DEEPAK JATIA, MUMBAI V. DCIT CEN CIR 1(1), MUMBAI

ITA 3363/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7682 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 08-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AUNGSHI GIMSON
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Question of law; Initiation of penalty proceedings; Reasonable cause
• Section: 271(1)(c); 153A; 132; 139

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE SH. SHAMIM YAHYA , A M & HONBLE SH. SANDEEP GOSAIN, J M ./ I.T.A. NO . 3363/MUM/2017 ( / ASSESSMENT YEAR: 2014 - 15 ) DEEPAK JATIA, MARATHON INNOVA A WING, 7 TH FLOOR, OFF. G. K. MARG, LOWER PAREL, MUMBAI - 4000 13 / VS. DCIT CEN CIR 1(1), R. NO. 903, 9 TH FLOOR, OLD CGO BLDG, ANNEXURE M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN NO. A DXPJ8701D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA , AR / RESPONDENTBY : SHRI AUNGSHI GIMSON, DR / DATE OF HEARING : 10/12 /201 8 / DATE OF PRONOUNCEMENT : 10.01.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 47, MUMBAI DATED 28.02.17 FOR AY 20 14 - 15 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA PENALTY U/S.271AAB ENHANCED TO 30% MAY BE RESTRICTED TO 10% 1. THE LD. CIT(A) ERRED IN ENHANCING THE PENALTY LEVIED U/S.271AAB OF THE ACT AT RS.5,42,77,569/ - BEING 30% OF THE UNDISCLOSED INCOME (AS AGAINST LEVIED BY AO AT RS.3,61,85,050/ - BEING 20% OF UNDISCLOSED INCOME) AND AS AGAINST THE CLAIM OF THE APPELLANT TO BE LEVIED AT 10% OF UNDISCLOSED INCOME WITHOUT APPRECIATING THAT THE CASE OF THE APPELLANT FALLS IN CLAUSE (A) TO SECTION 271AAB OF THE ACT THEREBY PENALTY TO BE LEVIED @10% OF UNDISCLOSED IN COME AND HENCE, THE EXCESS PENALTY LEVIED AMOUNTING TO RS.3,61,85,050/ - IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELETED. 2. THE LD. CIT(A) FAILED TO APPRECIATE THAT PROPER EXPLANATION AND DISCLOSURE WAS GIVEN DURING THE COURSE OF SEARCH ACTION IN THE STATEMENT RECORDED U/S. 132(4) OF THE ACT AND THE DISCLOSURE SO MADE WAS OFFERED TO TAX IN THE RETURN OF INCOME FILED AND HENCE, THE CASE OF THE APPELLANT FALLS WITHIN THE SCOPE OF CLAUSE (A) TO SECTION 271 AAB OF THE ACT AND ACCORDINGLY, THE LEVY OF PENALTY U/S.271AAB OF THE ACT MAY BE DIRECTED TO BE RESTRICTED TO 10% OF THE UNDISCLOSED INCOME. 3 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE RETURN OF INCOME FILED U/S. 13 9(4) OF THE ACT IS TO BE TREATED AS FILED WITHIN THE EXTENDED DUE DATE U/S. 13 9(1) OF THE ACT AND THAT THE MANNER OF DERIVING THE UNDISCLOSED INCOME WAS DULY EXPLAINED AND THUS, THE PENALTY U/S.271AAB OF THE ACT OUGHT TO BE LEVIED AT 10% OF UNDISCLOSED INCOME UNDER CLAUSE (A) THEREOF AND THE EXCESS PENALTY THUS LEVIED IS UN JUSTIFIED AND MAY BE DELETED. 4. THE LD. CIT(A) FURTHER FAILED TO APPRECIATE THAT ADDITIONS OF RS.7,75,407/ - TO THE RETURNED INCOME WERE MADE ON ESTIMATION / PRESUMPTION BASIS AND NOT ON THE BASIS OF ANY MATERIAL FOUND AND SEIZED IN THE COURSE OF SEARCH ACTION AND HENCE, THE PENALTY LEVIED U/S.271 AAB OF THE ACT ON SUCH ESTIMATED / PRESUMED ADDITION IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELETED. 5. THE LD. CIT(A) FURTHER FAILED TO APPRECIATE THAT PENALTY LEVIED IN RESPECT OF ADDITION MADE OF RS.2 ,54,064/ - TO THE RETURNED INCOME IN RESPECT OF EXCESS UNACCOUNTED CASH WAS DUE TO ARITHMETIC MISTAKE / ROUNDING OFF, WHICH INADVERTENTLY REMAINED TO BE INCLUDED IN THE RETURN OF INCOME FILED AND HENCE, THE PENALTY LEVIED IN RESPECT OF SUCH ADDITION OUGHT T O BE 4 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA DELETED MORE PARTICULARLY WHEN THE APPELLANT HAS DISCLOSED THE ENTIRE UNACCOUNTED EXCESS CASH FOUND IN THE COURSE OF SEARCH ACTION. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL. 2 . AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSESSEE DRAWN OUR ATTENTION TO LETTER DATED 14 TH SEPT 2018 FILED FOR SEEKING ADMISSION OF ADDITIONAL GROUND , WHICH ARE REPRODUCED BELOW: - 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT HOLDING THAT THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER U/S 271AAB OF THE ACT IS BAD IN LAW. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. LD. AR SUBMITTED BEFORE US THAT BEFORE LD. CIT( A), IT WAS SPECIFICALLY CONTENDED THAT PENALTY ORDER PASSED BY THE AO WAS BAD IN LAW AS THE NOTICE ISSUED U/S 274 OF THE ACT WAS VAGUE. 5 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA HOWEVER, THE SAID PLEA WAS INADVERTENTLY OMITTED TO BE RAISED IN THE PRESENT APPEAL . IT WAS FURTHER SUBMITTED THAT THE A DDITIONAL GROUND IS PURELY QUESTION OF LAW AND NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORD. THEREFORE, APPLICANT BE ALLOWED TO RAISE ADDITIONAL GROUNDS. 3. ON THE OTHER HAND LD. DR SUBMITTED THAT THE APPLICATION DATED 14.09 .18 IS MISCONCEIVED AND IS LIABLE TO BE DISMISSED. 4 . AFTER HAVING HEARD THE COUNSELS ON THIS APPLICATION , W E ARE OF THE VIEW THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS PURELY LEGAL IN NATURE AND ALL THE NECESSA RY FACTS REQUIRED FOR ADJUDICATION ARE ALREADY ON THE RECORD AND THUS, NO NEW EVIDENCE IS REQUIRED TO BE BROUGHT ON RECORD. EVEN OTHERWISE, THIS GROUND GOES TO THE ROOTS OF THE CASE, THEREFORE KEEPING IN VIEW THE PRINCIPLE LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF NTPC VRS CIT 229 ITR 383, JUTE CORPOR ATION OF INDIA VRS. CIT 187 ITR 688 (SC) AND AHMEDABAD ELECTRICITY LTD. VRS. CIT 199 ITR 351 (BOM) (FB) , WE ALLOW THE APPLICATION DATED 6 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 14.09.18 AND ADMIT THE ADDITIONAL GROUNDS MENTIONED ABOVE FOR ADJUDICATING ON MERITS. 5 . THE B RIEF FACTS OF THE CASE AR E THAT A SEARCH AND SEIZURE OPERATION U/S.132(L) OF THE ACT WAS CONDUCTED IN THE CASE OF ASSOCIATED STONE INDUSTRIES (ASI) GROUP AND ITS ASSOCIATED CONCERNS ON 13.18.2013. THE MAIN COMPANY OF THIS GROUP IS M/S ASSOCIATED STONE INDUSTRIES (KOTA) LTD. WHICH IS ENGAGED IN MINING AND TRADING OF KOTA STONE. SIMULTANEOUSLY, SEARCH ACTION WAS CARRIED OUT IN CASE OF THE ASSESSEE BEING CHAIRMAN AND MANAGING DIRECTOR OF ASI. THE ASSESSEE IN THE COURSE OF SEARCH ACTION MADE TOTAL DISCLOSURE OF RS. 35.13 CRORES IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT ON 14.08.13 AND 15.08.13. THE TOTAL DISCLOSURE OF THE ASSESSEE WAS MADE TO THE TUNE OF RS. 36.26 CRORES, WHICH WAS LATER ON ENHANCED OF RS. 42.89 CRORES BY FILING DETAILED LETTER DATED 07.11.13. SINCE THE ASSESSEE HAD ADMITTED DISCLOSURE INCOME IN THE COURSE OF STATEMENT RECORDED U/S 132(4) OF THE ACT DURING THE SEARCH, THEREFORE THE PENALTY U/S 271AAB WAS INITIATED AGAINST THE ASSESSEE. THE GRAND TOTAL OF UNDISCLOSED 7 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA INCOME OFFERED BY THE ASSESSEE ON HIS OWN AND T HE ONE DETECTED DURING ASSESSMENT WAS ACCORDINGLY WORKED OUT AT RS. 18,09,25,230/ - FOR THE PURPOSE OF LEVYING PENALTY U/S 271AAB. THE AO FURTHER HELD THAT THE ASSESSEE WAS NOT ENTITLED TO IMMUNITY FROM PENAL T Y U/S 271AAB OF THE ACT, THEREFORE THE AO VIDE HIS ORDER DATED 05.06.15 LEVIED PENALTY @ 20% OF THE UNDISCLOSED INCOME U/S 271AAB OF THE I.T. ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERI NG THE CASE OF BOTH THE PARTIES, DISMISSED THE APPEAL OF THE ASSESSEE AND ALSO ENHANCED THE PENALTY @ 30% OF THE UNDISCLOSED INCOME AND QUANTUM OF PENALTY U/S 271AAB . NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL ON THE GROUNDS MENTIONED ABOVE. SINCE THE ASSESSEE HAS RAISED MAIN GROUNDS THEREBY CHALLENGING THE LEVY AND ENHANCEMENT OF PENALTY U/S 271AAB AND ALSO RAISED LEGAL GROUNDS WITH REGARD TO THE NOTICE ISSUED U/S 274 OF THE ACT AND STATED THAT THE SHOW CAUSE NOTICE FOR PENALTY 8 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA DID NOT SPECI FY THE GROUND IN WHICH THE PENALTY IS INITIATED AND THUS WAS VAGUE. LD. AR APART FROM ADDRESSING THE ARGUMENTS ON THE MERITS HAD ALSO CHALLENGED THE LEGALITY OF THE NOTICE ISSUED U/S 274 R.W.S 271 OF THE I.T. ACT (COPY PLACED ON RECORD). IT WAS SUBMITTED T HAT THE REASONS FOR INITIATING THE PENALTY PROCEEDING WAS NOT CLEAR FROM SUCH NOTICE AS THE AO HAD NOT DELETED THE INAPPROPRIATE WORDS AND PARTS OF THE NOTICE, WHEREBY IT IS NOT CLEAR AS TO THE DEFAULT COMMITTED BY THE ASSESSEE, I.E. WHETHER IT IS U/S 271 OR U/S 271AAB . IT WAS ALSO SUBMITTED THAT THE AO HAS NOT DELETED THE INAPPROPRIATE WORDS AND PARTS OF THE NOTICE, WHEREBY IT IS ALSO NOT CLEAR AS TO THE DEFAULT COMMITTED BY THE ASSESSEE I.E. WHETHER IT IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME THAT THE PENALTY U/S 271(1)(C) IS SOUGHT TO BE LEVIED. 6. IT WAS ALSO SUBMITTED THAT AS THE NOTICE U/S. 274 DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE THE SAME IS INVALID AND THEREBY THE PENALTY ORDER IS LIABLE TO BE QUASHED AS WITHOUT JURISDICTION. IN SUPPORT THE ASSESSEE SEEKS TO RELY ON JUDGMENT OF 9 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA HON'BLE KARNATAKA HIGH COURT IN CASE OF MANJUNATHA 359 ITR 565 (KAR) AND THE ASSESSEE SPECIFICALLY SEEKS TO DRAW ATTENTION TO PAGES 600 TO 603 OF THE SAID JUDGMENT. THE SAID JUDGMENT HAS BEEN FOLLOWED IN VARIOUS SUBSEQUENT JUDGMENTS AND THE ASSESSEE HAS ENCLOSED COPY OF THE SAME IN PAPER BOOK NO 2 FILED. IN CASE OF SSA EMRALD BEFORE THE HON'BLE KARNATAKA HIGH COURT, QUESTION OF LAW 3 READ AS FOLLOWS: '(3) WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE REVENUE ON THE B ASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN ASSESSING OFFICER WAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 7 . AS PER LEARNED AR, IN THE CASE OF BAISETTY REVATHI BEFORE THE HO N'BLE ANDHRA PRADESH HIGH COURT, THE DEPARTMENT HAD RELIED ON JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF K P MADHUSUDHAN, 251 ITR 99 AND THE SAME WAS DISTINGUISHED AND PENALTY WAS DELETED FOLLOWING RATIO LAID DOWN IN CASE OF MANJUNATHA. COPY OF THE JUDGMENT IS AT PAGE 46 TO 56 OF THE PAPER BOOK AND RELEVANT PART IS AT PAGE 54. IT READS AS FOLLOWS: 10 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 'SMT. KIRANMAYEE, LEARNED COUNSEL, PLACED RELIANCE ON THE JUDGMENT OF THE SUPREME COURT IN K.P. MADHUSUDHAN'AN V/S. COMMISSIONER OF INCOME TAX, COCHIN . THEREIN, ? THE SUPREME COURT HELD THAT IT IS NOT NECESSARY FOR THE ASSESSING OFFICER, WHILE ISSUING A NOTICE UNDER SECTION 271(1 )(C) F TO EXPRESSLY INVOKE EXPLANATION 1(B) APPENDED TO THE PROVISION. IT IS HOWEVER RELEVANT TO NOTE THAT EXPLANA TION 1(3) MERELY ADVERTS TO A CASE OF FAILURE OF AN ASSESSEE TO SUBSTANTIATE THE EXPLANATION OFFERED WHEREBY THE AMOUNT ADDED OR DISALLOWED WHILE COMPUTING THE TOTAL INCOME OF SUCH PERSON FOR THE PURPOSES OF THE PENALTY PROVISION SHALL BE DEEMED TO REPRESE NT THE INCOME IN RESPECT OF WHICH PARTICULARS HAD BEEN CONCEALED. THE SUPREME COURT OBSERVED THAT THE STATUTORY PROVISION INCLUDED THE EXPLANATION AND ONCE THE ASSESSEE WAS PUT ON NOTICE, NO EXPRESS INVOCATION OF THE EXPLANATION IS NECESSARY. THIS JUDGMEN T HAS NO APPLICATION TO THE CASE ON HAND AS WHAT WE ARE CONCERNED WITH PRESENTLY IS WHETHER THE ASSESSEE IS REQUIRED TO BE PUT ON NOTICE AS TO WHETHER SHE IS TO BE PENALIZED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THESE ARE TWO DIFFERENT ACTS. CONCEALMENT OF INCOME IS AN ACT OF OMISSION WHILE FURNISHING OF INACCURATE PARTICULARS OF INCOME IS AN ACT OF COMMISSION. THE CONSEQUENCES OF SUCH ACTS, BEING PENAL IN NATURE, AN ASSESSEE HAS TO BE INFORMED AS TO WH AT EXACTLY IS THE CHARGE AGAINST HIM SO THAT HE MAY RESPOND THERETO.' 8 . IN CASE OF MRS INDRANI PILLAI BEFORE THE HON'BLE MUMBAI BENCH OF THE INCOME TAX APPELLATE TRIBUNAL, THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN CASE OF MAHARAJ GARAGE WAS 11 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA RELIED ON BY THE DEPARTMENT AND THE SAME WAS DISTINGUISHED. THE COPY OF THE JUDGMENT IS AT PAGE 57 - 70 OF THE PAPER BOOK AND THE RELEVANT PART IS AT PAGE 68. IT READS AS FOLLOWS: 'THE RATIO LAID DOWN IN THE AFORESAID DECISION SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. AS FAR AS THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN MAHARAJ'GARAGE (SUPRA) RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON A CAREFUL READING OF THE SAID JUDGMENT, WE ARE OF THE VIEW THAT IT WILL HAVE NO APPLICATION TO THE FACTS OF THE CASE. AS COULD BE SEEN, THE BASIC ISSUE ARISING OUT OF THE REFERENCE APPLICATION WHICH FELL FOR CONSIDERATION OF THE HON'BLE JURISDICTIONAL HIGH COURT WAS, WHILE GRANTING PREVIOUS APPROVAL BY INSPECTING ASSISTANT COMMISSIONER OF INCOME - TAX AS PER PROVISIONS OF SECTION 271(1)(C)(III) OF THE ACT WHETHER THE ASSESSEE WAS REQUIRED TO BE GIVEN AN OPPORTUNITY OF BEING HEARD. WHILE CONSIDERING THIS ISSUE, THE HON'BLE JURISDICTIONAL HIGH COURT OBSERVED THAT PROVISIONS OF SECTION 271(L)(C)(III) DOES NOT ATTRACT RULE OF PRESUMPTION OF MENS REA AS THE PENALTY IMPOSABLE UNDER THE SAID PROVISION IS FOR THE BREACH OF CIVIL OBLIGATION. THE OBSERVATIONS OF THE HON'BLE COURT AGAINST ISSUANCE OF SHOW CAUSE NOTICE APPEARS TO BE IN THE CONTEXT OF QUANTUM OF PENALTY PROPOSED TO BE IMPOSED AND NOT WITH REFERENCE TO THE DOING AWAY WITH THE ISSUANCE OF SHOW CAUSE NOTICE AS CONTEMPLATED UNDER SECTION 274 OF THE ACT. THEREFORE, THE JUDGMENT OF THE HON'BLE COURT CANNOT BE READ OUT OF CONTEXT OR IN A MANNER TO MEAN THAT THERE IS NO NEED FOR MENTIONING THE SPECIFIC LIMB OF SECTION 271(L)(C) OF THE ACT FOR WHICH THE PENALTY WAS INTENDED TO BE IMPOSED, AS SUCH ISSUE NEVER CAME UP FOR CONSIDERATION BEFORE THE \ HON'BLE HIGH COURT. THAT BEING THE CASE, THE AFORESAID DECISI ON CANNOT BE APPLIED FOR REBUTTING THE PROPOSITION THAT IN THE ABSENCE OF RECORDING OF SATISFACTION REGARDING THE EXACT NATURE OF OFFENCE, NO PENALTY UNDER SECTION 271(L)(C) CAN 12 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA BE IMPOSED. IN VIEW OF THE AFORESAID, WE DELETE THE PENALTY IMPOSED.' 9 . APA RT FROM ABOVE, LD. AR ALSO SUBMITTED THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF ITAT CHENNAI BENCH IN THE CASE OF DCIT VRS. R. ELANGOVAN IN ITA NO. 1199/CHNY/2017, WHEREIN IT WAS HELD AS UNDER: - 3. LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT NOTICE ISSUED TO THE ASSESSEE U/S.274 R.W.S. SECTION 271AAB OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS VAGUE. ACCORDING TO HIM, THE REASON FOR INITIATING THE PENALTY PROCEEDING WAS NOT CLEAR FROM SUCH INCOME. AS PER THE LD. AUTHORISED REPRESENTATIVE, BY VIRTUE OF JUDGMENTS OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 AND THAT OF CIT VS. SSAS EMERALD MEADOWS (ITA NO.380/2015, DATED 23.11.2015. PROCEEDINGS BASED ON A VAGUE PENALTY NOTICE WERE VOID. LD. AUTHORISED REPRESENTATIVE, POINTED OUT THAT THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) STOOD AFFIRMED BY THE HONBLE APEX COURT IN CC NO.11485 OF 2017 DATED 05.08.2016. LD . AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE HAD 13 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA RAISED A GROUND BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)QUESTIONING THE VALIDITY OF THE NOTICE. AS PER THE LD. AUTHORISED REPRESENTATIVE, THOUGH LD. COMMISSIONER OF INCOME TAX (APPEALS) RED UCED THE LEVY OF PENALTY UNDER SECTION 271 AAB FROM 30% TO 10%, HE HAD NOT DISPOSED OFF THE GROUND ASSAILING THE VALIDITY OF THE NOTICE ISSUED TO THE ASSESSEE. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE NOTICE BEING BAD IN LAW, LEVY OF PE NALTY HAD TO BE QUASHED. 4. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT NOTICE ISSUED TO THE ASSESSEE WAS ONE UNDER SECTION 274 R.W.S. 271 AAB OF THE ACT AND NOT UNDER SECTION 274 R.W.S . 271(1) (C) OF THE ACT. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, LD. ASSESSING OFFICER HAD IN THE SUCH NOTICE DATED 13.08.2014, CLEARLY MENTIONED THE PROCEEDINGS TO HAVE BEEN INITIATED FOR HAVING UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. THUS, ACCORDING TO HIM, NOTICE WAS NOT AT ALL VAGUE AND ASSESSEE COULD NOT TAKE ADVANTAGE OF THE JUDGMENTS OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) SSAS EMERALD MEADOWS (SUPRA). FURTHER, AS P ER THE LD. DEPARTMENTAL REPRESENTATIVE, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD REDUCED THE PENALTY LEVIED 14 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA ON THE ASSESSEE FROM 30% TO 10% AND THE DEPARTMENT WAS IN APPEAL AGAINST SUCH REDUCTION. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. NOTICE ISSUED TO THE ASSESSEE U/S.274 R.W.S.271 AAB OF THE ACT IS REPRODUCED HEREUNDER: - NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961 PAN: AADPE1841Q OFFICE OF DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - I, COIMBATORE. DATE: 13.08.2014 TO SHRI.R.ELANGOVAN 821/2, KALLIPALAYAM, CHIKKARAMPALAYAM POST, KARAMADAI 641104 WHEREAS IN THE COURSE OF THE PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2013 - 14. IT APPEARS TO ME THAT YOU: - *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH THE RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SECTION 22( 1 )/22(2)/3 4 OF THE INDIAN INCOME TAX ACT 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139 (1) OR BY A NOTICE GIVEN UNDER SECTION 13 9(2)/148 OF THE INCOME TAX L \ CT, 15 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 1961, NO. DATED OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND IN THE MANNER REQUIRED BY THE SAID SECTION 139(1) OR BY SUCH NOTICE. *HAVE 'WITHOU T REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 22(4 )/23 (2) OF THE INDIAN INCOME TAX AD, 1922 OR UNDER SECTION 142(1 )/143 (2) OF THE INCOME TAX ACT, 1961 NO DATED *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR._ FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. *HAVE UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE IT ACT. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 10.30 AM ON 12/09/2014AND 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 REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFO RE ANY SUCH ORDER IS MADE UNDER SECTION 271. (A. ANANDA KUMAR, IRS) 16 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA ( DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE I, COIMBATORE. LD. ASSESSING OFFICER HAD NOT SCORED OUT ANY ONE OF THE TWO LIMBS IN SUCH NOTICE, VIZ HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME OR HAVE UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. NOR DID HE SPECIFICALLY MENTION, ON WHICH CLAUSE ASSESSEE WAS ANSWERABLE. NO DOUBT THE CAPTION OF THE NOTICE DO MENTIONED THAT IT WAS BEING ISSUED U/S.274 R.W.S. 271AAB OF THE ACT. SECTION 271AAB IS REPRODUCED HEREUNDER: - (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, I N A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT. OF THE UNDISCLOSED INC OME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED 17 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED ; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED ; AND (III) ON OR BEFORE THE SPECIFIED DATE (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME ; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN ; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT. OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTI ON 132, DOES NOT ADMIT THE UNDISCLOSED INCOME ; AND (II) ON OR BEFORE THE SPECIFIED DATE (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FURNISHED FOR THE SPECIFIED PREVIOUS YEAR ; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME ; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER CENT. BUT WHICH SHALL NOT EXCEED NINETY PER CENT. OF THE 18 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLAUSES (A) AND (B). (2) NO PENAL TY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB - SECTION (1). (3) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, AS FAR AS MAY BE, APPLY IN RE LATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION FOR THE PURPOSES OF THIS SECTION, (A) SPECIFIED DATE MEANS THE DUE DATE OF FURNISHING OF RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A FOR FURNISHING OF RETURN OF INCOME EXPIRES, AS THE CASE MAY BE ; (B) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE A SSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE DATE OF SEARCH ; OR 19 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA (II) IN WHICH SEARCH WAS CONDUCTED ; (C) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, B Y ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR ; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH ; OR (II) ANY INCOME OF THE SPECIFIED PREVIO US YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BE EN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. IT IS CLEAR FROM THE SUB SECTION (3) OF SECTION 271 AAB THAT SECTIONS 274 AND SECTION 275 OF THE ACT SHALL, SO 20 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA FAR AS MAY BE, APPLY. SUB SECTION (1) OF SECTION 274 OF THE ACT MANDATES THAT ORDER IMPOSI NG PENALTY HAS TO BE IMPOSED ONLY AFTER HEARING THE ASSESSEE OR GIVING A ASSESSEE OPPORTUNITY OF HEARING. OPPORTUNITY THAT IS TO BE GIVEN TO THE ASSESSEE SHOULD BE A MEANINGFUL ONE AND NOT A FARCE. NOTICE ISSUED TO THE ASSESSEE REPRODUCED (SUPRA), DOES NOT SHOW WHETHER PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR HAVING UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. NOTICE IN OUR OPINION WAS VAGUE. HONBLE KARNATA KA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) RELYING IN ITS OWN JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD HELD AS UNDER: - 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (1 ) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PRO VED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? 21 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTI ON 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271(1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) W HETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFIC ER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACC URATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE 22 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. IN THE EARLIER CASE OF MANJUNA THA COTTON AND GINNING FACTORY (SUPRA) THEIR LORDSHIP HAD OBSERVED AS UNDER: - NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) , I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF I NCORRECT PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW ; THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES O F NATURAL JUSTICE ARE OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE ; ) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW ; PENALTY PROCEEDINGS ARE DISTINCT 23 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA FROM THE ASSESSMENT PROCEEDINGS : THOUGH PROCEEDINGS FOR IMPOSITION OF PENALTY EMANATE FROM PROCEEDINGS OF ASSESSMENT, THEY ARE INDEPENDENT AND A SEPARATE ASPECT OF THE PROCEEDINGS ; THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS CONCEA LMENT OF INCOME AND FURNISHING OF INCORRECT PARTICULARS WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUAN CE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED INVALID IN THE PENALTY PROCEEDINGS. VIEW TAKEN BY THE HONBLE KARNATAKA HIGH COURT IN THE ABOVE JUDGMENT WAS INDIRECTLY AFFIRMED BY THE HONBLE APEX COURT, WHEN IT DISMISSED AN SLP FILED BY THE REVENUE AGAINST THE JUDGMENT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA), SPECIFICALLY OBSERVING THAT THERE WAS NO MERITS IN THE PETITION FILED BY THE REVENUE. CONSIDERING THE ABOV E CITED JUDGMENTS, WE HOLD THAT THE NOTICE ISSUED U/S.274 R.W.S. 271AAB OF THE ACT, REPRODUCED BY US AT PARA 5 ABOVE WAS NOT VALID. EX - CONSEQUENTI, THE PENALTY ORDER IS SET ASIDE. 24 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 10. IN THE CASE OF GILLCO DEVELOPERS AND BUILDERS VRS. DCIT IN ITA NO. 16 8/CHD/2017 FOR AY 2012 - 13 , THE COORDINATE BENCH HAD HELD AS UNDER: - 19. NOW COMING TO THE LEGAL ISSUES RAISED BY THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT EVEN THE NOTICE SERVED UPON THE ASSESSEE U/S 274 OF THE ACT IS ALSO INVALID. WE HAVE GONE THROUGH THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE LETTER / NOTICE ISSUED U/S 274 READ WITH SECTION 271AAA OF THE ACT DATED 13.1.2014, WHICH FOR THE SAKE OF REFERENCE IS EXTRACTED AS UNDER: - NOTICE U/S 274 READ WITH SECITON 271AAA OF THE INCOME TAX ACT, 1961 OFFICE OF TH E DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1II, AAYAKAR BHAWAN, SECTOR 17 - E, CHANDIGARH DATED 13.01.2014 TO M/S GILCO DEVELOPERS AND BUILDERS PVT LTD., SCF 23024, GILCO VALLEY MORINDA ROPAR ROAD, ROPAR, PUNJAB 140001 25 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2012 - 13, IT APPEARS TO ME THAT YOU HAVE NOT RECORDED THE TRUE PARTICULARS OF YOUR INCOME IN THE BOOKS OF ACCOUNTS OR NOT DISCLOSED ACCURATE PARTICULARS OF INCOME. THEREFORE, YOU ARE REQ UIRED TO SHOW CAUSE AS TO WHY PENALTY PROCEEDINGS U/S 274 READ WITH SECTION 271AAA(1) OF THE INCOME TAX ACT MAY NOT BE LEVIED AGAINST YOU. IN THIS REGARD, YOU ARE HEREBY REQUESTED TO APPEAR BEFORE THE UNDERSIGNED AT 11.00A.M. ON 20.02.2014 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE U/S 271AAA(1) OF THE INCOME - TAX ACT, 1961). IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THOUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE U/S 271AAA(1). (SEAL) SD/ - (LAGANPREET SANDHU). DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - II, CHANDIGARH 27 26 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 20. A PERUSAL OF THE ABOVE NOTICE SHOWS THAT THOUGH THE ASSE SSING OFFICER HAS INTENDED TO INITIATE PENALTY PROCEEDINGS U/S 271AAA(1) OF THE ACT, HOWEVER, THE WORDING WRITTEN IN THE BODY OF THE LETTER DOES NOT CONFORM TO THE CHARGES OF THE PROVISIONS OF SECTION 271AAA OF THE ACT, RATHER, THE ASSESSEE HAS BEEN SHOW C AUSED ON THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHICH FALLS UNDER THE SCOPE AND PURVIEW OF SECTION 271(1)(C) OF THE ACT. THE ASSESSEE, THEREFORE, IS NOT SHOW CAUSED FOR LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271AAA, RATHER F OR DOING AN ACT INVITING PENALTY U/S 271(1)(C) OF THE ACT, WHICH OTHERWISE IS NEITHER ARISING OUT OF THE FACTS OF THE CASE NOR ESTABLISHED AGAINST THE ASSESSEE. THUS, THE PENALTY PROCEEDINGS CONDUCTED AGAINST THE ASSESSEE U/S 271AAA OF THE ACT WERE INVALID AT ITS VERY INCEPTION BECAUSE OF THE DEFECTIVE AND INVALID SHOW CAUSE NOTICE, RENDERING THE ENTIRE PENALTY PROCEEDINGS VOID ABNITIO. THE PENALTY LEVIED AGAINST THE ASSESSEE IS THUS NOT SUSTAINABLE ON THIS SCORE ALSO. 21. THE ASSESSEE HAS ALSO RAISED ANO THER LEGAL ISSUE REGARDING THE LIMITATION POINT. NOW AT THIS STAGE, WE DO NOT DEEM IT NECESSARY TO RESORT TO LENGTHY DELIBERATION ON THIS ISSUE AS WE HAVE NOT ONLY DECIDED THE ISSUE OF 27 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA LEVY OF PENALTY ON MERITS BUT ALSO THE LEGAL ISSUE IN FAVOUR OF THE ASS ESSEE. THE LIMITATION ISSUE, HOWEVER, IS LEFT OPEN TO BE ADJUDICATED IN AN APPROPRIATE CASE. 22. IN VIEW OF OUR OBSERVATIONS AND FINDINGS GIVEN ABOVE, THE PENALTY LEVIED BY THE LOWER AUTHORITIES U/S 271AAA OF THE ACT IN THIS CASE IS HELD NOT SUSTAINABLE AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 28 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. 11. IN THE CASE OF ORBIT ENTERPRISES VRS. ITO IN ITA NO. 1596 & 1597/MUM/2014 FOR AY 2005 - 06 & 2006 - 07, THE COORDINATE BENCH HAD HELD AS UNDER: - 7. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE POINTED OUT THAT THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE INVOLVE A POINT OF LAW FOR WHICH THE NECESSARY FACTS ARE ON RECORD AND, THEREFORE, THE SAME BE ADMITTED FOR ADJUDICATION. INSOFAR AS T HE ADMISSION OF THE ADDITIONAL GROUNDS OF APPEAL ARE CONCERNED, THERE IS NO SERIOUS OPPOSITION BY THE LD. DR EXCEPT POINTING OUT THAT THESE ASPECTS WERE OTHERWISE NOT RAISED BEFORE THE LOWER AUTHORITIES. 28 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 8. BE THAT AS IT MAY, IN OUR CONSIDERED OPINION, FO LLOWING THE RATIO OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD., 229 ITR 383 (SC) AS WELL AS IN THE CASE OF JUTE CORPORATION OF INDIA LTD., 187 ITR 688 (SC), THE ADDITIONAL GROUNDS RAISED BEFORE US DESERVE TO B E ADMITTED FOR ADJUDICATION INASMUCH AS THE SAME INVOLVE POINTS OF LAW AND DOES NOT REQUIRE ANY FURTHER OR FRESH INVESTIGATION OF FACTS. IT IS ALSO CLEAR THAT THE ISSUES RAISED IN THE ADDITIONAL GROUNDS OF APPEAL GO TO THE ROOT OF THE JURISDICTION OF THE A SSESSING OFFICER TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT AND, THEREFORE, THE SAME ARE RELEVANT TO DETERMINE THE LIABILITY OF THE ASSESSEE FOR PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE ADDITIONAL GROUNDS WERE ADMITTED FOR ADJUDICATION AND ACCORD INGLY, THE RIVAL COUNSELS WERE ALSO HEARD ON MERITS. 9. IN THE CONTEXT OF ADDITIONAL GROUND OF APPEAL NO. II, A PERTINENT POINT THAT IS SOUGHT TO BE RAISED BY THE ASSESSEE IS TO THE EFFECT THAT THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 22.12.2008, A COPY OF WHICH HAS BEEN PLACED ON RECORD, SHOWS NONAPPLICATION OF MIND BY THE ASSESSING OFFICER INASMUCH AS THE SAME HAS BEEN ISSUED IN A STANDARD PROFORMA AND THE IRRELEVANT PORTION OF THE NOTICE HAS 29 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA NOT BEEN STRUCK OFF. IT HAS BEEN CA NVASSED THAT SIMILAR POINT HAS BEEN DEALT WITH IN THE FOLLOWING JUDGMENTS : - I) MEHERJEE CASSINATH HOLDINGS PVT. LTD., ITA NO. 2555/MUM/2012 DATED 28.04.2017; II) JEHANGIR HC JEHANGIR, ITA NO. 1261/MUM/2011 DATED 17.05.2017; III) M/S. WADHWA ESTATE & DEVEL OPERS INDIA PVT. LTD., ITA NO. 2158/MUM/2016 DATED 24.02.2017; IV) SHRI SAMSON PERINCHERY, ITA NOS. 1154 OF 2014, 953 OF 2014, 1097 OF 2014 & 1226 OF 2014 DATED 05.01.2017 (HON'BLE BOMBAY HIGH COURT); V) M/S. SSAS EMERALD MEADOWS, CC NO. 11485/2016 DATED 05.08.2016 (HON'BLE SUPREME COURT); VI) M/S. SSAS EMERALD MEADOWS, ITA NO. 380 OF 2015 DATED 23.11.2015 (HON'BLE KARNATAKA HIGH COURT); AND VII) MRS. PIEDADE PERINCHERY, ITA NO. 1310 OF 2014 DATED 10.01.2017 (HON'BLE BOMBAY HIGH COURT) AND THE PENALTY HAS BEEN DELETED ON THIS ASPECT. 10. ON THIS ASPECT, THE LD. CIT - DR POINTED OUT THAT THE INTENTION OF THE ASSESSING OFFICER TO LEVY PENALTY WAS ALREADY COMMUNICATED THROUGH THE DISCUSSION IN THE ASSESSMENT ORDER WHEREIN THE PENALTY HAS BEEN INITIATED FOR CON CEALMENT OF INCOME. FURTHER, HE HAS MADE A REFERENCE TO PARA 4 OF THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER TO POINT OUT THE REPLY FILED BY THE ASSESSEE WHICH, INTER - ALIA, SHOWS THAT THE ASSESSEE 30 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA HAD UNDERSTOOD THAT THE PENALTY PROCEEDINGS WERE INI TIATED FOR CONCEALMENT OF INCOME. IT WAS, THEREFORE, CONTENDED THAT NON - STRIKING OFF OF THE IRRELEVANT PORTION IN THE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 22.12.2008 DOES NOT CREATE ANY AMBIGUITY AS THE ASSESSEE WAS AWARE THAT THE PROCEEDINGS H AVE BEEN INITIATED FOR CONCEALMENT OF INCOME AND NOT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. APART THEREFROM, IT IS CONTENDED THAT SEC. 292BB OF THE ACT SAVES THE ERROR, IF ANY, IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT AND, THER EFORE, THE PLEA OF THE ASSESSEE IS NOT JUSTIFIED. FURTHER, THE LD. CIT - DR RELIED UPON THE DECISION OF THE HON'BLE PATNA HIGH COURT IN THE CASE OF MITHILA MOTORS (P.) LIMITED, 149 ITR 751 (PATNA) FOR THE PROPOSITION THAT MENTION OF AN INCORRECT CHARGE IN TH E NOTICE OF PENALTY WOULD NOT RENDER THE PENALTY PROCEEDINGS VOID - AB - INITIO. 11. IN REPLY, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NON - STRIKING OFF OF IRRELEVANT PORTION OF THE STANDARD FORM OF NOTICE U/S 274 R.W.S. 271(1)(C) OF THE A CT IS A LEGAL INFIRMITY, WHICH IS FATAL TO THE IMPOSITION OF PENALTY BECAUSE IN THE ABSENCE OF SPECIFYING THE GROUND ON WHICH PENALTY IS INITIATED, THERE IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IN THIS CONTEXT, THE LEARNED REPRESENTATIVE HAS SPECI FICALLY 31 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA POINTED OUT THE JUDGMENTS OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY & ORS., 359 ITR 565 (KARN.) AND M/S. SSAS EMERALD MEADOWS (SUPRA) WHEREIN EVEN THE SLP FILED BEFORE THE HON'BLE SUPREME COURT HAS AL SO BEEN DISMISSED. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. SEC. 271(1)(C) OF THE ACT POSTULATES THAT PENALTY PRESCRIBED THEREIN CAN BE LEVIED ON EXISTENCE OF ANY OF THE TWO SITUATIONS, NAMELY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. IT HAS BEEN JUDICIALLY WELL UNDERSTOOD BY NOW THAT CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME REFERRED TO IN SEC. 271(1)(C) OF THE ACT DENOTE TWO DIFFERENT CONNOTATIONS. AS A READY REFERENCE FOR THE AFORESAID PROPOSITION, WE MAY LOOK UPON THE JUDGMENTS OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF, 161 TAXMAN 218 (SC) AND ALSO T. ASHOK PAI, 292 ITR 11 (SC) TO APPRECIATE THAT THE AFORESAID TWO EX PRESSIONS CONVEY DIFFERENT CONNOTATIONS. HAVING UNDERSTOOD THAT THE TWO EXPRESSIONS HAVE DIFFERENT CONNOTATIONS, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MEHERJEE CASSINATH HOLDINGS PVT. LTD. (SUPRA), WHEREIN ONE OF US IS A PARTY, HELD THAT IT WAS 32 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA I MPERATIVE FOR THE ASSESSING OFFICER TO MAKE THE ASSESSEE AWARE IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT AS TO WHICH OF THE TWO LIMBS ARE BEING PUT - UP AGAINST HIM FOR THE PURPOSES OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. OSTENSIBLY, UNLE SS THE ASSESSEE IS MADE AWARE OF THE SPECIFIC CHARGE AGAINST HIM, IT WOULD BE VIOLATIVE OF THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS THE ASSESSEE WOULD NOT BE IN A POSITION TO PUT UP HIS DEFENCE APPROPRIATELY. IT IS IN THIS MANNER ONE HAS TO APPRECIATE THE POINT BEING CANVASSED BY THE ASSESSEE BEFORE US, WHICH IS BASED ON THE TONE AND TENOR OF THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 22.12.2008, A COPY OF WHICH HAS BEEN PLACED ON RECORD. NOTABLY, THE RELEVANT DISCUSSION MADE BY THE MU MBAI BENCH OF THE TRIBUNAL IN THE CASE OF MEHERJEE CASSINATH HOLDINGS PVT. LTD. (SUPRA) IS AS UNDER : - 8. .............. IT IS ALSO A WELL ACCEPTED PROPOSITION THAT CONCEALMENT OF THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF I NCOME REFERRED TO IN SEC. 271(1)(C) OF THE ACT DENOTE DIFFERENT CONNOTATIONS. IN FACT, THIS DISTINCTION HAS BEEN APPRECIATED EVEN AT THE LEVEL OF HON'BLE SUPREME COURT NOT ONLY IN THE CASE OF DILIP N. SHROFF (SUPRA) BUT ALSO IN THE CASE OF T.ASHOK PAI, 29 2 ITR 11 (SC). THEREFORE, 33 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA IF THE TWO EXPRESSIONS, NAMELY CONCEALMENT OF THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME HAVE DIFFERENT CONNOTATIONS, IT IS IMPERATIVE FOR THE ASSESSEE TO BE MADE AWARE AS TO WHICH OF THE TWO IS BEING PUT AGAINST HIM FOR THE PURPOSE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, SO THAT THE ASSESSEE CAN DEFEND ACCORDINGLY. IT IS IN THIS BACKGROUND THAT ONE HAS TO APPRECIATE THE PRELIMINARY PLEA OF ASSESSEE, WHICH IS BASED ON THE MANNER IN WHICH T HE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 10.12.2010 HAS BEEN ISSUED TO THE ASSESSEE - COMPANY. A COPY OF THE SAID NOTICE HAS BEEN PLACED ON RECORD AND THE LEARNED REPRESENTATIVE CANVASSED THAT THE SAME HAS BEEN ISSUED BY THE ASSESSING OFFICER IN A STANDARD PROFORMA, WITHOUT STRIKING OUT THE IRRELEVANT CLAUSE. IN OTHER WORDS, THE NOTICE REFERS TO BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT, NAMELY CONCEALMENT OF THE PARTICULARS OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. QUI TE CLEARLY, NONSTRIKING - OFF OF THE IRRELEVANT LIMB IN THE SAID NOTICE DOES NOT CONVEY TO THE ASSESSEE AS TO WHICH OF THE TWO CHARGES IT HAS TO RESPOND. THE AFORESAID INFIRMITY IN THE NOTICE HAS BEEN SOUGHT TO BE DEMONSTRATED AS A REFLECTION OF NON - APPLICAT ION OF MIND BY THE ASSESSING OFFICER, AND IN SUPPORT, REFERENCE HAS BEEN MADE TO THE 34 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA FOLLOWING SPECIFIC DISCUSSION IN THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA): - 83. IT IS OF SOME SIGNIFICANCE THAT IN THE STANDARD PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD P ROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUAT IONS. 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NONAPPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. (SEE MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 2 SCC 718] 9. FACTUALLY SPEAKING, THE AFORESAID PLEA OF ASSE SSEE IS BORNE OUT OF RECORD AND HAVING REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA), THE NOTICE IN THE INSTANT CASE DOES SUFFER FROM THE VICE OF NON - APPLICATION OF MIND BY THE ASSESSING OFF ICER. IN FACT, A 35 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA SIMILAR PROPOSITION WAS ALSO ENUNCIATED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S. SSAS EMERALD MEADOWS (SUPRA) AND AGAINST SUCH A JUDGMENT, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE HAS SINCE BEEN DISMISSED BY THE HON' BLE SUPREME COURT VIDE ORDER DATED 5.8.2016, A COPY OF WHICH IS ALSO PLACED ON RECORD. 10. IN FACT, AT THE TIME OF HEARING, THE LD. CIT - DR HAS NOT DISPUTED THE FACTUAL MATRIX, BUT SOUGHT TO POINT OUT THAT THERE IS DUE APPLICATION OF MIND BY THE ASSESSING O FFICER WHICH CAN BE DEMONSTRATED FROM THE DISCUSSION IN THE ASSESSMENT ORDER, WHEREIN AFTER DISCUSSING THE REASONS FOR THE DISALLOWANCE, HE HAS RECORDED A SATISFACTION THAT PENALTY PROCEEDINGS ARE INITIATED U/S 271(1)(C) OF THE ACT FOR FURNISHING OF INACCU RATE PARTICULARS OF INCOME. IN OUR CONSIDERED OPINION, THE ATTEMPT OF THE LD. CIT - DR TO DEMONSTRATE APPLICATION OF MIND BY THE ASSESSING OFFICER IS NO DEFENCE INASMUCH AS THE HON'BLE SUPREME COURT HAS APPROVED THE FACTUM OF NONSTRIKING OFF OF THE IRRELEVAN T CLAUSE IN THE NOTICE AS REFLECTIVE OF NONAPPLICATION OF MIND BY THE ASSESSING OFFICER. SINCE THE FACTUAL MATRIX IN THE PRESENT CASE CONFORMS TO THE PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT, WE PROCEED TO REJECT THE ARGUMENTS ADVANCED BY THE LD. CIT - DR BASED ON THE 36 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FURTHER, IT IS ALSO NOTICEABLE THAT SUCH PROPOSITION HAS BEEN CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT ALSO IN THE CASE OF SHRI SAMSON PERINCHERY, ITA NOS. 1154, 953, 10 97 & 1126 OF 2014 DATED 5.1.2017 (SUPRA) AND THE DECISION OF THE TRIBUNAL HOLDING LEVY OF PENALTY IN SUCH CIRCUMSTANCES BEING BAD, HAS BEEN APPROVED. 11. APART FROM THE AFORESAID, THE LD. CIT - DR MADE AN ARGUMENT BASED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. KAUSHALYA & OTHERS, 216 ITR 660 (BOM.) TO CANVASS SUPPORT FOR HIS PLEA THAT NON - STRIKING OFF OF THE IRRELEVANT PORTION OF NOTICE WOULD NOT INVALIDATE THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. WE HAVE CAREFULLY CONS IDERED THE SAID ARGUMENT SET - UP BY THE LD. CIT - DR AND FIND THAT A SIMILAR ISSUE HAD COME UP BEFORE OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA). OUR COORDINATE BENCH, AFTER CONSIDERING THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT I N THE CASE OF SMT. KAUSHALYA & ORS., (SUPRA) AS ALSO THE JUDGMENTS OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) AND DHARMENDRA TEXTILE PROCESSORS, 306 ITR 277 (SC) DEDUCED AS UNDER : - 37 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 12. A COMBINED READING OF THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. B KAUSHALYA AND OTHERS (SUPRA) AND THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF DILIP N SHROFF (SUPRA) WOULD MAKE IT CLEAR THAT THERE SHOULD BE APPLICATION OF MIND ON THE PART OF THE AO AT THE TIME OF ISSUING NOTICE. IN THE CASE OF LAKHDIR LALJI (SUPRA), THE AO ISSUED NOTICE U/S 274 FOR CONCEALMENT OF PARTICULARS OF INCOME BUT LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE GUJARAT HIGH COURT QUASHED THE PENALTY S INCE THE BASIS FOR THE PENALTY PROCEEDINGS DISAPPEARED WHEN IT WAS HELD THAT THERE WAS NO SUPPRESSION OF INCOME. THE HONBLE KERALA HIGH COURT HAS STRUCK DOWN THE PENALTY IMPOSED IN THE CASE OF N.N.SUBRAMANIA IYER VS. UNION OF INDIA (SUPRA), WHEN THERE IS NO INDICATION IN THE NOTICE FOR WHAT CONTRAVENTION THE PETITIONER WAS CALLED UPON TO SHOW CAUSE WHY A PENALTY SHOULD NOT BE IMPOSED. IN THE INSTANT CASE, THE AO DID NOT SPECIFY THE CHARGE FOR WHICH PENALTY PROCEEDINGS WERE INITIATED AND FURTHER HE HAS ISSU ED A NOTICE MEANT FOR CALLING THE ASSESSEE TO FURNISH THE RETURN OF INCOME. HENCE, IN THE INSTANT CASE, THE ASSESSING OFFICER DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY PROCEEDINGS WERE INITIATED AND ALSO 38 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA ISSUED AN INCORRECT NOTICE. BOTH THE ACTS OF THE AO, IN OUR VIEW, CLEARLY SHOW THAT THE AO DID NOT APPLY HIS MIND WHEN HE ISSUED NOTICE TO THE ASSESSEE AND HE WAS NOT SURE AS TO WHAT PURPOSE THE NOTICE WAS ISSUED. THE HONBLE BOMBAY HIGH COURT HAS DISCUSSED ABOUT NONAPPLICATION OF MIND IN THE CASE OF KAUSHALYA (SUPRA) AND OBSERVED AS UNDER: - .... THE NOTICE CLEARLY DEMONSTRATED NON - APPLICATION OF MIND ON THE PART OF THE INSPECTING ASSISTANT COMMISSIONER. THE VAGUENESS AND AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY OF THE ASSESSEE SINCE HE DID NOT KNOW WHAT EXACT CHARGE HE HAD TO FACE. IN THIS BACK GROUND, QUASHING OF THE PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 1967 - 68 SEEMS TO BE FULLY JUSTIFIED. IN THE INSTANT CASE ALSO, WE ARE OF THE VIEW THAT THE AO HAS ISS UED A NOTICE, THAT TOO INCORRECT ONE, IN A ROUTINE MANNER. FURTHER THE NOTICE DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY NOTICE WAS ISSUED. HENCE, IN OUR VIEW, THE AO HAS FAILED TO APPLY HIS MIND AT THE TIME OF ISSUING PENALTY NOTICE TO THE ASSESSEE. 12. THE AFORESAID DISCUSSION CLEARLY BRINGS OUT AS TO THE REASONS WHY THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. 39 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA SHROFF (SUPRA) IS TO PREVAIL. FOLLOWING THE DECISION OF OUR COORDINATE BENCH IN THE CASE OF DR. SARITA MILIND DAVARE (SUPRA), WE HEREBY REJECT THE AFORESAID ARGUMENT OF THE LD. CIT - DR. 13. APART FROM THE AFORESAID DISCUSSION, WE MAY ALSO REFER TO THE ONE MORE SEMINAL FEATURE OF THIS CASE WHICH WOULD DEMONSTRATE THE IMPORTANCE OF NON - STRIKING OFF OF IRRELEVANT CLAUSE IN THE NOTICE BY THE ASSESSING OFFICER. AS NOTED EARLIER, IN THE ASSESSMENT ORDER DATED 10.12.2010 THE ASSESSING OFFICER RECORDS THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE TO BE INITIATED FOR FURNISHING OF INACCURATE PARTIC ULARS OF INCOME. HOWEVER, IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT OF EVEN DATE, BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT ARE REPRODUCED IN THE PROFORMA NOTICE AND THE IRRELEVANT CLAUSE HAS NOT BEEN STRUCK - OFF. QUITE CLEARLY, THE OBSERVA TION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE CLEARLY BRINGS OUT THE DIFFIDENCE ON THE PART OF ASSESSING OFFICER AND THERE IS NO CLEAR AND CRYSTALLISED CHARGE BEING CONVEYED TO THE ASSESSE E U/S 271(1)(C), WHICH HAS TO BE MET BY HIM. AS NOTED BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA), THE QUASI - CRIMINAL PROCEEDINGS U/S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE 40 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA PRINCIPLES OF NATURAL JUSTICE, AND IN THE PRESENT CA SE, CONSIDERING THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ALONGSIDE HIS ACTION OF NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE SHOWS THAT THE CHARGE BEING MADE AGAINST THE ASSESSEE QUA SEC. 271(1)(C) OF THE ACT IS NOT FIR M AND, THEREFORE, THE PROCEEDINGS SUFFER FROM NON - COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE INASMUCH AS THE ASSESSING OFFICER IS HIMSELF UNSURE AND ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF SEC. 271(1)(C) OF THE ACT HE HAS TO RESPOND. 14. THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 10.12.2010 IS UNTENABLE AS IT SUFFERS FROM THE VICE OF NONAPPLICATION OF MIND HAVING REGARD TO THE RATIO OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA) AS WELL AS THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA). THUS, ON THIS COUNT ITSELF THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT IS LIABLE TO BE DELETED. WE HOLD SO. SINCE THE PENALTY HAS BEEN DELETED ON THE PRELIMINARY POINT, THE OTHER ARGUMENTS RAISED BY THE APPELLANT ARE NOT BEING DEALT WITH. 41 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA TH EREFORE, IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 22.12.2008 IS UNTENABLE AND SUFFERS FROM THE INFIRMITY OF NONAPPLICATION OF MIND BY THE ASSESSING OFFICER. ON THIS COUNT ITSELF, IN OUR VIEW, THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT DESER VES TO BE DELETED. 13. AT THIS POINT, WE MAY ALSO MAKE A REFERENCE TO THE JUDGMENT OF THE HON'BLE PATNA HIGH COURT RELIED BY THE LD. CIT - DR BEFORE US. THE ISSUE BEFORE THE HON'BLE PATNA HIGH COURT WAS RELATING TO LEVY OF PENALTY FOR SHORTFALL IN THE PAYME NT OF ADVANCE TAX PAID AS COMPARED WITH THE TAX FINALLY ASSESSED AS PAYABLE, BUT IN THE NOTICE ISSUED U/S 274 R.W.S. 273(B) OF THE ACT IT WAS INCORRECTLY MENTIONED THAT ASSESSEE HAD FAILED TO FILE ITS ESTIMATE OF ADVANCE TAX. THE HON'BLE PATNA HIGH COURT H ELD THAT MENTION OF SUCH INCORRECT CHARGE WOULD NOT RENDER THE PENALTY PROCEEDINGS VOID - AB - INITIO. THE AFORESAID PARITY OF REASONING HAS BEEN RELIED UPON BY THE LD. CIT - DR BEFORE US TO STATE THAT NONSTRIKING OFF OF THE IRRELEVANT PORTION OF THE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DOES NOT RENDER THE PROCEEDINGS INVALID. IN OUR VIEW, THE SAID DECISION DOES NOT HELP THE CASE OF THE REVENUE QUA THE ISSUE BEFORE US. FIRSTLY, THE HON'BLE PATNA HIGH COURT ITSELF NOTED 42 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA THAT IT WAS A CASE OF MERE WRONG LABE LLING OF THE SECTION OR SOME MISTAKE IN THE CHARGE FRAMED AGAINST THE ASSESSEE WHICH DOES NOT PREJUDICE THE ASSESSEE. SECONDLY, NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT HAS BEEN COMPLETELY DIFFERENTLY UND ERSTOOD BY THE VARIOUS HIGH COURTS, INCLUDING THAT BY THE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY. IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA), THE HONBLE BOMBAY HIGH COURT NOTED THAT THE ORDER IMPOSING PENALTY U/S 271(1)(C) OF THE ACT HAS TO BE MAD E ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAVE BEEN INITIATED. IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA), THE REVENUE HAD PUT UP AN ARGUMENT TO THE EFFECT THAT THERE IS NO DIFFERENCE BETWEEN FURNISHING OF INACCURATE PARTICULARS OF INCOME AN D CONCEALMENT OF INCOME. THE AFORESAID ARGUMENT HAS BEEN SPECIFICALLY REJECTED BY THE HON'BLE HIGH COURT BY REFERRING TO THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF T. ASHOK PAI, 292 ITR 11 (SC). IT WAS FURTHER NOTED THAT THE JUDGMENT IN THE C ASE OF T. ASHOK PAI (SUPRA) HAS BEEN RELIED UPON BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY & ORS., 359 ITR 565 (KARN.). THE HON'BLE HIGH COURT APPROVED THE PROPOSITION THAT ONCE THE TWO LIMBS CONTAINED IN THE 43 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT, NAMELY CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE UNDERSTOOD TO BE CARRYING DIFFERENT MEANINGS/CONNOTATIONS, NONSTRIKING OFF OF THE IRRELEVANT CLAUSE OR STRIKING OFF ONE OF THE L IMBS AND IMPOSING PENALTY ON THE OTHER LIMB IS NOT AS PER LAW. THIRDLY, IT MAY BE NOTED THAT THE ISSUE BEFORE THE HON'BLE HIGH COURT WAS INCORRECT MENTIONING OF CHARGE IN THE SHOW CAUSE NOTICE, BUT THE CASE BEFORE US IS OF NON - MENTIONING OF THE CHARGE AT A LL. THEREFORE, FOR ALL THE ABOVE REASONS, NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT CANNOT BE SAID TO BE A MERE WRONG LABELLING OF THE SECTION OR SOME MISTAKE OF THE NATURE THAT WAS BEFORE THE HON'BL E PATNA HIGH COURT IN THE CASE OF MITHILA MOTORS (P.) LIMITED (SUPRA). THEREFORE, THE JUDGMENT OF THE HON'BLE PATNA HIGH COURT DOES NOT HELP THE CASE OF THE REVENUE BEFORE US. 14. THE OTHER PLEA OF THE LD. CIT - DR BEFORE US WAS THAT THERE WAS NO AMBIGUITY INASMUCH AS THE ASSESSING OFFICER HAD MADE AWARE THE ASSESSEE ABOUT THE CHARGE BEING MADE AGAINST HIM, NAMELY CONCEALMENT OF INCOME, BY REFERRING TO THE ASSESSMENT ORDER AND ALSO THE REPLY OF THE ASSESSEE FILED AT THE TIME OF PENALTY PROCEEDINGS. IN OUR CO NSIDERED OPINION, IF ONE WERE TO 44 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA EXAMINE THE ENTIRE CONSPECTUS OF FACT - SITUATION STARTING FROM THE ASSESSMENT ORDER UPTO THE PASSING OF PENALTY ORDER, THE ERROR IN THE ARGUMENT SET - UP BY THE LD. CIT - DR WOULD BE CLEAR. IN THE ASSESSMENT ORDER DATED 22.12.20 08, THE ASSESSING OFFICER RECORDS THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE INITIATED FOR CONCEALMENT OF INCOME WHILE IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT OF EVEN DATE, BOTH THE LIMBS OF SEC. 271(1)(C) OF THE ACT ARE LEF T INTACT IN THE STANDARD PRINTED NOTICE, AS THE IRRELEVANT CLAUSE HAS NOT BEEN STRUCK - OFF. THIS CONTRADICTION IN THE ASSESSMENT ORDER VIS - A - VIS THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT ON THE SAME DATE CLEARLY BRINGS OUT A CONFUSION ON THE PART OF THE ASSESSING OFFICER, AND APPARENTLY IT IS A SITUATION WHERE ASSESSEE IS NOT AWARE ABOUT THE CLEAR AND CRYSTALLISED CHARGE BEING MADE AGAINST HIM, THUS VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. THE PENALTY PROCEEDINGS BEING QUASI - CRIMINAL IN NATURE, AS NOTED BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF (SUPRA), THE SAME ARE NECESSARILY REQUIRED TO BE IN COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. IN THIS VIEW OF THE MATTER, IN OUR VIEW, THE LD. CIT - DR IS NOT CORRECT IN CONTENDING THAT NON - STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE ISSUED U/S 274 R.W.S. 45 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 271(1)(C) OF THE ACT IS NOT MATERIAL, AND THAT THE ASSESSEE HAD UNDERSTOOD THAT THE PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME BASED ON THE OBSERVATION S IN THE ASSESSMENT ORDER ITSELF. BEFORE PARTING, WE MAY ALSO REFER TO A RECENT JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF S. CHANDRASHEKAR, 396 ITR 538 (KARN.) WHEREIN A NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT IN PRINTED FORM WI THOUT SPECIFYING THE GROUNDS OF INITIATION OF PENALTY PROCEEDINGS WAS HELD TO BE INVALID AND UNTENABLE IN LAW. AS PER THE HON'BLE HIGH COURT, IN THE ABSENCE OF ANY SPECIFIC GROUND IN THE NOTICE SO ISSUED, THERE IS A BREACH OF PRINCIPLES OF NATURAL JUSTICE AND ACCORDINGLY, THE ORDER IMPOSING PENALTY CANNOT BE SUSTAINED. 15. BEFORE PARTING, WE MAY ALSO DEAL WITH THE ARGUMENT SET - UP BY THE LD. CIT - DR BASED ON THE PROVISION OF SEC. 292BB OF THE ACT. NOTABLY, SEC. 292BB OF THE ACT HAS BEEN INSERTED W.E.F. 01.04 .2008 AND IS UNDERSTOOD BASICALLY AS A RULE OF EVIDENCE. THE IMPLICATION OF SEC. 292BB OF THE ACT IS THAT ONCE THE ASSESSEE APPEARS IN ANY PROCEEDINGS OR HAS CO - OPERATED IN ANY INQUIRY RELATING TO ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOT ICE UNDER ANY PROVISIONS OF THE ACT THAT IS REQUIRED TO BE SERVED 46 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA HAS BEEN DULY SERVED UPON HIM IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND UNDER THESE CIRCUMSTANCES, ASSESSEE WOULD BE PRECLUDED FROM OBJECTING THAT A NOTICE THAT WAS REQUIRED TO BE SER VED UNDER THE ACT WAS EITHER NOT SERVED UPON HIM OR WAS NOT SERVED IN TIME OR WAS SERVED IN AN IMPROPER MANNER. IN OUR CONSIDERED OPINION, THE PROVISIONS OF SEC. 292BB OF THE ACT HAVE NO RELEVANCE IN THE CONTEXT OF THE IMPUGNED EXAMINATION OF THE EFFICACY OF THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271(1)(C) OF THE ACT. NOTABLY, THE ISSUE BEFORE US IS NOT ABOUT THE SERVICE OF NOTICE BUT AS TO WHETHER THE CONTENTS OF THE NOTICE ISSUED MEETS WITH THE REQUIREMENTS OF LAW. THEREFORE, THE SAID A RGUMENT OF THE LD. CIT - DR IS ALSO REJECTED. 16. IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, HAVING REGARD TO THE FACT THAT IN THE INSTANT CASE THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 29.03.2012 DOES NOT SPECIFY THE GROUNDS OF INI TIATION OF PENALTY PROCEEDINGS, THE SAME IS INVALID AND UNTENABLE IN THE EYES OF LAW. ACCORDINGLY, THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT IS DIRECTED TO BE DELETED ON THIS COUNT ITSELF. 17. SINCE THE PENALTY HAS BEEN DELETED ON THE PRELIMINARY POINT, THE OTHER ARGUMENTS OF THE ASSESSEE 4 7 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA DEALING WITH THE MERITS OF THE LEVY OF PENALTY ARE NOT BEING DEALT WITH AS THE SAME ARE RENDERED ACADEMIC IN NATURE. 1 2 . ON THE OTHER HAND LEARNED DR RELIED ON THE ORDER OF LD. CIT(A) AND SUBMITTED THAT SINCE IN THE PRESENT CASE, THE ASSESSEE IN THE COURSE OF SEARCH HAD MADE STATEMENT IN WHICH HE ADMITS UNDISCLOSED INCOME, THEREFORE THE PROVISIONS OF SECTION 271AAB WOULD AUT OMATICALLY ATTRACT. THUS RELIED UPON THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF PCIT VRS. SANDEEP CHANDAK (2018) 93 TAXMAN.COM 405(ALL), DCIT VRS. SRADDHA BUIDLERS (ITA NO. 890/BANG/2018 AY 2013 - 14) AND IT WAS SUBMITTED THAT ASSESSEE WAS FULLY AWARE REGARDING THE CHARGES ON WHICH PENALTY WAS BEING LEVIED UPON. THUS, THIS PLEA RAISED BY THE ASSESSEE NEEDS TO BE REJECTED AS THE AO HAS CORRECTLY LEVIED PENALTY. 1 3 . OUR ATTENTIO N WAS INVITED TO NOTICE DATED 31/03/2015 ISSUED U/S. 274 R.W.S . 271 OF THE A CT, WHEREIN THE AO HAS ALSO 48 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA INCORPORATED THE WORDS U/S 271AAB AND HAS NOT STRIKE OF F INAPPROPRIATE WORDS. FROM THE BARE APPEARANCE OF THE NOTICE, WE FIND THAT THE SAME IS A CYCLOSTYLE COPY BEING USED BY THE DEPARTMENT. AT THIS JUNCTURE, THE R ELIANCE WAS PL ACED ON THE DECISION OF JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINCHERY AND THE SERIES OF THE DECISION OF THE TRIBUNAL WHEREIN PENALTY WAS DELETED ON THE PLEA THAT IN THE NOTICE ISSUED U/S.274 R.W.S.271 (1)(C), AO HAS NOT DELETED THE INAPPROPRIATE WORDS. 14 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED BY LOWER AUTHORITIES DURING THE COURSE OF HEARING BEFORE US. FROM THE RECORD WE FOUND THAT THE AO HAD ISSUED SHOW - CAUSE NOTICE U/S.274 R.W.S 271 AND ALSO INCORPORATED 271 AAB (IN HAND) DATED 31/03/15 WHICH IS IN THE STANDARD PRE - PRINTED FORM AND BOTH THE LIMBS OF CONCEALMENT AND INACCURATE PARTICULARS HAVE BEEN RETAINED. 49 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 15 . EVEN ON THE LEGAL ISSUE, WE FOUND THAT T HE TWO CHARGES FOR INITIATING THE PENALTY OPERATE ON TWO DIFFERENT FOOTING AND UNDER THE PENAL PROVISION THE CHARGE HAS TO BE VERY SPECIFIC AND NOT VAGUE. THESE CHARGES ARE NOT TO BE RECKONED AS ANY CASUAL REMARK, WHICH CAN BE INTERCHANGED BY THE AO AT ANY STAGE ON HIS WHIMS AND FANCIES. IT IS NOT AN ERROR W HICH IS RECTIFIABLE OR TO BE IGNORED, ALBEIT IT IS A FATAL ERROR WHICH VITIATES THE ENTIRE INITIATION ITSELF. IF CHARGE ITSELF IS VAGUE AND NOT CLEAR, THEN THE ONUS CAST UPON THE ASSESSEE UNDER EXPLANATION ITSELF GETS VITIATED AS ASSESSEE IS PRECLUDED FROM A CHANCE TO GIVE A SPECIFIC REBUTTAL ON THAT CHARGE. IT IS A TRITE LAW THAT CIRCUMSTANCES AND FACTS FOR LEVY OF PENALTY UNDER BOTH THE GROUNDS OPERATE IN A DIFFERENT FIELDS. THE COURTS HAVE HELD THAT IN THE NOTICE UNDER SECTION 274 R.W.S. 271, THE AO HAS TO SPECIFY THE CHARGE ON WHICH HE INTENDS TO LEVY PENALTY. THIS ASPECT OF THE MATTER HAS BEEN CONSISTENTLY REITERATED BY THE HON'BLE HIGH COURTS FROM TIME TO TIME. 50 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 16 . WE FOUND THAT NOTICE DATED 31.03.15 ISSUED BY AO U/S.274 R.W.S. 271 ALSO INCORPORATED 271AAB (IN HAND) WAS ON STANDARD PERFORMA IN WHICH INAPPROPRIATE WORDS AND PARAGRAPHS WERE NEITHER STRUCK OFF NOR DELETED. THUS, THE ASSESSING AUTHORITY WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR HAD FURNISHED INACCURATE PARTICULARS. THUS, THE NOTICES SO ISSUED ARE NOT IN COMPLIANCE WITH THE REQUIREMENT OF THE PARTICULAR SECTION AND THEREFORE IT IS A VAGUE NOTICE, WHICH IS ATTRIBUTAB LE TO A PATENT NON - APPLICATION OF MIND ON THE PART OF THE ASSESSING AUTHORITY. 17 . WE ARE OF THE VIEW THAT FOR VISITING THE ASSESSEE WITH THE PANEL PROVISIONS, IT IS PRE - REQUISITE THAT IT SHOULD BE EVIDENT FROM THE NOTICE, THE INTEND AND PURPOSE FOR L EVYING PENALTY AS THE PURPOSE OF THE NOTICE IS TO INFORM THE ASSESSEE AS TO THE SPECIFIC CHARGE FOR WHICH HE HAS BEEN SHOW CAUSED SO THAT HE COULD FURNISH HIS REPLY WITHOUT ANY CONFUSION AND TO THE POINT. IN THE PRESENT CASE, NEITHER THE ASSESSEE NOR ANYON E ELSE COULD MAKE OUT 51 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA AS TO WHETHER THE NOTICE U/S. 274 R.W.S. 271 OF THE ACT WAS ISSUED FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME DISABLING IT TO MEET WITH THE CASE OF THE ASSESSING OFFICER. THERE ARE A CATENA OF JUDGMENTS HIGHLIGHTING THE NECESSITY FOR IDENTIFYING THE CHARGE FOR WHICH THE ASSESSEE IS BEING VISITED AND IN ALL THOSE DECISIONS, HON'BLE COURTS HAVE REPEATEDLY HELD THAT WHERE THE JURISDICTIONAL NOTICE IS VAGUE, SIMILAR TO THE ONE IN THE PR ESENT CASE, THE CONSEQUENT LEVY CANNOT BE SUSTAINED. 18 . IN THIS CONNECTION, RELIANCE IS FIRST PLACED UPON THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. MANJUNATHA COTTON AND GINNING FACTORY & ORS. AND VEERABHADRAPPA SANGAPPA AND CO. (359 ITR 565, 577, 601, 603 - 604) IN WHICH THE FACTS ARE SIMILAR. IN THOSE BUNCH OF TAX APPEALS, SEVERAL ASSESSEE AND SEVERAL ISSUES WERE INVOLVED. IN SO FAR AS I.T.A. NO. 5020 OF 2009 WAS CONCERNED, ONE OF THE SUBSTANTIAL QUESTIONS ON WHICH THE AP PEAL WAS FILED BY THE REVENUE WAS: 52 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 'WHETHER THE NOTICE ISSUED UNDER SECTION 271(1)(C) IN THE PRINTED FORM WITHOUT SPECIFICALLY MENTIONING WHETHER THE PROCEEDINGS ARE INITIATED ON THE GROUND OF CONCEALMENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURAT E PARTICULARS IS VALID AND LEGAL?' 19 . WHILE ANSWERING THE ABOVE IN FAVOUR OF THE ASSESSEE, THE FOLLOWING FINDINGS WERE RECORDED BY THE HON'BLE COURT: '61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEA LMENT FURNISHING INACCURATE PARTICULARS OF INCOME 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 FURNISHING OF INACCURATE PARTICULARS. THE A PEX COURT IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING P LTD REPORTED IN [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 BEING UNCLEAR PE NALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. '(P) NOTICE UNDER SECTIO N 274 OF THE ACT SHOULD SPECIFICALLY 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. THE 53 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEA D TO AN INFERENCE AS TO NON - APPLICATION OF MIND. 20 . THEREAFTER, IN SO FAR AS THE MANNER IN WHICH THE STATUTORY NOTICE WAS REQUIRED TO BE ISSUED, THE HON'BLE COURT CONCLUDED THUS: (P) NOTICE U/S 274 OF THE ACT SHOULD BE SPECIFICALLY 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. 2 1 . FINALLY, IN CONCURRING WITH THE FINDINGS RECORDED IN THE ORDER OF THE TRIBUNAL, IT WAS HELD THUS: 66. IN VIEW OF T HE AFORESAID LAW, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ENTIRE PROCEEDINGS ARE VITIATED AS THE NOTICE ISSUED IS NOT IN ACCORDANCE WITH LAW AND ACCORDINGLY JUSTIFIED IN INTERFERING WITH THE ORDER PASSED BY THE APPELLATE AUTH ORITY AS WELL AS THE ASSESSING AUTHORITY AND IN SETTING ASIDE THE SAME. HENCE, WE ANSWER THE SUBSTANTIAL QUESTIONS OF LAW FRAMED IN THIS CASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ' 22 . THE AFORESAID JUDGMENT WAS UNSUCCESSFULLY CHALLENGED BY THE REVENUE BEFORE THE SUPREME COURT, AS IT WAS REJECTED VIDE 54 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO. 13898/2014 DATED 11.07.2016. 23 . RELIANCE WAS NEXT PLACED UPON ANOTHER JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE CIT V. SSA'S EMERALD MEADOWS (INCOME TAX APPEAL NO. 380 OF 2015 DECIDED ON 23.11.2016). IN THIS CASE ALSO S SIMILAR SITUATION AROSE IN AS MUCH AS THE HONBLE COURT WAS REQUIRED TO ADJUDICATE ON THE FOLLOWING SUBSTANTIAL QUESTION: (1) WHETHER, OMISSION OF ASSESSING OFF ICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE?' 24 . THE AFORESAID QUESTION WAS DEALT WITH BY THE HONBLE COURT IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING WORDS: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME - TAX ACT 1961 (FOR SHORT 'THE ACT; TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE PENALTY PROCEEDINGS HAD BEEN INITIATED LE. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNEL WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS 55 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA COURT RENDERED IN THE CA SE OF COMMISSIONER OF INCOME - TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS A PPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 2 5 . THE SLP FILED BY THE DEPARTMENT IN THE AFORESAID CASE ALSO WAS DISMISSED BY THE HON'BLE SUPREME COURT VIDE PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO .... ./2016 (CC NO. 11485/2016) DATED 05.08.2016. 2 6 . THE HONBLE JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT V. SAMSON PERINCHERY [INCOME TAX APPEAL NO. 1154 OF 2014 AND OTHERS DATED 05.01.2017 ] HAD ALSO OCCASION TO CONSIDER A SIMILAR ISSUE. IN THIS CASE, THOUGH PROCEE DINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, IN THE NOTICE ISSUED U/S. 274 R.W.S. 271 OF THE ACT IN THE STANDARD FORM, THE CHARGE FOR WHICH IT WAS ISSUED WAS ALSO NOT IDENTIFIED, AS IN THE PRESENT CASE. IN DELETING THE LEVY, SO FAR AS NON - SPECIFICATION OF THE DEFAULT IN THE JURISDICTIONAL NOTICE, THE 56 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA FOLLOWING FINDINGS WERE RECORDED BY THE HON'BLE BOMBAY HIGH COURT: '7 THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT - ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MENJUNETH C OTTON AND GINNING FACTORY (SUPRA). 8. IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED DO NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW THUS, NOT ENTERTAINED' 27 . THE HON'BLE SUPREME COURT IN DILIP N. SHROFF V/S JCIT, [2007] 291 ITR 519 (SC), HAS OBSERVED THAT WHILE ISSUING THE NOTICE UNDER SECTION 274 R/W SECTION 271, IN THE STANDARD FORMAT, THE ASSESSING OFFICER SHOULD DELETE THE INAPPROPRIATE WORDS OR PARAGRAPHS, OTHERWISE, IT MAY INDICATE THAT THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THIS, ACCORDING TO THE HON'BLE SUPREME COURT, DEPRIVES THE ASSESSEE OF A FAIR OPPORTUNITY TO EXPLAIN ITS STAND, THEREBY, VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. AS HELD BY THE HON'BLE SUPREME COURT IN CIT V/S 57 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC), THE AFORESAID PRINCIPLE LAID IN DILIP N. SHROFF (SUPRA) STILL HOLDS GOOD IN SPITE OF THE DECISION OF THE H ON'BLE SUPREME COURT IN UOI V/S DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC) . THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S SMT. KAUSHALYA & ORS., [1995] 216 ITR 660 (BOM), OBSERVED THAT NOTICE ISSUED UNDER SECTION 274 MUST REVEAL APPLICATION O F MIND BY THE ASSESSING OFFICER AND THE ASSESSEE MUST BE MADE AWARE OF THE EXACT CHARGE ON WHICH HE HAD TO FILE HIS EXPLANATION. THE COURT OBSERVED, VAGUENESS AND AMBIGUITY IN THE NOTICE DEPRIVES THE ASSESSEE OF REASONABLE OPPORTUNITY AS HE IS UNAWARE OF T HE EXACT CHARGE HE HAS TO FACE. THE HON'BLE JURISDICTIONAL HIGH COURT IN SAMSON PERINCHERY (SUPRA) , FOLLOWING THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN CIT V/S MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565 (KAR.) , HELD, ORDER IMPOSING PENAL TY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. 58 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA 2 8 . IN ADDITION TO THE AFORESAID BINDING JUDGMENTS, THERE ARE SEVERAL ORDERS PASSED BY CO - ORDINATE BENCHES OF THE TRIBUNAL ON THIS VERY POINT. IN ALL THOSE ORDERS ALSO PENALTY LEVIED U S. 271(L)(C) OF THE ACT ON THE BASIS OF SIMILAR VAGUE NOTICE WAS CANCELLED. SOME OF THE DECISIONS, WE HAVE ALREADY DISCUSSED ABOVE, WHEREIN MORE PARTICULARLY IN THE CASE OF DCIT VRS. R. ELANGOVAN (ITA NO. 1199/CHNY/2017) UNDER THE IDENTICAL CIRCUMSTANCES PENALTY ORDER WAS SET ASIDE AND EVEN IN THE CASE OF ORBIT ENTERPRISES VRS. ITO (1596 & 1597/MUM/14) , THE PENALTY WAS SET ASIDE. WHEREAS ON THE OTHER HAND, THE PARA MATERIA CONTAINED IN THE ORDERS RELIED BY REVENUE ARE DIFFERENT FROM THE FACTS OF THE PRESENT AND ARE THUS NOT APPLICABLE. 2 9 . IN VIEW OF THE ABOVE DISCUSSIONS, WE HOLD THAT THE NOTICE ISSUED U/S 274 R.W.S 271 AND INCORPORATED 271AAB (IN HAND) WAS NOT VALID. CONSEQUENTLY, THE PENALTY PROCEEDINGS ARE ALSO INVALID . SINCE THE VERY BASIS OF LEVY OF PENALTY HAS BEEN HELD TO BE INVALID, WE ARE OF THE VIEW THAT THE OTHER GROUNDS OF APPEAL RAISED 59 I.T.A. NO. 3363 /MUM/201 7 DEEPAK JATIA BY THE ASSESSEE AGAINST THE MERITS OF THE LEVY OF PENALTY REQUIRES NO ADJUDICATION AT THIS STAGE AS THE SAME ARE RENDERED ACAD EMIC IN NATURE. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED . 30 . IN THE NET RESULT THE APPEAL FILED BY THE ASSESS E E STANDS ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JAN 2019 SD/ - SD/ - ( SHAMIM YAHYA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 10 . 01 .201 9 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI