Shankar Ramchandra Earthmovers Pvt. Ltd., Pune V. Assistant Commissioner of Income-tax,

ITA 341/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6937 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H B NINAWE
• Assessee Lawyers: S N DOSHI
• Keywords: Loose papers; Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , ! ' , #$ BEFORE SHRI R.K PANDA, AM AND SHRI VIKAS AWASTHY, J M / ITA NO. 341/PUN/2015 #% & '& / ASSESSMENT YEAR : 2010-11 SHANKAR RAMCHANDRA EARTHMOVERS PVT. LTD. OM LAXMI NIWAS, 80/85, PRABHAT ROAD, EARNDWANE, PUNE-411 004. PAN : AACCS3382E ....... APPELLANT % / V/S. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-10, PUNE. / RESPONDENT ASSESSEE BY : SHRI S.N DOSHI REVENUE BY : SHRI H.B. NINAWE / DATE OF HEARING : 15.03.2017 / DATE OF PRONOUNCEMENT : 17.03.2017 ( / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-4, PUNE DATED 19.01.20 15 FOR THE ASSESSMENT YEAR 2010-11 CONFIRMING THE LEVY OF PENALT Y U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT ). 2 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 2. THE FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE : THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEA R 2010-11 ON 10.09.2010 DECLARING INCOME OF RS.1,57,81,910/-. DURING COURSE OF SCRUTINY ASSESSMENT PROCEEDING, THE ASSESSING OFFICER MADE ADDITIONS ON ACCOUNT OF ; 1) CASH PAYMENT TO BOGUS SUB-CONTRACTORS RS.20,73,852/-; 2) CASH PAYMENT TO SUB-CONTRACTORS RS.11,67,125/-; 3) ADDITIONAL INCOME DECLARED DURING SURVEY RS.50,00,000/-; AND 4) DISALLOWANCE OF MESS EXPENSES RS. 7,00,000/- THE ASSESSEE AGITATED ADDITION BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEA LS) CONFIRMED THE ADDITIONS. THEREAFTER, THE ASSESSING OFFICER VIDE ORDER DATED 27.09.2013 LEVIED PENALTY OF RS. 25,46,470/- U/S 271 (1) ( C) OF THE ACT ON ACCOUNT OF CASH PAYMENTS MADE TO BOGUS SU B- CONTRACTORS/CONTRACTORS AND ADDITIONAL INCOME DECLARED DURING S URVEY. 3. AGGRIEVED BY THE ORDER LEVYING PENALTY U/S 271 (1) (C) O F THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE AND UPHELD THE LEVY OF PENALTY . NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING FIN DINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING LEVY O F PENALTY U/S 271 (1) (C) OF THE ACT. THE ASSESSEE HAS IMPUGNED THE LEVY OF PENALTY ON MERITS. THE ASSESSEE HAS FILED ADDITIONAL GROUNDS OF APPEAL ASSAILING THE LEVY OF PENALTY ON TECHNICAL GROUND I.E THE ASS ESSING OFFICER HAS NOT RECORDED CLEAR SATISFACTION WITH RESPECT TO THE CHARGE AS 3 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 TO WHETHER THE ASSESSEE/APPELLANT HAS CONCEALED THE PA RTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 4. SHRI S.N DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBM ITTED THAT THE ORDER LEVYING PENALTY IS BAD IN LAW. THE ASSESSING OFFICER WHILE RECORDING SATISFACTION FOR INITIATING PENALTY PROCEEDING, HAS O BSERVED THAT PENALTY PROCEEDINGS U/S 271 (1) (C ) OF THE ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME, WHEREAS WHILE ISS UING NOTICE U/S 274 R.W.S 271(1) (C ) OF THE ACT, THE ASSESSING OFFICER HAS FAILED TO CLEARLY SPECIFY THE CHARGE FOR LEVYING PENALTY I.E WHETHER THE PENALTY IS BEING LEVIED FOR CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE IRRELEVANT PA RTS OF THE PROFORMA NOTICE HAVE NOT BEEN STRUCK OFF BY THE ASSESS ING OFFICER. THE LD. AR FURTHER POINTED THAT IN PENALTY ORDER DATED 27.09.20 13, INITIALLY THE ASSESSING OFFICER OBSERVED THAT PENALTY U/S 271 (1) (C) OF THE ACT IS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND W HILE CONCLUDING ORDER, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AMOUNTING TO R S. 82,40,977/- AND HAS THEREBY CONCEALED THE SAID INCOME. FU RNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME ARE TWO DIFFERENT OFFENCES. THE ASSESSING OFFICER IS HIMSELF NOT CLEAR AS TO WHETHER PENALTY IS LEVIED FOR FURNISHING OF INACCURATE PARTIC ULARS OF INCOME OR CONCEALMENT OF INCOME. THE LD. AR FURTHER SUBMITTE D THAT NON STRIKING OF IRRELEVANT PARTS OF NOTICE ISSUED U/S 274 R.W.S 271 (1)( C) OF THE ACT MAKES NOTICE VAGUE AND INVALID. IN SUPPORT OF HIS SUBMISSION LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: 4 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 1) THE COMMISSIONER OF INCOME TAX-11 V/S. SHRI SAMS ON PERINCHERY, DECIDED BY HONBLE BOMBAY HIGH COURT IN ITA NO.1154 OF 2014 ON 05.01.2017; 2) KANHAIYALAL D. JAIN V/S. THE ASSISTANT COMMISSIO NER OF INCOME TAX DECIDED BY PUNE BENCH OF THE TRIBUNAL IN ITA NOS. 1 201 TO 1205/PN/2014, FOR ASSESSMENT YEARS 2003-04 TO 2007- 08 ON 30.11.2016; 3) NANDKISHOR TULSIDAS KATORE V/S. THE ASSISTANT COMMIS SIONER OF INCOME TAX DECIDED BY PUNE BENCH OF THE TRIBUNAL IN ITA NOS. 2174 TO 2180/PN/2014 FOR THE ASSESSMENT YEARS 2002- 03 TO 2008-09, ON 14.12.2016. 4.1 LD. AR SUBMITTED THAT EVEN ON MERITS, THE ASSESSEE HAS GOT A STRONG CASE. THE PENALTY HAS BEEN LEVIED IN RESPECT OF AD DITION MADE ON ACCOUNT OF CASH PAYMENTS MADE TO ALLEGED BOGUS SUB-CON TRACTORS AND ADDITIONAL INCOME DECLARED DURING SURVEY. THE LD. AR SUBMITTE D THAT THE DETAILS OF PAYMENT MADE TO THE SUB-CONTRACTORS IN C HEQUE AND CASH ARE GIVEN AT PAGE NO. 2 OF THE PAPER BOOK. THE LIST OF SUB -CONTRACTORS ALONG WITH THEIR ADDRESS, PAN NUMBERS, PAYMENTS MADE AND TDS DEDUCTED ON SUCH PAYMENTS HAVE BEEN GIVEN AT PAGE NO . 3 TO 6 OF THE PAPER BOOK. THE PAYMENTS HAVE BEEN DISALLOWED ON THE GR OUND THAT GENUINENESS OF THE SUB-CONTRACTORS COULD NOT BE VERIFIED. ALTHOUGH, THE ADDITION MADE DURING ASSESSMENT PROCEEDINGS, HAVE BEEN C ONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE ASSESSEE HAS ACCEPTED THE SAME BUT THAT WOULD NOT MEAN THAT EVERY ADDITION MADE DURING ASSESSMENT WOULD BE SUBJECT TO PENALTY. THE ASS ESSING OFFICER WHILE MAKING ADDITION HAS ERRED IN OBSERVING THAT ASSESSEE HAS FAILED TO PRODUCE PAN NUMBERS OF 33 SUB-CONTRACTORS. THE LIST AT PAGE NO. 3 TO 6 OF THE PAPER BOOK WOULD SHOW THAT THE ASSESSEE HAS GIV EN DETAILS OF SUB-CONTRACTORS INCLUDING PAN NUMBERS IN MAJORITY OF CAS ES. THE DISALLOWANCE OF RS. 20,73,852/- HAS BEEN MADE MERELY ON T HE GROUND 5 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 THAT CONFIRMATION LETTER HAVE NOT BEEN RECEIVED FROM THE SUB CONTRACTORS. 4.2 IN RESPECT OF DISALLOWANCE OF RS. 11,67,125/-, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS MADE ADDITION FOR THE REASON THAT PAYMENTS MADE TO THE SUB CONTRACTORS HAVE NOT BEEN VERIFIED. THE PAYMENTS WERE MADE TO SUB CONTRACTORS WHO REGULARLY WORKED FOR THE ASSESSEE. THE LEDGER EXTRACT OF THE SUB- CONTRACTORS W OULD SHOW THAT THE PAYMENTS HAVE BEEN MADE TO THEM IN THE NORMAL CO URSE OF BUSINESS. THE SUB CONTRACTORS HAVE RAISED BILLS AND PAYM ENTS HAVE BEEN MADE TO THEM BY CHEQUE AND IN SOME OF THE CASES , PAYMENTS WERE MADE IN CASH AFTER DEDUCTING TAX AT SOURCE. DESPITE ACCE PTING CHEQUE PAYMENTS AS GENUINE, THE ASSESSING OFFICER HAS DISALLOWED CH EQUE PAYMENT OF RS.4,06,807/-. THE ASSESSEE HAS ACCEPTED AD DITION AND HAS PAID TAX THEREON. THE LD. AR FURTHER SUBMITTED THAT MERELY BECAUSE PAYM ENTS HAVE BEEN MADE IN CASH THAT PER SE WOULD NOT MEAN THAT PAYMENTS MA DE ARE NOT GENUINE. CASH PAYMENT EXCEEDING RS. 20,000/- COULD BE DISALLOWED U/S 40(A) (3) OF THE ACT. HOWEVER, NO PENALTY COULD BE LEVIED ON SUCH DISALLOWANCE. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS PLACED R ELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE C ASE OF CIT V/S. RELIANCE PETRO PRODUCTS (P) LTD. REPORTED IN 322 ITR 158. 4.3 IN RESPECT OF PENALTY ON ADDITION OF RS. 50 LAKHS DECLA RED AS ADDITIONAL INCOME DURING SURVEY, THE LD A.R SUBMITTED THAT IN STATEMENT RECORDED AT THE TIME OF SURVEY, THE ASSESSEE OFFERED RS.50,00,000/-AS ADDITIONAL INCOME ON AD-HOC BASIS TO COVER ALL POSSIBLE ERRORS ETC. THE DECLARATION OF ADDITIONAL AMOUNT H AS NOT BEEN 6 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 MADE ON ACCOUNT OF SEIZURE OF ANY INCRIMINATING MATERIAL DUR ING SURVEY. SOME LOOSE PAPERS WERE SEIZED DURING SURVEY, HOW EVER, THEY DO NOT DIRECTLY RELATE TO ANY INCOME. THE ASSESSEE OFFERED A DDITIONAL INCOME OF RS. 50 LAKHS BASICALLY TO BUY PEACE OF MIND. THE LD. AR CONTENDED THAT ANY ADDITION MADE ON AD-HOC BASIS DOES NOT ATTRACT PENALTY. IN SUPPORT OF HIS SUBMISSION, LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMIS SIONER OF INCOME TAX V/S. BHIMJI BHANJEE & CO REPORTED IN 146 IT R 145 AND THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CA SE OF HARIGOPAL SINGH V/S. COMMISSIONER OF INCOME TAX REPORTED IN 258 ITR 85. THE LD. AR FURNISHED COPIES OF SEVERAL OTHER DECISIONS TO BUTTRESSES HIS SUBMISSIONS. 5. ON THE OTHER HAND, SHRI H.B NINAWE REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF INCOME TAX (APPEALS) IN CONFIRMING LEVY OF PENALTY. THE LD. DR SUBMITTED THAT A PERUSAL OF ASSESSMENT ORDER WOULD SHOW THAT THE ASSESSING OFFICER WHILE RECORDING SATISFACTION HAS CLEARLY MEN TIONED THAT PENALTY PROCEEDINGS ARE INITIATING FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME. EVEN WHILE LEVYING PENALTY, THE ASSESSIN G OFFICER IN PENALTY ORDERS DATED 27.09.2013 HAS MADE CATEGORIC OB SERVATION THAT PENALTY HAS BEEN LEVIED FOR FURNISHING INACCURATE PART ICULARS OF INCOME AND THEREBY RESULTING IN CONCEALING OF INCOME. THE LD. DR FURTHER SUBMITTED THAT OBSERVATIONS OF THE ASSESSING OFFICE R WHILE RECORDING SATISFACTION AND WHILE LEVYING PENALTY ARE CONSISTE NT. THE PENALTY HAS BEEN LEVIED U/S 271 (1) (C) OF THE ACT FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. 7 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 5.1 THE LD. DR SUBMITTED THAT ON MERITS, THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE ADDITIONS MADE DURING ASSESSMENT PROCEEDINGS WARRANT NO LEVY OF PENALTY. THE ADDITION MADE DURING SCRUT INY ASSESSMENT PROCEEDING WERE CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE CASH PAYMENTS MADE BY THE ASSESSEE TO SUB- CONTRACTORS WERE FOUND TO BE BOGUS. SEVERAL BOGUS SUB- CONTRACTORS WERE INTRODUCED MERELY TO SUPPRESS INCOME. THE ASSESSE E COULD NOT PROVE GENUINENESS OF THE PAYMENTS MADE TO THE SUB CONTRACTORS. 5.2 AS REGARDS ADDITIONAL INCOME DECLARED DURING THE COURS E OF SURVEY, THE LD. DR SUBMITTED THAT LOOSE PAPERS WERE FOUND AND SEIZED DURING SURVEY ACTION. SEIZED PAPERS CLEARLY INDICATE THAT ASSESSEE HAS SUPPRESSED INCOME. THE ASSESSEE WOULD NOT HAVE DECLARE D ADDITIONAL INCOME, HAD THERE BEEN NO SURVEY ACTION. THE ADDITIONAL IN COME WAS UNEARTHED ONLY DURING SURVEY. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVE S OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW. WE HAVE ALSO CONSIDERED DOCUMENTS AND DECISIONS ON WHICH LD. AR OF THE ASSESSEE HAS PLACED RELIANCE IN SUPPORT OF HIS SUBMISSIONS. PENALTY PROCEEDINGS HAVE BEEN INITIATED AGAINST ASSESSEE IN RESPE CT OF CASH PAYMENTS MADE TO SUB-CONTRACTORS AND ADDITIONAL INCOME DECLARED BY THE ASSESSEE DURING COURSE OF SURVEY ACTION. IT IS AN UN DISPUTED FACT THAT THE ASSESSEE HAS ACCEPTED ADDITION MADE DURING AS SESSMENT PROCEEDINGS AND HAS PAID TAX THEREON. 7. THE ASSESSEE HAS FURNISHED THE LIST OF SUB CONTRACTO RS TO WHOM PAYMENTS HAVE BEEN MADE. A PERUSAL OF THE LIST SHOW THA T ASSESSEE HAS 8 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 GIVEN ADDRESSES, PAN NUMBERS, DETAILS OF AMOUNT PAID AND T DS DEDUCTED ON THE SAID PAYMENTS. IN CASE OF SOME OF THE SUB-CONTRACTORS, PAN DETAILS ARE MISSING. THE ASSESSING OFFICER HAS DISBELIEVED THE PAYMENTS MADE TO THOSE SUB CONTRACTORS, FOR WHOM, THE ASSESSEE HAS FAILED TO PROVIDE PAN DETAILS. OUT OF TOTAL PAYMENT OF RS. 74,5 22,272/- TO SUB CONTRACTORS, THE ASSESSING OFFICER HAS ADDED BACK PAYMENTS OF RS. 32,40,977/-. THE DISALLOWED PAYMENT CONSTITUTES MERELY 4.5 % OF THE TOTAL PAYMENTS MADE. THE ASSESSING OFFICER HAS ACCEPT ED REST OF THE PAYMENTS. THE PAYMENTS HAVE BEEN DISALLOWED AS THE ASS ESSEE COULD NOT FURNISH CONFIRMATION LETTERS FROM SUB-CONTRACTORS TO W HOM PAYMENTS WERE MADE IN CASH. WE FIND MERIT IN THE SUBMISSION S OF LD. AR THAT IN RESPECT OF CASH PAYMENTS MADE IN EXCESS OF RS. 20,000/-, DISALLOWANCE CAN BE MADE U/S 40 A (3) OF THE ACT. HOWEVE R, NO PENALTY U/S 271(1) (C) OF THE ACT IS ATTRACTED. 8. WITH REGARD TO LEVY OF PENALTY ON ADDITIONAL INCOME OF RS.50,00,000/- DISCLOSED DURING SURVEY ACTION IS CONCERNED , THE ASSESSEE HAS ADMITTED THE SAID AD-HOC AMOUNT TO BUY P EACE OF MIND. IT IS A WELL SETTLED LAW THAT ANY ADDITION MADE DURING ASSESS MENT PROCEEDINGS ON AD-HOC BASIS DOES NOT ATTRACT PENALTY. 9. THUS, IN VIEW OF OUR ABOVE FINDINGS, WE HOLD THAT LEVY OF PENALTY U/S 271 (1) (C) OF THE ACT IS UNJUSTIFIED. 10. THE LD. AR HAS POINTED THAT WHILE RECORDING SATISFACTION AND WHILE PASSING ORDER LEVYING PENALTY, THE FINDINGS OF ASSESSING OFFICER ARE INCONSISTENT WITH RESPECT TO THE CHARGE FOR LEVY OF PENALTY. EVEN NOTICE ISSUED U/S 274 R.W.S 271 (1) (C) OF THE ACT IS VAGUE AS IRRELEVANT 9 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 PARTS OF THE PROFORMA NOTICE HAVE NOT BEEN STRUCK OFF B Y THE ASSESSING OFFICER. 11. THE HONBLE BOMBAY HIGH COURT IN A RECENT DECISION RE NDERED IN THE CASE OF COMMISSIONER OF INCOME TAX V/S. SHRI SAMSON P ERINCHERY (SUPRA) HAS REITERATED THE LAW LAID DOWN BY THE HONBLE A PEX COURT IN THE CASE OF ASHOK PAI V/S. CIT REPORTED IN 292 ITR 11 A ND HAS ALSO RELIED ON THE DECISION RENDERED IN THE CASE OF CIT V/S. M ANJUNATH COTTON & GINNING FACTORY, 359 ITR 565. THE HONBLE JURIS DICTIONAL HIGH COURT HELD : 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [ RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY( SUPRA)- WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271 (1) (C ) OF TH E ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271 (1) (C ) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON W HICH THE PENALTY HAS BEEN INITIATED/ NOTICE ISSUED. IT MUST, THEREFO RE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANN OT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7. THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT-ASSESSEE BY THE DECISION OF THE KARNATAK A HIGH COURT IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY ( SUPRA) . NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRAN T OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY ( SUPRA). 12. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CI T V/S. MANJUNATH COTTON & GINNING FACTORY (SUPRA) HAS HELD THAT WHEN ASSESSING OFFICER PROPOSES TO INVOKE FIRST LIMB BEING CONCEA LMENT THEN NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD P ROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERE NCE AS TO NON APPLICATION OF MIND. NOTICE U/S 274 R.W.S 271 (1) (C) OF T HE ACT 10 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 SPECIFICALLY STATE TO THE GROUND MENTIONED IN SECTION 271 (1) (C) OF THE ACT I.E WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SENDING PRINTED FORM WHER E ALL GROUNDS ARE MENTIONED FOR LEVYING PENALTY U/S 271 (1) (C) O F THE ACT WOULD NOT SATISFY THE REQUIREMENT OF LAW. 13. IN THE PRESENT CASE, THE ASSESSING OFFICER WHILE RECORD ING SATISFACTION FOR INITIATING PROCEEDINGS U/S 271 (1) (C) OF THE ACT HAS OBSERVED THAT PENALTY IS BEING INITIATED FOR FURNISHING INACCU RATE PARTICULARS OF INCOME AND WHILE LEVYING PENALTY, THE ASSESSIN G OFFICER HAS OBSERVED THAT THE ASSESSEE HAS FURNISHED INACCURAT E PARTICULARS OF INCOME AND HAS THEREBY CONCEALED THE INCOME. EVEN WHILE IS SUING NOTICE U/S 274 R.W.S 271 (1) (C) OF THE ACT, THE ASSESSEE H AS NOT STRUCK OFF IRRELEVANT CLAUSE/LIMB OF THE NOTICE. THE SPECIFIC CHANGE FOR LEVY OF PENALTY IS NOT DECIPHERABLE FROM THE NOTICE. WE ARE OF CONS IDERED VIEW THAT INCOHERENT OBSERVATIONS MADE BY THE ASSESSING OFFICE R WHILE RECORDING SATISFACTION AND AT THE TIME OF LEVY OF PENALTY, C OUPLED WITH DEFECTIVE NOTICE WOULD VITIATE PENALTY PROCEEDINGS. THUS, IN V IEW OF OUR FINDINGS AND THE JUDGMENTS CITED ABOVE, WE HOLD THAT THE PENALTY PROCEEDINGS ARE BAD IN LAW. 14. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND A PPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 17 TH DAY OF MARCH, 2017. SD/- SD/- ( /R.K PANDA) ( ! ' /VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 17 TH MARCH, 2017. 11 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11 SB ()*#+,!-!'+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-4, PUNE. 4. THE PR. CCIT, PUNE. #$ %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 6. './01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, /ASSISTANT REGISTRAR * () , / ITAT, PUNE 12 ITA NO. 341/PUN/2015 ASSESSMENT YEAR 2010-11