBAI V. DEPUTY COMMISSONER OF INCOME TAX, RANGE 14(3)(1), MUMBAI

ITA 3108/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0217 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: URVI HEM TA
• Keywords: Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3); 27; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3108/M/2016 ASSESSMENT YEAR: 2010-11 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED, TOWER B, SIXTH FLOOR, PLOT C21 & C-36, G-BLOCK, BANDRA KURLA COMPLEX, MUMBAI- 400098 PAN: AACCV3189Q VS. DEPUTY COMMISSIONER OF INCOME TAX, RANGE-14(3)(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI KETAN VED, A.R. & MS. URVI HEM TA, A.R. REVENUE BY : SHRI M.C OMI NINGSHEN, D.R. DATE OF HEARING : 11.01.2018 DATE OF PRONOUNCEMENT : 21.02.2018 O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-14, MUMBAI DAT ED 23.02.2016 AND IT PERTAINS TO ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: BEING AGGRIEVED BY THE ORDER DATED 23 FEBRUARY, 20 16 PASSED UNDER SECTION 250 OF THE INCOME- TAX ACT, 1961 (HEREINAFT ER REFERRED TO AS THE ACT), BY THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS)-14, MUMBAI, [HEREINAFTER REFERRED TO AS THE HON'BLE CIT (A)], THE APPELLANT SUBMITS THE FOLLOWING GROUNDS OF APPEAL F OR YOUR SYMPATHETIC CONSIDERATION WHICH ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANOTHER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE HON'BLE CIT (A) HAS ERRED IN: 1. DISMISSING THE GROUND OF APPEAL WITHOUT GIVING ANY REASONS THAT THE PENALTY ORDER UNDER SECTION 271 (1)( C) OF THE ACT HAS BEEN PASSED ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 2 EX-PARTE BY THE LEARNED AO I.E. WITHOUT GIVING ANY OPPORTUNITY OF PRESENTING ITS CASE AND OF BEING HEARD TO THE APPEL LANT, WHICH IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 2. UPHOLDING THE PENALTY ORDER ON THE PREMISE THAT NO APPEAL WAS FILED AGAINST THE ADDITION MADE BY THE LEARNED AO IN THE ASSESSMENT ORDER, THEREBY IGNORING THE FACT THAT THE ISSUE OF SUBJECTING THE SAME INCOME TO TAX TWICE, WAS A FIT CASE FOR RECTIF ICATION UNDER SECTION 154 OF THE ACT AND PROCEEDING TO UPHOLD THE LEVY OF PENALTY EVEN WITHOUT WAITING FOR THE DISPOSAL OF THE RECTIFICATI ON APPLICATION FILED BY THE APPELLANT. 3. UPHOLDING THE PENALTY ORDER PASSED BY THE LEARNED A O LEVYING PENALTY OF RS. 22,62,959/- U/S 271(1)(C) ON THE PRE MISE THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS AND CONCEALED THE INCOME. 4. CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)( C) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE ADDITIONS MA DE BY THE LEARNED AO OF RS 66,57,721/- ON THE BASIS OF WHICH PENALTY IS IMPOSED WERE ALREADY MADE BY THE APPELLANT TO THE EXTENT OF RS. 62,95,961/- IN ITS RETURN OF INCOME AND THE DIFFERENTIAL VALUE BEING C AUSED DUE TO DIFFERENT METHOD ADOPTED FOR ALLOCATION / ABSORPTIO N OF FIXED OVERHEADS IN CASE OF A SALES ORDER EXECUTED BY ITS DOMESTIC T ARIFF UNIT. THE APPELLANT SINCERELY PRAYS THAT THE LEVY OF PENA LTY BEING INVALID AND BAD IN LAW MAY KINDLY BE DIRECTED TO BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OMIT OR S UBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT T HE TIME OF THE APPEAL HEARING. 2. THE ASSESSEE HAS FILED A PETITION FOR ADMISSION OF ADDITIONAL GROUNDS ON 11.12.2017. THE ADDITIONAL GROUNDS RAISED BY THE A SSESSEE ARE AS FOLLOWS: 1: 0 RE.: LEVY OF PENALTY U/S. 271(1)(C): 1 : 1 THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(L) (C) OF THE INCOME-TAX ACT, 1961 ON THE APPELLANT. 2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT IT H AS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCO ME AND HENCE NO PENALTY WHATSOEVER CAN BE LEVIED ON IT U/S.271(1)(C ) OF THE INCOME-TAX ACT, 1961 AND THE COMMISSIONER OF INCOME-TAX (APPEALS) O UGHT TO HAVE HELD AS SUCH. ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 3 1 : 3 THE APPELLANT SUBMITS THAT THE IMPUGNED ORDER LEVYING PENALTY U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 BE STRUCK DOWN. 2: 0 RE : GENERAL: 2 : 1 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND, SUBSTITUTE AND/OR MODIFY IN ANY MANNER WHATSOEVER ALL OR ANY OF THE F OREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CAS E RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS.7,55,19,904/-. THE AS SESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 04.03.14 DETERMINING THE TO TAL INCOME AT RS.8,21,77,620/- INTER-ALIA MAKING ADDITIONS TOWARDS DISALLOWANCE OF CORPORATE REVENUE ON WHICH EXEMPTION UNDER SECTION 10A/10AA WAS CLAIMED AMOUNTING TO RS.66,57,721/-. SUBSEQUENTLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) HAS BEEN INITIATED FOR FURNISHING OF INAC CURATE PARTICULARS OF INCOME. ACCORDINGLY, NOTICE UNDER SECTION 274 R.W.S. 271(1) (C) WAS ISSUED ON 12.03.14. THE ASSESSEE NEITHER APPEARED BEFORE THE AO NOR FIL ED ANY EXPLANATION. THEREFORE, THE AO HELD THAT THE ASSESSEE HAS NO EXP LANATION TO OFFER AND ALSO HAS NO OBJECTION FOR THE PROPOSED LEVY OF PENALTY. ACCORDINGLY, CONSIDERING THE FACTS OF THE CASE AND ALSO BY RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS & OTHERS (2008) 306 ITR 277 LEVIED PENALTY OF RS.22,6 2,959/- UNDER SECTION 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSE E HAS FILED AN ELABORATE WRITTEN SUBMISSIONS. THE ASSESSEE FURTHER CONTENDE D THAT THE AO WAS ERRED IN LEVYING PENALTY FOR DISALLOWANCE OF CORPORATE REVEN UE FOR COMPUTATION OF DEDUCTION CLAIMED UNDER SECTION 10A/10AA ON THE GRO UND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WHIC H ATTRACTS PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THOUGH THE ASSESSEE HAS FILED REVISED COMPUTATION WORKING OUT CORRECT DISALLOWANCE OF CORPORATE REVENUE FOR COMPUTING DEDUCTION UNDER SEC TION 10A/10AA THIS ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 4 CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PA RTICULARS OF INCOME. THE ASSESSEE HAS TAKEN UP A LEGAL PLEA IN AS MUCH AS TH E NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 271(1)(C) IS INVALID AS TH E AO HAS NOT STRIKE OFF INAPPROPRIATE PORTION WHICH IS NOT APPLICABLE TO TH E FACTS OF THE ASSESSEES CASE, THEREFORE, IT IS A CASE OF NON APPLICATION OF MIND BY THE AO AND HENCE, PENALTY PROCEEDINGS ARE BAD IN LAW AND LIABLE TO BE QUASHED . THE LD. CIT(A), AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSE E, OBSERVED THAT THE ASSESSEE FAILED TO BRING ON RECORD ANY FAULT ON THE PART OF THE AO WHILE COMPUTING THE DISALLOWANCE EXCEPT FOR THE ISSUE OF DOUBLE ADDITIO N AGAINST WHICH RECTIFICATION APPLICATION IS ALREADY FILED AS CONTENDED, THEREFOR E, IN MY OPINION THE CASE FALLS UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE AC T, AS THE CLAIM OF EXEMPTION UNDER SECTION 10A/10AA SHOULD HAVE BEEN LESS THAN T HAT CLAIMED AND PENALTY IMPOSED BY THE AO IS THEREFORE CONFIRMED. IN SO FA R AS ISSUE OF NOTICE, THE LD. CIT(A) OBSERVED THAT IT IS NOTED FROM THE ASSESSMEN T ORDER THAT THE AO HAS INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INA CCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) O F THE ACT. THEREFORE, THE ARGUMENT OF THE ASSESSEE REGARDING THE NOTICE NOT S PECIFYING THE DETAILS IS NOT ACCEPTABLE. WITH THESE OBSERVATIONS THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO. AGGRIEVED BY THE ORDER OF THE LD . CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. A.R. FOR THE ASSESSEE, AT THE OUTSET, SU BMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SHRI SAMSON PERINCHERY VS . ACIT, (2017) ACIT 392 ITR 4 AND ALSO THE DECISION OF MUMBAI ITAT IN THE C ASE OF M/S. CENZAR INDUSTRIES LTD. VS. ITO IN ITA NO.1970/M/2015 DATED 29.12.17 WHEREIN THE ISSUE OF VAGUE NOTICE HAS BEEN DISCUSSED IN THE LIG HT OF VARIOUS CASE LAWS INCLUDING THE DECISION OF HONBLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KA RN.) WHEREIN IT WAS CATEGORICALLY HELD THAT SATISFACTION OF THE EXISTEN CE OF THE GROUNDS MENTIONED IN ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 5 SECTION 271(1)(C) WHEN IT IS A SINE QUA NON INITIAT ION OF PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E GROUNDS AND THE SAID GROUNDS SHOULD BE SPECIFICALLY STATED SO THAT THE A SSESSEE WOULD HAVE THE OPPORTUNITY TO HAVE MADE THOSE GROUNDS. THE LD. A. R. FURTHER REFERRED TO THE COPY OF NOTICE ISSUED BY THE AO UNDER SECTION 274 R .W.S. 271(1)(C), SUBMITTED THAT THE AO HAS ISSUED PRINTED FORM OF NOTICE WITHO UT STRIKING OFF IRRELEVANT PORTION, THEREFORE, IT IS A CLEAR CASE OF NON APPLI CATION OF MIND FROM THE AO WHETHER PENALTY HAS BEEN INITIATED FOR FURNISHING O F INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. TH E LD. A.R. FURTHER REFERRED TO THE PENALTY ORDER PASSED BY THE AO AND SUBMITTED THAT THOUGH THE AO HAS STATED THAT PENALTY PROCEEDINGS ARE INITIATED FOR F URNISHING OF INACCURATE PARTICULARS OF INCOME, IN HIS ORDER AT PARAGRAPH NO .1 IN THE CONCLUDING PARAGRAPHS HE HAS NOT SPECIFICALLY MENTIONED WHETHE R PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE PENALTY ORDER PASSED BY THE AO CONSEQUENT TO INVALID OR VAGUE NOTICE CANNOT SURVIVE AND HENCE TH E ORDER PASSED BY THE AO SHOULD BE QUASHED. 6. THE LD. D.R., ON THE OTHER HAND, STRONGLY SUPPOR TED THE ORDER OF THE LD. CIT(A). THE LD. D.R. FURTHER REFERRING TO THE DECI SION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN THE CASE OF M/S. MAHARA J GARAGE & COMPANY VS. CIT IN INCOME TAX REFERENCE NO.21 OF 2008 DATED 22. 08.17 SUBMITTED THAT THE REQUIREMENT OF SECTION 274 OF THE INCOME TAX ACT FO R GRANTING REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER CANNOT BE STRETCHED TO THE EXTENT OF FRAMING A SPECIFIC CHARGE OR ASKING THE ASSESSEE AN EXPLANATION IN RESPECT OF THE QUANTUM OF PENALTY PROPOSED TO BE IMPOSED, AS H AS BEEN URGED. THE HONBLE BOMBAY HIGH COURT HAS CONSIDERED THE ISSUE OF NOTICE AND HELD THAT THERE IS NO REQUIREMENT OF SPECIFIC CHARGE IN THE N OTICE AND IF THE ASSESSEE IS AWARE OF THE QUANTUM ADDITIONS IN THE ASSESSMENTS P ROCEEDINGS, THEN IT CAN BE ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 6 SUFFICIENT, EVEN IF THE AO HAS NOT SPECIFICALLY MEN TIONED THE CHARGE IN THE NOTICE, STILL PENALTY CAN BE LEVIED UNDER SECTION 2 71(1)(C) OF THE ACT. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL S AVAILABLE ON RECORD AND GONE THROUGH THE CASE LAWS CITED BY BOTH THE PA RTIES. THE ASSESSEE HAS CHALLENGED PENALTY ORDER PASSED BY THE AO UNDER SEC TION 271(1)(C) ON THE GROUND THAT THE AO HAS ISSUED VAGUE NOTICE WITHOUT STRIKING OFF INAPPROPRIATE PORTION IN THE NOTICE WHETHER THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME, THEREFORE, THE PENALTY LEVIED ON SUCH VAGUE NOTICE CANNOT SURVIVE. WE FIND THAT THE ISSUE OF NOTICE UNDER SECTION 274 R.W.S 271(1)( C) HAS BEEN DEALT BY THIS TRIBUNAL IN VARIOUS CASES INCLUDING IN THE CASE OF M/S. CENZAR INDUSTRIES LTD. VS. ITO IN ITA NO.1970/M/2015 DATED 29.12.17 WHEREI N AFTER CONSIDERING THE RELEVANT FACTS AND ALSO RELIED UPON VARIOUS JUDICIA L PRECEDENTS INCLUDING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND ALSO THE DECIS ION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SHRI SAMSON PERINCHERY VS . ACIT (SUPRA), HAS HELD THAT PENALTY PROCEEDINGS INITIATED UNDER SECTION 27 1(1)(C) IS VOID AB INITIO AND LIABLE TO BE QUASHED, IF THE AO ISSUED VAGUE NOTICE UNDER SECTION 274 R.W.S 271(1)(C) WITHOUT STRIKING OFF IRRELEVANT PORTION O F NOTICE AND ALSO IF THE AO HAS NOT MADE A SPECIFIC CHARGE WHETHER PENALTY PROC EEDING IS INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE RELEVANT PORTION OF ORDER IS EXTRACTED BELOW: 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. THE AO HAS LEVIED PENALTY U/S 271(1)(C) IN RESPECT OF DISALLOWANCE OF REIMBUR SEMENT OF SELLING AND DISTRIBUTION EXPENSES ON THE GROUND THAT THE ASSESS EE HAS CONCEALED PARTICULARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. THE AO HAS INITIATED PENALTY BY ISSUING NOTICE U/S 274 R.W.S. 271(1)(C) IN A PRINTED FORM WITHOUT STRIKING OFF OF IRRELEVANT PORTION WHICH WERE NOT APPLICABLE TO THE FACTS OF ASSESSEE'S CASE. THE AO HAS ISSUED NOTICE WHICH STATES THAT PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ASSESSMENT ORDER, THE AO HAS INITIAT ED PENALTY PROCEEDINGS ON BOTH CHARGES, I.E. FOR CONCEALING THE PARTICULARS OF INC OME AND FURNISHING INACCURATE ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 7 PARTICULARS OF INCOME. THE AO LEVIED THE PENALTY ON BOTH THE CHARGES, I.E. FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. RIGHT FROM THE ASSESSMENT STAGES TO LEVY OF PENALTY, THE AO HAS INITIATED PENALTY ON BOTH CHARGES WHICH IS NOT THE CASE AS PE R THE PROVISIONS OF SECTION 271(1)(C) AS THE TWO CHARGES, I.E. CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERE NT CONNOTATIONS. THE ISSUE OF NOTICE U/S 274 R.W.S. 271(1)(C) GOES TO THE ROOT OF THE MATTER OF ASSUMING JURISDICTION TO LEVY PENALTY U/S 271(1)(C), THEREFO RE, BEFORE ISSUANCE OF NOTICE, THE AO HAS TO ARRIVE AT A SATISFACTION AS TO WHETHER PE NALTY PROCEEDINGS ARE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE AO CANNOT TAKE BOTH THE CHARGES FOR LEV YING PENALTY BY STATING THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND AL SO FURNISHED INACCURATE PARTICULARS OF INCOME. 11. THE PROVISIONS OF SECTION 271(1)(C) ARE VERY CLEAR AND THERE IS NO AMBIGUITY. ON A PLAIN READING OF SECTION 271(1)(C) , IT IS VERY CLEAR THAT CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALMENT OF P ARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES, THERE MAY BE O VERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES, THE INITIATION OF THE PENALTY PR OCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT INITIATING PENALTY PROCEEDINGS FO R ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR HOLDING HIM G UILTY FOR EITHER ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. THIS LEGAL PROPOSITION IS CLEARLY REITERATED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON & GINNING FACTORY LTD (SUPRA) WHEREIN IT WAS CATEGORICALLY HELD THAT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON INITIATION OF PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONF INED ONLY TO THOSE GROUNDS AND THE SAID GROUND SHOULD BE SPECIFICALLY STATED SO TH AT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. INITIATION OF PE NALTY ON ONE GROUND AND LEVYING PENALTY ON ANOTHER GROUND WOULD CAUSE INJUSTICE TO THE ASSESSEE AS THE ASSESSEE WAS KEPT IN BLANK TO JUSTIFY HIS CASE WHETHER THE A O SOUGHT TO INITIATED PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IF THE PROCEEDINGS ARE INITIATED ON A SPECI FIC CHARGE, THEN, THE ASSESSEE CAN JUSTIFY ITS CASE BY ADVANCING ARGUMENTS ON THE CHAR GE FRAMED BY THE AO. THUS, ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PE NALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. IF PENALTY PROCEEDINGS ARE INITIAT ED ON ONE GROUND AND LEVIED PENALTY ON DIFFERENT GROUND OR PENALTY PROCEEDINGS ARE INITIATED ON TWO GROUNDS, I.E. CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICULARS OF INCOME WOULD DEFINITELY VITIATE THE ENTIRE PENALTY PROCEEDINGS. 12. IN THIS CASE, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD IT IS ABUNDANTLY CLEAR THAT THE AO HAS INITIATED PENALTY PROCEEDINGS IN THE ASS ESSMENT ORDER ON BOTH THE GROUNDS, I.E. CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE AO ALSO LEVIED PENALTY O N BOTH THE GROUNDS OF CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNI SHING OF INACCURATE PARTICULARS OF INCOME WHICH IS QUITE CONTRARY TO THE PROVISIONS OF SECTION 271(1)(C) WHERE IT WAS CATEGORICALLY STATED THAT BOTH THE CHARGES ARE STAN DING IN A DIFFERENT FOOTING AND THE AO HAS TO INITIATE PENALTY PROCEEDINGS FOR CONC EALMENT OF PARTICULARS OF INCOME ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 8 OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. INITIATION OF PENALTY BY INJECTING AND IN PLACE OF OR WOULD DEFINITELY GO AGAINST THE BASIC PROVISIONS OF THE ACT. IN THIS CASE, THE AO HAS INITIATED PENALTY ON BOTH THE GROU NDS, WHICH CANNOT BE THE CASE FOR INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT. WE FURTHER OBSERVE THAT IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENA LTY TO IMPOSE PENALTY ON THE GROUND 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 VIOLATE PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THE VALIDITY OF ORDER OF PENALTY MUST BE DETERMINED WIT H REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE POSSESSION OF THE AUTHOR ITY IMPOSING PENALTY AT THE TIME, THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY. THE A O IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIE D IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS OF TOTAL INCOME. AS ALREADY STATED, FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES. IN CASE, THE AO HAS MADE MULTIPLE ADDITIONS, ONE MAY R ELATES TO CONCEALMENT OF PARTICULARS OF INCOME AND ANOTHER MAY RELATE TO FUR NISHING OF INACCURATE PARTICULARS OF INCOME, BUT SINGLE ADDITION MADE CANNOT LEAD TO AN INFERENCE OF CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT BEFORE INITIATION OF PENAL TY PROCEEDINGS, THE AO HAS TO ARRIVE AT A CORRECT SATISFACTION AS TO WHETHER PENA LTY IS INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IF THE AO FAILS TO INITIATE PENALTY PROCEEDINGS BY ISSUANCE O F PROPER NOTICE, THEN THE WHOLE PENALTY PROCEEDINGS BECOMES VITIATED AND VOID AB IN ITIO. 13. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSEE. THE ASSESSEE HAS RELIED UPON THE DECISION OF HON'BLE KARNATAKA HIGH COURT I N THE CASE OF MANJUNATHA COTTON & GINNING FACTORY VS CIT (SUPRA), WHEREIN TH E HON'BLE HIGH COURT HAS CATEGORICALLY OBSERVED THAT SENDING PRINTED FORM OF NOTICE WHERE ALL THE GROUNDS MENTIONED IN SECTION 271(1)(C) ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. NOTICE ISSUED U/S 274 OF THE ACT SHOULD SPECIF ICALLY STATE THE GROUND MENTIONED IN SECTION 271(1)(C), I.E. WHETHER IT IS FOR CONCEA LMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE SHOU LD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. INITIATING THE PENALTY PROCEEDINGS ON ONE LIMB AND HOLDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- ' THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF TOTAL INCOME ARE DIFFERENT. THUS, THE ASSESSING OFFICER W HILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT AS CASE OF FURNISHING OF INACCURATE PARTIC ULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED (2007) 292 ITR 11 (SC) A T PAGE 19 HAS HELD THAT CONCEALNMENT OF INCOME AND FURNISHING INACCURATE PA RTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COUR T IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI H IGH COURT IN THE CASE OF VIRGO MARKETING P.LTD., REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 9 PENALTY 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 INVOKE THE FIRST LIMB BEING CON CEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STAND AND PROFORMA WITHO UT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NO N-APPLICATION OF MIND.' 14. THE ASSESSEE HAS RELIED UPON DECISION OF HON'BL E BOMBAY HIGH COURT IN THE CASE OF CIT VS SAMSON PERINCHERY IN INCOME TAX APPEAL NO .1154 OF 2014 & ORS ORDER DATED 5 TH JANUARY, 2017. THE HON'BLE BOMBAY HIGH COURT AFTER CONSIDERING THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA) OBSERVED THAT THE SATISFACT ION OF THE AO WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED IN SECTION 271(1)(C) OF THE ACT FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT / PERMIT PENAL TY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPO ND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED / NOTICE ISSUED. IT MUST , THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED AND IT CANNOT BE ON A FRESH GROUND OF WHICH ASSESSEE HAS NO NOTICE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- 'THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE THE DECISION OF THE SUPREME COURT IN ASHOK PAL V/S. CIT 292 ITR [RE LIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] - WHEREIN IT IS O BSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS . THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD T O ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALT Y BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED / NOTICE IS SUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MA DE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED AND IT CANNOT BE ON A FRESH GROUND OF WHICH ASSESSEE HAS NO NOTICE.' 15. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS SSA 'S EMERALD MEADOWS (SUPRA) WHEREIN THE HON'BLE SUPR EME COURT DISMISSED SLP FILED BY THE REVENUE BY FOLLOWING THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY (SUPRA) BY OBSERVING THAT NOTICE ISSUED U/S 274 R.W.S. 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. 16. COMING TO THE CASE LAWS RELIED UPON BY THE LD. DR. THE LD. DR RELIED UPON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS SMT.KAUSHALYA (SUPRA). WE HAVE GONE THROUGH THE CASE LAW RELIED UPON BY TH E LD. DR IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND FIND THAT THE ITAT, M UMBAI IN THE CASE OF DCIT VS DR. SARITA MILIND DAVARE IN ITA NO.1789/MUM/2014 DATED 21-12-2016 HAS CONSIDERED THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE LIGHT OF SUPREME COURT JUDGEMENT IN THE CASE OF DILIP N SHROFF 291 ITR 519 (SC) AND OBSERVED THAT THERE ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 10 SHOULD BE APPLICATION OF MIND ON THE PART OF THE AO AT THE TIME OF ISSUING NOTICE. SINCE THE CO-ORDINATE BENCH HAS ALREADY CONSIDERED THE JUDGEMENT OF HON'BLE BOMBAY HIGH COURT, WE ARE OF THE VIEW THAT CASE LAW RELIED UPON BY THE LD.DR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 8. IN SO FAR AS THE JUDGMENT OF THE HONBLE JUDICIA L BOMBAY HIGH COURT IN THE CASE OF M/S. MAHARAJ GARAGE & COMPANY VS. CIT ( SUPRA) RELIED UPON BY THE LD. D.R., THE CO-ORDINATE BENCH OF ITAT IN THE CASE OF INDRANI SUNIL PILLAI VS. ACIT IN ITA NO.1339/M/2016 DATED 19.01.18 HAS C ONSIDERED THE RATIO OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F M/S. MAHARAJ GARAGE & COMPANY VS. CIT (SUPRA) AND HELD THAT THE BASIC ISS UE ARISING OUT OF THE REFERENCE APPLICATION WHICH TELL FOR CONSIDERATION OF THE HONBLE JURISDICTIONAL HIGH COURT WAS WHILE GRANTING PREVIOUS APPROVAL BY INSPECTING ASSISTANT COMMISSIONER AS PER PROVISIONS OF SECTION 271(1)(C) (III) OF THE ACT, WHETHER THE ASSESSEE WAS REQUIRED TO BE GIVEN AN OPPORTUNIT Y OF BEING HEARD. WHILE CONSIDERING THE ISSUE, THE HON'BLE COURT OBSERVED T HAT PROVISIONS OF SECTION 271(1)(C)(III) DOES NOT ATTRACT RULE OF PRESUMPTION OF MENSREA AS THE PENALTY IMPOSED UNDER THE SAID PROVISION IS FOR THE BREACH OF CIVIL OBLIGATION. THE OBSERVATIONS OF THE HONBLE COURT AGAINST ISSUANCE OF SHOW CAUSE NOTICE APPEAR TO BE IN THE CONTEXT OF QUANTUM OF PENALTY P ROPOSED TO BE IMPOSED AND NOT WITH REFERENCE TO THE DOING AWAY WITH THE ISSUE OF SHOW CAUSE NOTICE AS CONTEMPLATED UNDER SECTION 274 OF THE ACT. 9. IN THE VIEW OF THE MATTER AND CONSISTENT WITH TH E VIEW TAKEN BY THE CO- ORDINATE BENCH IN THE CASE OF M/S. CENZAR INDUSTRIE S LTD. VS. ITO (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY PROCEED INGS INITIATED BY THE AO BY ISSUE OF NOTICE UNDER SECTION 274 R.W.S 271(1)(C) W ITHOUT STRIKING OFF THE IRRELEVANT PORTION OF NOTICE IS A CLEAR CASE OF NON APPLICATION OF MIND BY THE AO, WHETHER PENALTY HAS BEEN INITIATED FOR CONCEALM ENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. WE FURTHER NOTICED THAT THE AO HAS ISSUED PRINTED FORM OF NOTICE WITHO UT STRIKING OFF IRRELEVANT PORTION AND ALSO IN THE PENALTY ORDER HE DOES NOT S PECIFY UNDER WHICH CHARGE ITA NO.3108/M/2016 M/S. TATA COMMUNICATIONS TRANSFORMATION SERVICES LIMITED 11 PENALTY HAS BEEN INITIATED. THEREFORE, WE ARE OF T HE CONSIDERED VIEW THAT THE PENALTY PROCEEDING INITIATED BY THE AO IS BAD IN LA W AND LIABLE TO BE QUASHED. HENCE, WE QUASH THE PENALTY PROCEEDINGS AND DELETE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.02.2018. SD/- SD/- (MAHAVIR SINGH) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 21.02.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.