AMIT CAPITAL & SECURITIES P.LTD, MUMBAI V. ITO 2(1)(1), MUMBAI

ITA 3443/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5011 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISHCHANDRA RAJOREDR
• Assessee Lawyers: GOVIND JHAVERI
• Keywords: Business income; Depreciation; Business expenditure; Opportunity of being heard; Principle of natural justice; Question of law; Initiation of penalty proceedings; Wrong claim; Deemed dividend; Commercial expediency; Revenue expenditure
• Section: 143(3); 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3443/MUM/2017 ASSESSMENT YEAR 2006-07 AMIT CAPITAL & SECURITIES PRIVATE LIMITED, 47A, 3 RD FLOOR, PLOT NO.308, HANUMAN BUILDING, PERIN NARIMAN STREET, FORT, MUMBAI-400001 / VS. INCOME TAX OFFICER RANGE-2(1)(1), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( ! /ASSESSEE) ( ' / REVENUE) P.A. NO. AAACA4219Q ! / ASSESSEE BY SHRI GOVIND JHAVERI ' / REVENUE BY SHRI SATISHCHANDRA RAJORE-DR # '$ % !& / DATE OF HEA RING : 04/10/2018 % !& / DATE OF PRONOUNCEMENT 09/10/2018 ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 08/02/2017 OF THE FIRST APPELLATE AUTHORITY, MUMBAI, CONFIRMING THE PENALTY OF RS.4,30,000/-, IM POSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AND FURTHER HOLDING THAT THE ASSESSEE WHILE CLAIMING DEDUCTION OF ADMINISTRATIVE EXPENSES TO THE EXTENT OF RS.13,99,521/- DID NOT FURNISH ANY EVIDEN CE. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI GOVIND JHAVERI, EXPLAINED THAT THE TRIBUNAL PA RTLY ALLOWED THE QUANTUM ADDITION (ITA NO.1405/MUM/2017) , ORDER DATED 14/09/2017. IT WAS ALSO PLEADED THAT IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S 271(1)(C), TH E RELEVANT LIMB IN THE NOTICE HAS NOT BE STRUCK DOWN BY THE ASSESSING OFFICER. ON THE OTHER HAND, SHRI SATISHCH ANDRA RAJORE, LD. DR, DEFENDED THE IMPOSITION OF PENALTY. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE AD VERTING ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 3 FURTHER, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 14/0 9/2017. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 16- 12-2016 PASSED BY LD CIT(A)-3, MUMB AI AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMIN G THE DISALLOWANCE OF EXPENSES OF RS.13.87 LAKHS AS EXPEN SES NOT RELATING TO LONG TERM CAPITAL GAIN EARNED BY THE AS SESSEE. THE ASSESSEE ALSO SEEKS DIRECTION TO ASSESS THE LONG TE RM CAPITAL GAINS AT CONCESSIONAL RATE OF TAX. 2. THE ASSESSEE IS A SHARE TRADING AND INVESTMENT C OMPANY. IT FILED ITS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.10,25,000/-. THE ASSESSING OFFICER DETERMINED TH E TOTAL INCOME AT RS.1,03,53,890/- BY TREATING CAPITAL GAIN S AS BUSINESS INCOME; DISALLOWING ADMINISTRATIVE EXPENSE S; ADDING DEEMED DIVIDEND AND ADDING TRANSACTIONS NOT DISCLOSED IN THE BOOKS. IT APPEARS THAT THE ASSESSE E HAD CLAIMED ALL ADMINISTRATIVE EXPENSES AS DEDUCTION AG AINST LONG TERM CAPITAL GAIN AND THE SAME WAS REJECTED BY THE AO. IN THE APPEAL FILED BEFORE LD CIT(A), THE FIRST APP ELLATE AUTHORITY DELETED ALL THE ADDITIONS/ADJUSTMENTS MAD E BY THE AO. THE REVENUE PREFERRED APPEAL CHALLENGING THE ORDER OF LD CIT(A) BEFORE THE TRIBUNAL. THE TRIBUNA L CONFIRMED THE ORDER OF LD CIT(A) IN RESPECT OF ALL ITEMS EXCEPT THAT RELATING TO ADMINISTRATIVE EXPENSES. TH E TRIBUNAL RESTORED THE ISSUE RELATING TO ADMINISTRATIVE EXPEN SES WITH THE FOLLOWING OBSERVATIONS:- ADMITTEDLY, THE AO, IN THE SCRUTINY ASSESSMENT ORD ER FOR AY 2005-06 HAS ACCEPTED THE EXPENDITURE OF RS.9,466/- AND ALLOWED THE SAME. HOWEVER, DURING THE YEAR THE TOTA L EXPENDITURE HAS GONE UPTO RS.13,99,521/- WHICH INCL UDES SALARY AND ALLOWANCES OF RS.13,37,196/-. FURTHER, T HE ASSESSEE DURING THE IMPUGNED A.Y HAS PURCHASED THE BOMBAY STOCK EXCHANGE CARD AT A COST OF RS.65,10,000/-. UN DER THESE CIRCUMSTANCES, THE ENTIRE EXPENDITURE, IN OUR OPINION, CANNOT BE ALLOWED AS EXPENDITURE FOR EARNING LONG T ERM CAPITAL GAIN. HOWEVER, TO MAINTAIN CORPORATE STATUS OF THE ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 4 ASSESSEE, IT MAY REQUIRE TO SPEND SOME EXPENDITURE. WE, THEREFORE, FIND MERIT IN THE SUBMISSION OF LD COUNS EL FOR THE ASSESSEE THAT THE MATTER MAY BE SET ASIDE TO THE FI LE OF THE A.O WITH A DIRECTION TO ALLOW REASONABLE EXPENDITURE WH ICH MAY BE ALLOWED AS REVENUE EXPENDITURE. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF THE A.O WITH A DIRECTION TO DETERMINE SUCH REASONABLE EXPENDITURE AND ALLOW THE SAME AS R EVENUE IN NATURE. THE GROUND RAISED BY THE REVENUE IS ACCO RDINGLY PARTLY ALLOWED FOR STATISTICAL PURPOSES. THUS, THE ASSESSING OFFICER WAS DIRECTED TO DETERMI NE REASONABLE EXPENDITURE THAT IS REQUIRED TO BE INCUR RED FOR MAINTAINING CORPORATE STRUCTURE OF THE ASSESSEE AND ALLOW THE SAME AS REVENUE EXPENDITURE. 3. IN THE SET ASIDE PROCEEDINGS, THE ASSESSEE SUBMI TTED BEFORE THE AO THAT IT WAS FORMED BY EX-PRESIDENT OF BSE, W HO WAS A CHARTERED ACCOUNTANT. IT WAS SUBMITTED THAT SALARY WAS PAID TO THE MANAGING DIRECTOR AND A VERY SENIOR GOVERNME NT OFFICERS. IT WAS FURTHER SUBMITTED THAT EXPENSES WE RE INCURRED ON ELECTRICITY, TELEPHONE, OFFICE AND DEPRECIATION. ACCORDINGLY IT WAS SUBMITTED THAT ALL THESE EXPENSE S SHOULD BE ALLOWED AS BUSINESS EXPENDITURE. THE AO, HOWEVER , ALLOWED EXPENSES RELATING TO FILING FEE, PROFESSION AL TAX, AUDIT FEE AND BANK CHARGES. ACCORDINGLY HE DISALLOWED FOL LOWING EXPENSES:- SALARY AND ALLOWANCES RS. 13,37,196/- STOCK EXCHANGE EXPENSES RS. 22,190/- DEMAT CHARGES RS. 804/- LEGAL EXPENSES RS. 4,556/- SECURITY TRANSACTION TAX RS. 6,221/- OFFICE EXPENSES RS. 3,121/- INTEREST PAID RS. 13,758/- -------------------- RS. 13,87,846/- =========== THE LD CIT(A) CONFIRMED THE ORDER OF THE AO BY OBSE RVING THAT THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS OF EXPENSES. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL. ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 5 4. THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO IMPLEMENT THE DIRECTIONS OF ITAT. HE SUBMITTED T HAT THE SALARY WAS PAID TO DIRECTORS AND OTHER STAFFS. HE S UBMITTED THAT THE COMPANIES ACT MANDATES THAT A COMPANY SHAL L HAVE MINIMUM TWO DIRECTORS AND ACCORDINGLY CONTENDED THA T THE SALARY PAID TO DIRECTORS AMOUNTING TO RS.7,32,505/- SHOULD BE CONSIDERED AS EXPENDITURE INCURRED IN MAINTAINING C ORPORATE STATUS. HE SUBMITTED THAT THE ASSESSEE HAS ACQUIRED STOCK EXCHANGE MEMBERSHIP CARD DURING THE YEAR UNDER CONSIDERATION, WHICH SHOWS THAT IT WAS IN THE PROCE SS OF FULFILLING ITS OBJECTS BY STARTING SHARE TRADING AC TIVITIES. HENCE THE ASSESSEE WAS REQUIRED TO EMPLOY OTHER STA FFS AND HENCE THE SALARY PAID TO THEM SHOULD ALSO BE CONSID ERED AS EXPENSES INCURRED FOR MAINTAINING CORPORATE STRUCTU RE. HE FURTHER SUBMITTED THAT OTHER EXPENSES LIKE OFFICE E XPENSES, STOCK EXCHANGE EXPENSES ETC. ARE EXPENSES RELATED T O THE CORPORATE ACTIVITIES ONLY. 5. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE A SSESSEE HAS EARNED ONLY CAPITAL GAIN DURING THE YEAR UNDER CONSIDERATION AND HENCE THE AO WAS JUSTIFIED IN DIS ALLOWING OTHER EXPENSES 6. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE R ECORD. I NOTICE THAT THE ASSESSEE HAS GENERATED ONLY CAPITAL GAINS ON SALE OF SHARES DURING THE YEAR UNDER CONSIDERATION. IT HAS ACQUIRED STOCK EXCHANGE CARD DURING THE YEAR UNDER CONSIDERATION, I.E., THE BUSINESS ACTIVITIES OF THE ASSESSEE WAS NOT COMMENCED DURING THE YEAR UNDER CONSIDERATION. SINCE THE PRESENT ASSESSEE IS A COMPANY, WHICH IS REQUIRE D TO INCUR CERTAIN EXPENSES TO MAINTAIN ITS CORPORATE STATUS, THE TRIBUNAL HELD THAT SUCH TYPE OF EXPENSES SHOULD BE TREATED AS REVENUE EXPENDITURE AND SHOULD BE ALLOWED. 7. THE LD A.R ARGUED THAT THE EXPENSES HAVE BEEN IN CURRED BY THE ASSESSEE ON ACCOUNT OF COMMERCIAL EXPEDIENCY AND ALSO TO MAINTAIN CORPORATE STRUCTURE OF THE ASSESSE E. I NOTICE THAT THE TRIBUNAL HAS DIRECTED THE AO TO DETERMINE THE EXPENSES RELATING TO MAINTAINING CORPORATE STRUCTUR E AND HENCE, I AM OF THE VIEW, THE QUESTION OF COMMERCIAL EXPEDIENCY CANNOT BE EXAMINED AT THIS STAGE. ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 6 8. THE SALARY EXPENSES OF RS.13.37 LAKHS CONSISTS O F SALARY PAID TO DIRECTORS AMOUNTING TO RS.7.32 LAKHS AND SA LARY PAID TO STAFF RS.6.04 LAKHS. I NOTICE THAT THE ASSESSEE HAS CARRIED ON MAINLY INVESTMENT ACTIVITIES DURING THE YEAR UND ER CONSIDERATION. IN THE SUBMISSIONS MADE BEFORE THE A O, THE ASSESSEE HAS SUBMITTED THAT ITS MANAGING DIRECTOR I S A CHARTERED ACCOUNTANT AND FURTHER IT HAS EMPLOYED RE TIRED GOVERNMENT OFFICERS. THOUGH THE LD A.R FURNISHED BR EAKUP DETAILS OF SALARY EXPENDITURE, YET HE HAS FURNISHED THE NAMES OF THE PERSONS TO WHOM IT WAS PAID. THE LD A.R SUBM ITTED THAT THE MINIMUM TWO DIRECTORS ARE REQUIRED TO BE A PPOINTED AS PER THE PROVISIONS OF COMPANIES ACT. THE DIRECTO RS ADMINISTER A COMPANY THROUGH BOARD MEETINGS AND IT IS ONLY THE WORKING DIRECTORS WHO ARE GIVEN SALARY. HENCE, IN MY VIEW, THE PURPOSE OF MANDATING APPOINTMENT OF MINIM UM TWO DIRECTORS IS DIFFERENT AND THE SAME CANNOT SUPPORT THE CASE OF GIVING SALARY TO DIRECTORS. 9. I HAVE EARLIER NOTICED THAT THE ASSESSEE HAS GEN ERATED INCOME ONLY BY WAY OF CAPITAL GAINS OUT OF ITS INVE STMENT ACTIVITIES. IN THAT CASE, THE NATURAL COROLLARY IS THAT THE SERVICES OF THE DIRECTORS AND EMPLOYEES HAVE BEEN M AINLY USED IN CONNECTION WITH THE INVESTMENT ACTIVITIES O NLY. AT THE SAME, IT IS ALSO TRUE THAT THE DIRECTORS AND EMPLOY EES WOULD HAVE CONTRIBUTED IN CONNECTION WITH THE CORPORATE A CTIVITIES RELATED TO MAINTAINING CORPORATE STRUCTURE. IN THIS VIEW OF THE MATTER, I AM OF THE VIEW THAT 25% OF SALARY EXPENSE S INCURRED ON DIRECTORS AS WELL AS OTHER STAFFS CAN BE CONSIDE RED AS HAVING BEEN INCURRED IN CONNECTION WITH MAINTAINING CORPORATE STRUCTURE. ACCORDINGLY I MODIFY THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO TRE AT 25% OF THE SALARY EXPENSES AS REVENUE EXPENSES INCURRED IN MAINTAINING CORPORATE STRUCTURE. 10. THE ASSESSEE HAS NOT GIVEN DETAILS OF OFFICE EX PENSES OF RS.3,121/-. HENCE, IN MY VIEW, 50% THEREOF MAY BE CONSIDERED AS INCURRED IN MAINTAINING CORPORATE STR UCTURE AND ALLOWED. I ORDER ACCORDINGLY. 11. INTEREST EXPENDITURE, DEMAT CHARGES AND SECURIT Y TRANSACTION CHARGES CANNOT BE CONSIDERED AS EXPENSE S RELATING TO MAINTAINING CORPORATE STRUCTURE. ACCORD INGLY I CONFIRM THE DISALLOWANCE OF THE SAME. ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 7 12. THE ASSESSEE HAS NOT EXPLAINED THE NATURE OF ST OCK EXCHANGE EXPENSES AND LEGAL EXPENSES. HENCE I HAVE NO OTHER OPTION BUT TO CONFIRM THEIR DISALLOWANCE. 13. IN VIEW OF THE FOREGOING DISCUSSIONS, I DIRECT THE AO TO COMPUTE THE EXPENSES ALLOWABLE AS PER THE DISCUSSIO NS MADE SUPRA. 14. THE NEXT GROUND URGED BY THE ASSESSEE RELATES T O THE TAX COMPUTED BY THE ASSESSEE. THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER HAS COMPUTED TAX ON THE CAPITAL G AIN ARISING IN OFF-MARKET TRANSACTIONS AT REGULAR RATE, WHEREAS THEY HAVE TO BE TAXED AT CONCESSIONAL RATE. I SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO EXAMINE THE CLAIM OF THE ASSESSEE . 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, SO FAR AS FACTS ARE CON CERNED, HAS BEEN DELIBERATED BY THE TRIBUNAL AND PART RELIE D WAS GRANTED TO THE ASSESSEE. THE ADDITION WAS MADE TOWA RDS VARIOUS EXPENSES ON THE BASIS OF WHICH PENALTY WERE IMPOSED. THE TRIBUNAL WHILE DELIBERATING UPON THE QUANTUM ADDITION, FOUND THAT THE ASSESSEE GENERATED ONLY CAPITAL GAINS ON SALE OF SHARES AND ALSO ACQUIRED S TOCK EXCHANGE CARD. THE ASSESSEE WAS ALSO FOUND TO INCUR ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 8 CERTAIN EXPENSES TO MAINTAIN ITS CORPORATE STATUS A ND DUE TO COMMERCIAL EXPEDIENCY MAINTAINED THE CORPORATE STRUCTURE AND THUS THE TRIBUNAL DIRECTED THE ASSESS ING OFFICER TO DETERMINE THE EXPENSES RELATING TO MAINT AIN TO CORPORATE STRUCTURE. THE ASSESSEE ALSO INCURRED SAL ARY EXPENSES PAID TO DIRECTORS AND STAFFS. IN PARA-8 O F THE QUANTUM ORDER, THERE IS A FINDING THAT THE ASSESSEE FURNISHED BREAK UP/DETAILS OF SALARY EXPENDITURE AL ONG WITH THE NAMES TO WHOM IT WAS PAID. IN PARA-9 OF TH E ORDER OF THE TRIBUNAL, IT WAS OBSERVED AS UNDER:- 9. I HAVE EARLIER NOTICED THAT THE ASSESSEE H AS GENERATED INCOME ONLY BY WAY OF CAPITAL GAINS OUT OF ITS INVE STMENT ACTIVITIES. IN THAT CASE, THE NATURAL COROLLARY IS THAT THE SERVICES OF THE DIRECTORS AND EMPLOYEES HAVE BEEN M AINLY USED IN CONNECTION WITH THE INVESTMENT ACTIVITIES O NLY. AT THE SAME, IT IS ALSO TRUE THAT THE DIRECTORS AND EMPLOY EES WOULD HAVE CONTRIBUTED IN CONNECTION WITH THE CORPORATE A CTIVITIES RELATED TO MAINTAINING CORPORATE STRUCTURE. IN THIS VIEW OF THE MATTER, I AM OF THE VIEW THAT 25% OF SALARY EXPENSE S INCURRED ON DIRECTORS AS WELL AS OTHER STAFFS CAN BE CONSIDE RED AS HAVING BEEN INCURRED IN CONNECTION WITH MAINTAINING CORPORATE STRUCTURE. ACCORDINGLY I MODIFY THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO TRE AT 25% OF THE SALARY EXPENSES AS REVENUE EXPENSES INCURRED IN MAINTAINING CORPORATE STRUCTURE. 2.3. SO FAR AS, CLAIM IS CONCERNED, THE DECISION F ROM HON'BLE APEX COURT IN RELIANCE PETRO PRODUCTS, COME S TO THE RESCUE OF THE ASSESSEE, WHEREIN, IT WAS HELD TH AT EVEN IF ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 9 A WRONG CLAIM IS MADE THEN NO PENALTY WILL BE LEVIA BLE UNDER SECTION 271(1)(C) OF THE ACT BECAUSE THE ASSE SSEE FURNISHED THE PARTICULARS FOR SUCH CLAIM. THE DECIS ION OF THE TRIBUNAL IN THE CASE OF M/S TATA COMMUNICATION TRANSFORMATION SERVICES LTD. VS DCIT (ITA NO.3108/MUM/2016), ORDER DATED 21/02/2018 CLEARLY COMES TO THE RESCUE OF THE ASSESSEE. THE RELEVANT P ORTION OF THE SAME IS REPRODUCED HEREUNDER:- 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 HONBLE COMMISSIONER OF INCOME TAX (APP EALS)-14, MUMBAI, [HEREINAFTER REFERRED TO AS THE HONBLE CIT(A)], THE APPELLANT SUBMITS THE FOLLOWING GROUNDS OF APPEAL FOR YOUR SYMPATHETIC CO NSIDERATION WHICH ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANO THER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE HONBLE CIT (A) HAS ERRED IN EX-PARTE BY THE LEARNED AO I.E. WITHOUT GIVING ANY OPPORTUNITY OF PRESENTING I TS CASE AND OF BEING HEARD TO THE APPELLANT, WHICH IS IN VIOLAT ION 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 RECTIF ICATION 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 ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 10 ITS RETURN OF INCOME AND THE DIFFERENTIAL VALUE BEI NG CAUSED DUE TO DIFFERENT METHOD ADOPTED FOR ALLOCATION / ABSORPTIO N OF FIXED OVERHEADS IN CASE OF A SALES ORDER EXECUTED BY ITS DOMESTIC TARIFF 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 ANYTIME BEFO RE OR AT THE TIME OF THE APPEAL HEARING.' 2. THE ASSESSEE HAS FILED A PETITION FOR ADMISSION OF ADDITIONAL GROUNDS ON 11.12.2017. THE ADDITIONAL GROUNDS RAISE D BY THE ASSESSEE 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 OFFIC ER U/S. 271(I)(C) OF THE INCOME-TAX ACT, 1961 ON THE APPELL ANT. 2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT IT HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INAC CURATE PARTICULARS OF INCOME AND HENCE NO PENALTY WHATSOEV ER CAN BE LEVIED ON IT U/S.271(1)(C) OF THE INCOME-TAX ACT, 1 961 AND THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 1 : 3 THE APPELLANT SUBMITS THAT THE IMPUGNED ORDER LEVYING PENALTY U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 B E 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 O F THE FOREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARIN G OF THE APPEAL.' 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE R ETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS.7,55,19,904/ -. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 04.03.14 DETE RMINING THE TOTAL INCOME AT RS.8,21,77,620/- INTER-CILIA MAKING ADDITIONS TOWARDS DISALLOWANCE OF CORPORATE REVENUE ON WHICH EXEMPTIO N UNDER SECTION 10A/10AA WAS CLAIMED AMOUNTING TO RS.66,57,7211-. S UBSEQUENTLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) HAS BEE N INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACC ORDINGLY, NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) WAS ISSUED ON 12 .03.14. THE ASSESSEE NEITHER APPEARED BEFORE THE AO NOR FILED A NY 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 HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS & OTHERS (2 008) 306 ITR 277 ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 11 LEVIED PENALTY OF RS.22,62,959/- UNDER SECTION 271( 1)(C) OF THE ACT. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PREFER RED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE A SSESSEE HAS FILED AN ELABORATE WRITTEN SUBMISSIONS. THE ASSESSEE FURT HER CONTENDED THAT THE AO WAS ERRED IN LEVYING PENALTY FOR DISALL OWANCE OF CORPORATE REVENUE FOR COMPUTATION OF DEDUCTION CLAIMED UNDER SECTION 10A/10AA ON THE GROUND THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF INCOME WHICH ATTRACTS PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THOU GH THE ASSESSEE HAS FILED REVISED COMPUTATION WORKING OUT CORRECT DISAL LOWANCE OF CORPORATE REVENUE FOR COMPUTING DEDUCTION UNDER SEC TION 10A/10AA THIS CANNOT BE CONSIDERED AS FURNISHING OF INACCURA TE PARTICULARS OF INCOME. THE ASSESSEE HAS TAKEN UP A LEGAL PLEA IN A S MUCH AS THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 27 1(1)(C) IS INVALID AS THE AO HAS NOT STRIKE OFF INAPPROPRIATE PORTION WHICH IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE, THE REFORE, IT IS A CASE OF NON APPLICATION OF MIND BY THE AO AND HENCE, PENALT Y PROCEEDINGS ARE BAD IN LAW AND LIABLE TO BE QUASHED. THE LD. CI T(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 ISS UE OF DOUBLE ADDITION AGAINST WHICH RECTIFICATION APPLICATION IS ALREADY FILED AS CONTENDED, THEREFORE, IN MY OPINION THE CASE FALLS UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, 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. I N SO FAR AS ISSUE OF NOTICE, THE LD. CIT(A) OBSERVED THAT IT IS NOTED FROM THE ASSESSMENT ORDER THAT THE AO HAS INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT. THEREFOR E, THE ARGUMENT OF THE ASSESSEE REGARDING THE NOTICE NOT SPECIFYING 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 DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRI SAMSO N PERINCHERY VS. ACIT, (2017) ACIT 392 ITR 4 AND ALSO THE DECISION O F MUMBAI ITAT IN THE CASE 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 LIGHT OF VARIOUS CASE LAW S INCLUDING THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KA RN.) WHEREIN IT WAS CATEGORICALLY HELD THAT SATISFACTION OF THE EXI STENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QU A NON INITIATION OF PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONF INED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS SHOULD BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO HAVE MADE TH OSE 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 ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 12 PRINTED FORM OF NOTICE WITHOUT STRIKING OFF IRRELEV ANT PORTION, THEREFORE, IT IS A CLEAR CASE OF NON APPLICATION OF MIND FROM THE AO WHETHER PENALTY HAS BEEN INITIATED FOR FURNISHING OF INACCU RATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. THE LD. A.R. FURTHER REFERRED TO THE PENALTY ORDER PASSED BY THE AO AND SUBMITTED THAT THOUGH THE AO HAS STATED THAT PENALTY PROCEEDINGS A RE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, IN HIS ORDER AT PARAGRAPH NO.1 IN THE CONCLUDING PARAGRAPHS HE HAS NOT SPECIFICALLY MENTIONED WHETHER PENALTY HAS BEEN LEVIED FOR CONCE ALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THEREFORE, THE PENALTY ORDER PASSED BY THE AO CONSE QUENT TO INVALID OR VAGUE NOTICE CANNOT SURVIVE AND HENCE THE 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 T HE DECISION OF HON'BLE BOMBAY HIGH COURT, NAGPUR BENCH IN THE CASE OF MIS. MAHARAJ GARAGE & COMPANY VS. CIT IN INCOME TAX REFE RENCE NO.2 1 OF 2008 DATED 22.08.17 SUBMITTED THAT THE REQUIREME NT OF SECTION 274 OF THE INCOME TAX ACT FOR GRANTING REASONABLE OPPOR TUNITY OF BEING HEARD IN THE MATTER CANNOT BE STRETCHED TO THE EXTE NT OF FRAMING A SPECIFIC CHARGE OR ASKING THE ASSESSEE AN EXPLANATI ON IN RESPECT OF THE QUANTUM OF PENALTY PROPOSED TO BE IMPOSED, AS HAS B EEN URGED. THE HO&BLE BOMBAY HIGH COURT HAS CONSIDERED THE ISSUE O F NOTICE AND HELD THAT THERE IS NO REQUIREMENT OF SPECIFIC CHARG E IN THE NOTICE AND IF THE ASSESSEE IS AWARE OF THE QUANTUM ADDITIONS IN T HE ASSESSMENTS PROCEEDINGS, THEN IT CAN BE SUFFICIENT, EVEN IF THE AO HAS NOT SPECIFICALLY MENTIONED THE CHARGE IN THE NOTICE, ST ILL PENALTY CAN BE LEVIED UNDER SECTION 271(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 PARTIES. THE ASSESSEE HAS CHALLENGED PENALTY ORDER PASSED BY THE AO UNDER SECTION 271(1)(C) ON THE GROUND THAT THE AO HAS ISS UED VAGUE NOTICE WITHOUT STRIKING OFF INAPPROPRIATE PORTION IN THE N OTICE WHETHER THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE REFORE, 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 D EALT BY THIS TRIBUNAL IN VARIOUS CASES INCLUDING IN THE CASE OF M/S. CENZAR INDUSTRIES LTD. VS. ITO IN ITA NO. 1970/M/2015 DATE D 29.12.17 WHEREIN AFTER CONSIDERING THE RELEVANT FACTS AND AL SO RELIED UPON VARIOUS JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND ALSO THE DECISION OF HON'BLE BOMBAY HIG H COURT IN THE CASE OF SHRI SAMSON PERINCHERY VS. ACIT (SUPRA), HA S HELD THAT PENALTY PROCEEDINGS INITIATED UNDER SECTION 271(1)( C) IS VOID AB INITIO AND LIABLE TO BE QUASHED, IF THE AO ISSUED VAGUE NO TICE UNDER SECTION 274 R.W.S 271(1)(C) WITHOUT STRIKING OFF IRRELEVANT PORTION OF NOTICE AND ALSO IF THE AO HAS NOT MADE A SPECIFIC CHARGE W HETHER PENALTY ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 13 PROCEEDING IS INITIATED FOR CONCEALMENT OF PARTICUL ARS 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 ORDER S OF AUTHORITIES BELOW. THE AO HAS LEVIED PENALTY U/S 27 1(1)(C) IN RESPECT OF DISALLOWANCE OF REIMBURSEMENT 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 W ITHOUT STRIKING OFF OF IRRELEVANT PORTION WHICH WERE NOT APPLICABLE TO THE FACTS OF ASSESSEE'S CASE. THE AO HAS ISSUED NOTICE WHICH STA TES THAT PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTI CULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ASSESSMENT ORDER, THE AO HAS INITIATED PENALTY PROC EEDINGS ON BOTH CHARGES, I.E. FOR CONCEALING THE PARTICULARS O F INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE AO LEVIED THE PENALTY ON BOTH THE CHARGES, I.E. FOR CONCEALING TH E PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME. RIGHT FROM THE ASSESSMENT STAGES TO LEVY OF PENALTY, THE AO HA S 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 PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT CONNOTATION S. 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) , THEREFORE, BEFORE ISSUANCE OF NOTICE, THE AO HAS TO ARRIVE AT A SATISFACTION AS TO WHETHER PENALTY PROCEEDINGS ARE INITIATED FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE AO CANNOT TAKE BOTH THE CHARGES FOR LEV YING PENALTY BY STATING THAT THE ASSESSEE HAS CONCEALED PARTICUL ARS OF INCOME AND ALSO 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 OFFEN CES, THAT IS TO SAY, CONCEALMENT OF PARTICULARS 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 OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES, THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE O FFENCES. BUT INITIATING PENALTY PROCEEDINGS FOR 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 L EGAL PROPOSITION IS CLEARLY REITERATED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY LTD (SU PRA) 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 CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUND SHOULD BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 14 TO MEET THOSE GROUNDS. INITIATION OF PENALTY ON ONE GROUND AND LEVYING PENALTY ON ANOTHER GROUND WOULD CAUSE INJUS TICE TO THE ASSESSEE AS THE ASSESSEE WAS KEPT IN BLANK TO JUSTI FY HIS CASE WHETHER THE AO SOUGHT TO INITIATED PENALTY FOR CONC EALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IF THE PROCEEDINGS ARE INITIATED ON A SPECI FIC CHARGE, THEN, THE ASSESSEE CAN JUSTIFY ITS CASE BY ADVANCING ARGU MENTS ON THE CHARGE FRAMED BY THE AO. THUS, ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED O N THE SAME GROUND. IF PENALTY PROCEEDINGS ARE INITIATED ON ONE GROUND AND LEVIED PENALTY ON DIFFERENT GROUND OR PENALTY PROCE EDINGS ARE INITIATED ON TWO GROUNDS, I.E. CONCEALMENT OF PARTI CULARS OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICULARS OF IN COME 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 ASSESSMENT ORDER ON BOTH THE GROUNDS, I.E. CONC EALMENT OF PARTICULARS OF INCOME AND ALSO FURNISHING OF INACCU RATE PARTICULARS OF INCOME. THE AO ALSO LEVIED PENALTY ON BOTH THE G ROUNDS OF CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNI SHING OF INACCURATE PARTICULARS OF INCOME WHICH IS QUITE CON TRARY TO THE PROVISIONS OF SECTION 271(1)(C) WHERE IT WAS CATEGO RICALLY STATED THAT BOTH THE CHARGES ARE STANDING IN A DIFFERENT F OOTING AND THE AO HAS TO INITIATE PENALTY PROCEEDINGS FOR CONCEALM ENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. INITIATION OF PENALTY BY INJECTING AND IN P LACE OF OR WOULD DEFINITELY GO AGAINST THE BASIC PROVISIONS OF THE A CT. IN THIS CASE, THE AO HAS INITIATED PENALTY ON BOTH THE GROUNDS, W HICH 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 AUTHORIT Y, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUND OT HER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET OTHERWISE THOUGH T HE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD VIOLATE PRINCIPLES OF NATURA L JUSTICE AND CANNOT BE SUSTAINED. THE VALIDITY OF ORDER OF PENAL TY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE POSSESSION OF THE AUTHORITY IMPOSING PENALTY AT THE TIME, THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUB SEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY. THE AO IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROC EEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF TOTAL INCOME. AS ALREADY STATED, FACTS OF SOME CASE S MAY ATTRACT BOTH THE OFFENCES. IN CASE, THE AO HAS MADE MULTIPL E ADDITIONS, ONE MAY RELATES TO CONCEALMENT OF PARTICULARS OF IN COME AND ANOTHER MAY RELATE TO FURNISHING OF INACCURATE PART ICULARS 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 VI EW THAT BEFORE INITIATION OF PENALTY PROCEEDINGS, THE AO HAS TO AR RIVE AT A CORRECT SATISFACTION AS TO WHETHER PENALTY IS INITIATED FOR CONCEALMENT OF ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 15 PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IF THE AO FAILS TO INITIATE PENALTY PROCEED INGS BY ISSUANCE OF PROPER NOTICE, THEN THE WHOLE PENALTY PROCEEDING S BECOMES VITIATED AND VOID AB INITIO. 13. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSEE. THE ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE KARNATAKA HI GH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY VS CIT (SUPRA), WHEREIN THE HONBLE HIGH COURT HAS CATEGORICALLY OBS ERVED THAT SENDING PRINTED FORM OF NOTICE WHERE ALL THE GROUND S MENTIONED IN SECTION 271(1)(C) ARE MENTIONED WOULD NOT SATISFY R EQUIREMENT 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 CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. THE ASSESSEE SHOULD 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 INA CCURATE PARTICULARS OF TOTAL INCOME ARE DIFFERENT. THUS, THE ASSESSING OFF ICER WHILE 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 PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED (2007) 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALNMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING P.LTD., R EPORTED IN 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 PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO I NVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROP RIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTI CULARS OF INCOME. THE STAND AND PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. 14. THE ASSESSEE HAS RELIED UPON DECISION OF HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS SAMSON PERINCHERY IN IN COME TAX APPEAL NO.1154 OF 2014 & ORS ORDER DATED 5TH JANUAR Y, 2017. THE HON'BLE BOMBAY HIGH COURT AFTER CONSIDERING THE RAT IO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJ UNATHA COTTON & GINNING FACTORY (SUPRA) OBSERVED THAT THE SATISFA CTION OF THE AO WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTION ED IN SECTION 271(1)(C) OF THE ACT FOR INITIATION OF PENALTY PROC EEDINGS WILL NOT WARRANT / PERMIT PENALTY BEING IMPOSED FOR THE OTHE R BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GRO UND ON WHICH THE PENALTY HAS BEEN INITIATED / NOTICE ISSUED. 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 IN ITIATED AND IT CANNOT BE ON A FRESH GROUND OF WHICH ASSESSEE HAS N O NOTICE. THE ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 16 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 [RELIED UPON IN MANJUNATH COTTON & GINNING FACT ORY (SUPRA)] - WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CON NOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICE R WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UN DER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PEN ALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESS EE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED / NOTICE ISSUED. IT MUST, THEREFORE, FOLL OW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE G ROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED AND IT CANNOT BE ON A FRESH GROUND OF WHICH ASSESSEE HAS N O NOTICE.' 15. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF CIT VS SSAS EMERALD ME ADOWS (SUPRA) WHEREIN THE HON'BLE SUPREME COURT DISMISSED SLP FILED BY THE REVENUE BY FOLLOWING THE DECISION OF THE KARNAT AKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING F ACTORY (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 SECTI ON 271(1)(C), PENALTY PROCEEDINGS HAD BEEN INITIATED. COMING TO T HE CASE LAWS RELIED UPON BY THE LD. DR. THE LD. DR RELIED UPON T HE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SMT .KAUSHALYA (SUPRA). WE HAVE GONE THROUGH THE CASE LAW RELIED U PON BY THE LD. DR IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AN D FIND THAT THE ITAT, MUMBAI IN THE CASE OF DCIT VS DR. SANTA MILIN D DAVARE IN ITA NO.1789/MUM/2014 DATED 21-12-2016 HAS CONSIDERED TH E DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE LIGHT OF SUPREME COURT JUDGEMENT IN THE CASE OF DILIP N SHROFF 291 I TR 519 (SC) AND OBSERVED THAT THERE SHOULD BE APPLICATION OF MIND O N THE PART OF THE AO AT THE TIME OF ISSUING NOTICE. SINCE THE CO-ORDI NATE BENCH HAS ALREADY CONSIDERED THE JUDGEMENT OF HONBLE BOMBAY H IGH 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 HON'BLE JUDICIAL B OMBAY HIGH COURT IN THE CASE OF M/S. MAHARAJ GARAGE & COMPANY VS. CIT (SUPRA) RELIED UPON BY THE LD. D.R., THE CO-ORDINAT E BENCH OF ITAT IN THE CASE OF INDRANI SUNIL PILLAI VS. ACIT IN ITA NO.1339/M/2016 DATED 19.01.18 HAS CONSIDERED THE RATIO OF THE HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. MAHAR AJ GARAGE & COMPANY VS. CIT (SUPRA) AND HELD THAT THE BASIC ISS UE ARISING OUT ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 17 OF THE REFERENCE APPLICATION WHICH TELL FOR CONSIDE RATION OF THE HON'BLE JURISDICTIONAL HIGH COURT WAS WHILE GRANTIN G PREVIOUS APPROVAL BY INSPECTING ASSISTANT COMMISSIONER AS PE R PROVISIONS OF SECTION 271(L)(C)(III) OF THE ACT, WHETHER THE ASSE SSEE WAS REQUIRED TO BE GIVEN AN OPPORTUNITY OF BEING HEARD. WHILE CO NSIDERING THE ISSUE, THE HON'BLE COURT OBSERVED THAT PROVISIONS O F 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 HON'BLE C OURT AGAINST ISSUANCE OF SHOW CAUSE NOTICE APPEAR TO BE IN THE C ONTEXT OF QUANTUM OF PENALTY PROPOSED TO BE IMPOSED AND NOT W ITH REFERENCE TO THE DOING AWAY WITH THE ISSUE OF SHOW CAUSE NOTI CE AS CONTEMPLATED UNDER SECTION 274 OF THE ACT. 9. IN THE VIEW OF THE MATTER AND CONSISTENT WITH THE V IEW TAKEN BY THE COORDINATE BENCH IN THE CASE OF MIS. CENZAR INDUSTRIES LTD. VS. ITO (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY PROCEEDINGS INITIATED BY THE AO BY ISSUE OF NOTICE UNDER SECTION 274 R.W.S 271(1)(C) WITHOUT STRIKING OFF THE IRRELEVANT PORTION OF NOTICE IS A CLEAR CASE OF NON APPLICATION OF MIND BY THE A O, WHETHER PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTI CULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 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 SPECIFY UNDER WHICH CHARGE PENALTY HAS BEEN INITIATED. THER EFORE, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY PROCEEDING INI TIATED BY THE AO IS BAD IN LAW AND LIABLE TO BE QUASHED. HENCE, WE Q UASH THE PENALTY PROCEEDINGS AND DELETE PENALTY LEVIED BY THE AO UND ER SECTION 271(1)(C) OF THE ACT. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. 2.4. IDENTICAL RATIO WAS LAID DOWN BY HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS M/S L & T FINAN CE LTD. (ITA NO.1363, 1358, 1359 OF THE 2015) ORDER DATED 04/06/2018, WHICH IS ALSO REPRODUCED HEREUNDER:- 1. THESE THREE APPEALS UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 (THE ACT) CHALLENGE THE COMMON ORDER DATED 19T H MARCH, 2015 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (THE TRIBUNAL). THE IMPUGNED ORDER IS IN RESPECT OF ASSESSMENT YEARS 1995-96, 1996-97 AND 1997-98. THUS, THE THREE AP PEALS. ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 18 2. THE REVENUE HAS URGED ONLY THE FOLLOWING IDENTIC AL RE-FRAMED QUESTION OF LAW IN ALL THREE APPEALS FOR OUR CONSID ERATION :- (I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT? 3. THE RESPONDENT ASSESSEE HAD CLAIMED DEPRECIATION IN RESPECT OF THE ASSETS ACQUIRED / PURCHASED FROM THE LESSEE AND GIVEN BACK ON LEASE BASIS POPULARLY CALLED SALE AND LEASE BAC K. IN QUANTUM PROCEEDINGS, THE TRIBUNAL BY ORDER DATED 30 TH APRIL, 2014 HAS HELD THE RESPONDENT ASSESSEE ENTITLED TO C LAIM DEPRECIATION ON THE ASSETS USED ON SALE AND LEASE B ACK BASIS. THIS BY FOLLOWING THE DECISION OF THE SUPREME COURT IN ICDS LTD. VS. COMMISSIONER OF INCOME TAX, 350 ITR 527. 4. BEING AGGRIEVED BY THE ORDER DATED 3 0THAPRIL, 2014 OF THE TRIBUNAL IN QUANTUM PROCEEDINGS, THE REVEN UE HAD FILED THREE APPEALS BEING INCOME TAX APPEAL NOS.1625 OF 2 014, 1670 OF 2014 AND 1694 OF 2014 IN THIS COURT. ON 8TH MAR CH, 2017 ALL THE THREE APPEALS WERE ADMITTED ON IDENTICAL SUBSTANTIAL QUESTION OF LAW, WHICH READS AS UNDER :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN ALLOWING DEPRECIATION ON ASSETS GIVEN ON SALE AND LEASE BACK BASIS WHEN THE TRANSACTIONS WERE PURELY FINANCIAL TRANSACTIONS? 5. IN THE MEANTIME, PENDING DISPOSAL OF THE QUANTUM APPEAL BY THE TRIBUNAL, THE DEPUTY COMMISSIONER OF INCOME TAX IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THREE SEPARATE ORDERS ALL DATED 29TH MARCH, 2011 IN RESPECT OF THE ASSESSMENT YEARS 1995-96, 1996-97 AND 1997-98. THIS BY FOLLOW ING THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CO MMISSIONER OF INCOME TAX VS. ZOOM COMMUNICATION PVT. LTD. 371 ITR 570. FINALLY, THE TRIBUNAL BY THE IMPUGNED ORDER DATED 1 9TH MARCH, 2015 ALLOWED THE RESPONDENT'S APPEALS IN PENALTY PR OCEEDINGS. THIS BY HOLDING THAT ON MERITS IT HAD BY ITS ORDER DATED 30TH APRIL, 2014 IN QUANTUM PROCEEDINGS FOR ALL THE THRE E YEARS, HELD THAT THE RESPONDENT ASSESSEE IS ENTITLED TO THE CLA IM OF DEPRECIATION ON ITS ASSETS AS CLAIMED. THUS, DELET ED THE PENALTY. 6. THE REVENUE SEEKS ADMISSION OF THESE APPEALS FROM THE IMPUGNED ORDER DATED 19TH MARCH, 2015 DELETING PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND TH AT THE APPEALS IN THE QUANTUM PROCEEDINGS HAVE BEEN ADMITTED BY TH IS COURT. IT IS A SETTLED POSITION IN LAW THAT MERE REJECTION OF A CLAIM MADE BY THE ASSESSEE WOULD NOT IPSO FACTO RESULT IN PENA LTY UNDER SECTION 271(1)(C) OF THE ACT. IN FACT, IN COMMISS IONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. 2010 (11) SCC 762, THE ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 19 APEX COURT OBSERVED THAT MERELY BECAUSE THE ASSESS EE'S HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT PENALTY UNDER SECTION 271(1)(C). BEFORE PENALTY CAN BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, THE REVENUE IN TERMS THEREOF MUST BE SATISFIED THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR FURNISHED INACC URATE PARTICULARS OF HIS INCOME. IN CASE, WHERE AN AS SESSEE MAKES A COMPLETE DISCLOSURE OF FACTS IT THEN CANNOT BE SA ID TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THUS, MERE MAKING A CLAIM FOR BENEFIT UNDER A PARTICULAR PROVISION OF LAW WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IF THERE IS ABSENCE OF CONCEALMENT AND / OR FURNISHING OF INACC URATE PARTICULARS OF INCOME. THIS HAS BEEN SO HELD BY THE APEX COURT IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA). 7. WE CALLED UPON MR. SURESH KUMAR, LEARNED COUNSEL APPEARING FOR THE REVENUE TO SHOW US A FINDING BY THE AUTHORI TIES UNDER THE ACT THAT THERE HAS BEEN CONCEALMENT OF PA RTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME ON THE PART OF THE RESPONDENT ASSESSEE. IN FACT, WE PERUSE D THE ORDERS OF THE ASSESSING OFFICER IMPOSING PENALTY AS WELL AS T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] UPHOL DING THE PENALTY AND ALSO THE IMPUGNED ORDER OF THE TRIBUNAL . IN NONE OF THESE ORDERS THERE IS ANY WHISPER OF THE ALLEGED PA RTICULARS OF INCOME WHICH HAS BEEN CONCEALED OR WHAT PARTICULARS OF INCOME WHICH HAVE BEEN FILED IS INACCURATE. MERE USING T HE WORDS THAT THERE HAS CONCEALMENT OF INCOME AND / OR FURNISHING INACCURATE PARTICULARS OF INCOME WOULD NOT IN THE ABSENCE OF SAME BEING PARTICULARIZED, LEAD TO IMPOSITION OF PENALTY. IT IS ONLY WHEN THE SPECI FIED OFFICER OF THE REVENUE IS SATISFIED THAT THERE HAS BEEN CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME THAT THE OCCASION TO EXPLAIN THE CONDUCT IN TERMS OF EXPLANATION-I TO SECTION 271(1) (C) OF THE ACT WOULD ARISE. 8. IN THE FACTS OF THE PRESENT CASE, WE ARE DEALING WITH THE ASSESSMENTS RELATING TO ASSESSMENT YEARS 1995-96, 1996-97 AND 1997-98. THE POSITION IN LAW AT THAT POINT OF TIME WAS NOT CLEAR. IT IS NOT A CASE OF THE REVEN UE THAT THE RESPONDENT ASSESSEE HAS CLAIMED DEPRECIATION IN THE FACE OF A STATUTORY PROVISION OR A BINDING DECISION OF A COUR T, PROHIBITING THE ASSESSEE FROM CLAIMING DEPRECIATION IN RESPECT OF THE ASSETS ON SALE AND LEASE BACK BASIS. TILL SUCH TIME AS TH E APEX COURT RENDERED ITS DECISION IN ICDS LTD. (SUPRA) IN AN IN COME TAX CASE, THE POSITION WAS NOT CLEAR. THEREFORE, AT THE REL EVANT TIME, WHEN THE ASSESSEE MADE A CLAIM FOR DEPRECIATIO N, THERE WAS NO STATUTORY PROVISION OR A DECISION CONTRARY TO THE STAND TAKEN BY THE ASSESSEE WHICH HAS BEEN SHOWN TO US. IT I S PERTINENT TO NOTE THAT IN THE ORDER DATED 30TH APRIL, 2014 IN QU ANTUM ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 20 PROCEEDINGS, THE TRIBUNAL HAS READ THE DECISION IN CASE OF ICDS LTD. (SUPRA) OF THE APEX COURT COVERING THE ISSUE I N FAVOUR OF THE ASSESSEE EVEN IN CASE OF FINANCE LEASE. THUS, THE ISSUE IN RESPECT OF CLAIM MADE IS CLEARLY DEBATABLE. IT I S FURTHER TO BE NOTED THAT IT IS NOT THE CASE OF TH E REVENUE IN THE ABSENCE OF PARTICULARIZATION THAT THE BASIS OF THE CLAIM WAS BY SUPPRESSION /CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. ONCE SUPPRESSIO N OR FILING OF INACCURATE PARTICULARS IS ABSENT, NO P ENALTY IS IMPOSABLE ONLY FOR MAKING A CLAIM NOT ACCEPTABLE TO THE REVEN UE. 9. FURTHER, RELIANCE BY THE IMPUGNED ORDER DATED 19 TH MARCH, 2015 UPON THE DECISION OF THE DELHI HIGH COURT IN Z OOM COMMUNICATION PVT. LTD. (SUPRA) IS BASED ON THE FAC T THAT THE CLAIM MADE BY THE ASSESSEE THEREIN WAS WITHOUT ANY FOUNDATION. FURTHER, IN THE ABOVE CASE, IT WAS POINTED THAT IT WAS APPARENT THAT THE RESPONDENT THEREIN WAS NOT ACTING BONA FID E WHILE MAKING CLAIM FOR DEDUCTION. MOREOVER, THE SAME HA D NOT BEEN ADDED BACK IN THE COMPUTATION OF INCOME DUE TO OVER SIGHT. THUS, PRIMA FACIE THERE WAS INACCURATE FILING OF PARTICUL ARS OF INCOME. MOREOVER, THE ASSESSEE IN THE ABOVE CASE WAS UNABLE TO EXPLAIN TO THE SATISFACTION OF THE AUTHORITIES AS TO THE CI RCUMSTANCES WHICH LED TO THE MISTAKE IN HAVING MADE A CLAIM FOR DEDUCTION, WHICH WAS NOT ADDED BACK WHILE COMPUTING THE INCOME . IT WAS IN THESE CIRCUMSTANCES, THE PENALTY UPON AN A SSESSEE UNDER SECTION 271(1)(C) OF THE ACT WAS UPHELD. 10. THE PRESENT FACTS ARE COMPLETELY DIFFERENT. T HE CLAIM MADE BY THE RESPONDENT ASSESSEE WAS BONA FIDE AND NOT IN THE FACE OF A STATUTORY PROVISION OR ANY BINDING DECISION. IN FACT, THE ISSUE RAISED HEREIN STANDS COVERED IN FAVOUR OF THE RESPO NDENT ASSESSEE BY THE DECISION OF THE APEX COURT IN RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) WHERE IT HAS BEEN OBSERVED THAT MAKING OF INCORRECT CLAIM IN LAW WOULD NOT BY ITSELF AMOUNT TO CONCEALM ENT OF INCOME OR GIVING INACCURATE PARTICULARS OF INCOME. THE WORDS CONCEALMENT OR GIVING INACCURATE PARTICULARS OF INC OME HAVE TO BE READ STRICTLY BEFORE THE PENALTY PROVISIONS UNDER S ECTION 271(1)(C) OF THE ACT CAN BE INVOKED. IN THE PRES ENT FACTS, THE REVENUE HAS NOT BEEN ABLE TO SHOW EVEN REMOTELY THA T THERE IS ANY CONCEALMENT OF INCOME OR FILING OF INACCURATE P ARTICULARS OF INCOME. 11. IN THE AFORESAID CIRCUMSTANCES, THE QUESTION AS PROPOSED STANDS CONCLUDED AGAINST THE APPELLANT REVENUE BY T HE DECISION OF THE APEX COURT IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA). IN THE ABOVE VIEW, THE QUESTION AS PROPOSED DOES NOT G IVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTA INED. 12. ACCORDINGLY, ALL THE THREE APPEALS ARE DISMISSE D. NO ORDER AS TO COSTS ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 21 2.5. CONSIDERING THE AFOREMENTIONED JUDICIAL PRONOUNCEMENTS, FACTS OF THE CASE AND AS HELD BY HO N'BLE JURISDICTIONAL HIGH COURT THAT IT IS A SETTLED POSI TION OF LAW THAT MERE REJECTION OF CLAIM, MADE BY THE ASSESSEE, WOULD NOT IPSO-FACTO, RESULT IN PENALTY IMPOSED UNDER SEC TION 271(1)(C) OF THE ACT AS WAS HELD BY HON'BLE APEX CO URT ALSO IN CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. (2010)( 11) SCC 762(SUPREME COURT), WHEREIN, THE HON'BLE APEX COURT OBSERVED THAT MERELY BECAUSE THE ASSESSEE'S HAD CLA IMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR NO T ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT PENALTY UNDER SECTION 271(1 )(C). BEFORE PENALTY CAN BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, THE REVENUE IN TERMS THEREOF MUST BE SA TISFIED THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCO ME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. IN CASE, WHERE AN ASSESSEE MAKES A COMPLETE DISCLOSURE OF FA CTS IT THEN CANNOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURA TE PARTICULARS OF INCOME. THUS, MERE MAKIN G A CLAIM FOR BENEFIT UNDER A PARTICULAR PROVISION OF LAW WOULD ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 22 NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IF THERE IS ABSENCE OF CONCEALMENT AND / OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS HAS BEEN SO HELD BY THE APEX COURT IN RELIANCE PETRO PRODUCTS PVT. L TD. (SUPRA). THUS, CONSIDERING THE DECISION OF THE COO RDINATE BENCH AND RESPECTFULLY FOLLOWING THE AFORESAID DECI SIONS, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT IS DIRECTED TO BE DELETED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 04/10/2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; + DATED : 09/10/2018 F{X~{T? P.S/. . . , !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 22 # 3! , ( ,- ) / THE CIT, MUMBAI. 4. 22 # 3! / CIT(A)- , MUMBAI ITA. NO.3443/MUM/2017 AMIT CAPITAL & SECURITIES PVT. LTD. 23 5. 5'60! , 2,-&,) , # / DR, ITAT, MUMBAI 6. 78 / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , # / ITAT, MUMBAI