M/s. STI (India) Ltd., Indore V. THE ACIT-5(1), Indore

ITA 42/IND/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5796 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-11-2018
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: S S SOLANKI
• Keywords: Document seized; Opportunity of being heard; Principle of natural justice; Question of law; Documents seized; Set aside; Audi alteram partem
• Section: 271(1)(c); 143(3); 153A; 274; 251; 6; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.42/IND/2017 ASSESSMENT YEAR: 2005-06 M/S. STI (INDIA) LTD, C/O S.S. SOLANKI & CO. 402, TRADE HOUSE 16/3, SOUTH TUKOGANJ, INDORE / VS. ACIT-5(1) INDORE ( APPELLANT ) ( RE VENUE) PAN: AAECS3348C APPELLANT BY SHRI S.S. SOLANKI , CA REVENUE BY SHRI ASHIMA GUPTA , CIT - DR DATE OF HEARING: 29.11.2018 DATE OF PRONOUNCEMENT: 11.12.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL OF ASSESSEE PERTAINING TO A.Y. 2005-06 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INC OME TAX(APPEALS)-II, INDORE, (IN SHORT CIT(A)), DATED 1 8.10.2016 WHICH IS ARISING OUT OF THE ORDER U/S 271(1)(C) OF T HE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON STI(INDIA) LTD. ITANO.42/IND/2017 2 31.03.2011 BY ACIT, 5(1) INDORE. THE ASSESSEE HAS RAIS ED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING PEN ALTY U/S 271(1)(C) OF RS.7,00,000/- INSPITE OF THE FACT THAT THERE IS NO SATISFACTION OF THE AO AS TO ON WHICH LIMB HE WANTS TO IMPOSE THE PENALTY. THE PENALTY SO LIVIED BEING ILLEGAL AND WR ONG, THE SAME REQUIRE TO BE DELETED. WITHOUT PREJUDICE TO THE ABOVE 2.1 THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PEN ALTY ON DISALLOWANCE OF INTEREST OF RS.14,39,191/- IN SPITE OF THE FACT THAT THERE WAS NO CONCEALMENT OF FURNISHING OF INACCURAT E PARTICULARS OF INCOME. THE PENALTY SO CONFIRMED BEING ILLEGAL A ND WRONG, THE SAME REQUIRE TO BE DELETED. 2.2 THAT THE LD. CIT(A) ERRED IN CONFIRMING PENALTY ON DISALLOWANCE OF INTEREST OF RS.14,39,191/- IN SPITE OF THE FACT THAT THE AO HAS MADE A DISALLOWANCE OF RS.6,07,15,687/- WHICH WAS REDUCED TO RS.14,39,191/-. SINCE THE DISALLOWANCE M ADE HAS BEEN SUBSTANTIALLY REDUCED BY LEARNED CIT(A), PENAL TY U/S 271(1)(C) CANNOT BE LEVIED. 2.3 FURTHER THE AO HAS MADE DISALLOWANCE ON DIFFERE NT FOOTING WHEREAS THE CIT(A) HAS MADE DISALLOWANCE ON SOME OT HER GROUND. IT IS A SETTLED LAW THAT IF CIT(A) HAS MADE DISALLOWANCE ON SOME OTHER GROUNDS THAN THAT OF AO, THEN PENALTY HAS TO BE INITIATED BY LD. CIT(A) SEPARATELY. THE PENALTY SO LEVIED & CONFIRMED WITHOUT INITIATED BY LD. CIT(A) IS ILLEGA L AND WRONG, THE SAME REQUIRED TO BE DELETED. 3. THAT THE LD. CIT(A) ERRED IN MAINTAINING PENALTY ON DISALLOWANCE OF INTEREST PAID OF RS.16,220/-. THE P ENALTY SO LEVIED BEING ILLEGAL AND WRONG, THE SAME REQUIRE TO BE DELETED. 4. THAT THE LD. CIT(A) ERRED IN MAINTAINING PENALTY ON PRIOR PERIOD EXPENSES OF RS.3,91,610/-. THAT NO PENALTY CAN BE L EVIED ON DISALLOWANCE OF PRIOR PERIOD EXPENSES. THE PENALTY SO LEVIED BEING ILLEGAL AND WRONG, THE SAME REQUIRE TO BE DEL ETED. 2. DURING THE COURSE OF HEARING LD. COUNSEL FOR THE ASSESSEE RAISED AN ADDITIONAL GROUND CHALLENGING THE LEGALITY OF THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT MENTIONING THAT THE PENALTY NOTICE DID NOT SPECIFY TH E CHARGE LEVELED AGAINST THE ASSESSEE. HE PLACED RELIANCE O N STI(INDIA) LTD. ITANO.42/IND/2017 3 THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF NAT IONAL THERMAL POWER CO. LTD. VS. CIT, (1998) 229 ITR 383 ( SC) IN SUPPORT OF HIS REQUEST FOR ADMITTING THE ADDITIONAL LE GAL GROUND. 3. WE FIND THAT THE ASSESSEE HAS NOT RAISED THE LEGAL GROUND AT THE TIME OF FILING THE APPEAL HOWEVER IN VIE W OF THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF NAT IONAL THERMAL POWER CO. LTD. (SUPRA), WE ARE OF THE VIEW THAT THE ADDITIONAL LEGAL GROUND RAISED BEFORE US DESERVES TO BE ADMITTED FOR ADJUDICATION AS IT ONLY INVOLVES POINT OF LAW AND DOES NOT REQUIRE ANY FURTHER INVESTIGATION OF FACTS. IT IS ALSO CLEAR THAT THE LEGAL ISSUE RAISED, GOES TO THE ROOT OF THE JURISDICTION OF THE ASSESSING OFFICER TO LEVY THE PE NALTY U/S 271(1)(C) OF THE ACT. THEREFORE, THE SAME IS RELEVANT TO DETERMINE THE LIABILITY OF THE ASSESSEE FOR PENALTY U/ S 271(1)(C) OF THE ACT. WE, ACCORDINGLY ADMIT THE ADDITI ONAL LEGAL GROUND FOR ADJUDICATION. 4. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF TEXTILE MANUFACTURING UNIT. LOSS OF RS.19,30,73,905/- DECLARED IN THE INCOME TAX RETURN FILED ON 31.10.2005. CASE SELECTED FOR SCRUTINY. NOTICE U/ S 143(3) OF THE ACT WAS FRAMED ON 19.12.2007. AFTER MAKI NG STI(INDIA) LTD. ITANO.42/IND/2017 4 VARIOUS DISALLOWANCES AT RS.6,13,67,779/- INCOME ASSESSE D AT RS.13,16,16,126/-. PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. DURING THE COURSE OF PENALTY PROCEEDINGS LD. ASSE SSING OFFICER (IN SHORT LD. AO) AFTER GOING THROUGH THE SUBMISSIONS GIVEN BY THE ASSESSEE IMPOSED THE PENALTY AT RS.7,00,000/- U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICUL ARS OF INCOME. 6. AGAINST THE LEVY OF PENALTY, ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) BUT FAILED TO SUCCEED. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAI SING LEGAL ISSUE ABOUT THE DEFECT IN THE NOTICE ISSUED U/S 274 R.W. SECTION 271(1)(C) OF THE ACT AS WELL AS ON THE MERITS AGAINST THE PENALTY OF RS.7,00,000/- LEVIED U/S 271(1) (C) OF THE ACT. 8. LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET SUBMIT TED THAT THERE IS A TECHNICAL DEFECT AS IN THE PENALTY NOTI CE ISSUED U/S 274 R.W. SECTION 271(1)(C) OF THE ACT. T HE ASSESSING OFFICER HAS NOT MENTIONED THE LIMB FOR WHIC H PENALTY HAS BEEN LEVIED. AS REGARDS THE MERITS OF THE CASE HE SUBMITTED THAT THE DISALLOWANCE/ADDITIONS ON WHICH STI(INDIA) LTD. ITANO.42/IND/2017 5 PENALTY HAVE BEEN LEVIED REVENUE AUTHORITIES HAVE NOT DOUBTED THE GENUINENESS OF THE EXPENSES AND THE DISALLOWANCE ARE MOSTLY MADE ON AD HOC BASIS AND IN SUCH SITUATION NO PENALTY SHOULD HAVE BEEN LEVIED. HE PLACE D RELIANCE ON THE FOLLOWING JUDGMENTS: I. PR. CIT VS. KULWANT SINGH BHATIA IN ITANO.09 OF 20 18 (MP HIGH COURT) II. CIT & ANR. VS. M/S. SSAS EMERALD MEADOWS IN INCO ME- TAX ACT, 1961. NO.380/2015 (KARNATAKA, HIGH COURT) III. CIT & ANR. VS. MANJUNATHA COTTON & GINNING FACTORY IN 83 CCH 0282 (KARNATAKA HIGH COURT) IV. DCIT-1(2)(2) VS. M/S. PENNZOIL QUAKER STATE INDI A LTD. IN ITA NO.7386/MUM/2014 (I.T.A.T.,MUMBAI) V. M/S ORBIT ENTERPRISES VS. ITO-15(2)(2) IN ITANO. 1796 & 1597/MUM/2014 (I.T.A.T., MUMBAI) VI. S. CHANDRASHEKAR VS. ASSISTANT COMMISSIONER OF INCOME TAX 98 CCH 0398 (KARNATAKA HIGH COURT) VII. CIT VS. RELIANCE PETROPRODUCTS (P) LTD. IN 78 C CH 0283 (SC) VIII. M/S. SHREE COAL ENTERPRISES (I) VS. ACIT 3(1) IN ITANO.516/IND/2017(I.T.A.T., INDORE) 9. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE RECORD PLACED BEFORE US. LEGAL ISSUE AS WELL AS ISSUE ON MERITS REVOLVE ALL-ROUND THE PENALTY OF RS.7,00,000/- LEVIED STI(INDIA) LTD. ITANO.42/IND/2017 6 U/S 271(1)(C) OF THE ACT FOR THE FOLLOWING ADDITION S MADE BY THE ASSESSING OFFICER WHICH STANDS DULY CONFIRMED BY LD. CIT(A): I. ADDITION ON ACCOUNT OF INTEREST CHARGEABLE AMOUN T RS.14,39,191/- II. DISALLOWANCE OUT OF PENAL INTEREST PAID RS. 16,220/- III. DISALLOWANCE ON ACCOUNT OF PRIOR YEAR EXPENSES RS. 3,91,610/- TOTAL RS. 1847021/- 11. WE WILL FIRST TAKE UP THE LEGAL ISSUE THROUGH WHI CH LD. COUNSEL FOR THE ASSESSEE HAS CHALLENGED THE VALIDITY O F THE NOTICE U/S 274 R.W. SECTION 271(1)(C) OF THE ACT BY PLEADING THAT THE LD. ASSESSING OFFICER WHILE ISSUING THE IMPUGNE D NOTICE SHOULD HAVE MENTIONED THE SPECIFIC CHARGE FOR INITIAT ING THE PENALTY PROCEEDINGS, AS TO WHETHER IT HAS BEEN INITIAT ED FOR CONCEALING PARTICULARS OF INCOME OR FURNISHING INACC URATE PARTICULARS OF SUCH INCOME. RELIANCE HAS BEEN PLACED ON THE JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT IN THE CASE O F CIT VS. SSAS EMERALD MEADOWS (SUPRA), CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND THE JUDGMENT OF H ON'BLE M.P. HIGH COURT IN THE CASE OF PR. CIT VS. KULWANT SI NGH BHATIA (SUPRA). 12. BEFORE FURTHER PROCEEDINGS WE WILL LIKE TO REPR ODUCE THE RELEVANT ABSTRACT OF THE IMPUGNED NOTICE U/S 274 R.W. SECTION STI(INDIA) LTD. ITANO.42/IND/2017 7 271(1)(C) OF THE ACT DATED 19.12.2007 ISSUED TO THE ASSESSEE BY LD. ASSESSING OFFICER. NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 PAN:AAECS3348C OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX 5(1), INDORE TO M/S. STI (INDIA) LTD. PLOT NO.1, SONVAY INDUSTRIAL AREA, RAU-PITHAMPUR LINK ROAD INDORE WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2005-06 IT APPEARS TO ME THAT YOU HAVE CONCEAL ED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11 .00 AM/PM ON 15.10.18 AND SHOW CAUSE WHY AN ORDER IMPOSING A PEN ALTY ON YOU SHOULD NOT BE MAD UNDER SECTION 271 OF THE INCOME T AX ACT, 1961. IF YOUR DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY O F BEING HEARD IN PERSON OR THROUGH AUTHORISED REPRESENTATIVE YOU MAY SHOW C AUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271. SINCERELY YOURS, SD/- (K.C. SELVAMANI) ASSISTANT COMMISSIONER OF INCOME TAX 5(1), INDORE 13. FROM PERUSAL OF THE ABOVE NOTICE IT IS WELL EVIDE NT THAT LD. ASSESSING OFFICER HAS MENTIONED BOTH THE LIMBS PROVIDED IN SECTION 271(1)(C) OF THE ACT WITH OR IN BETWEEN. 14. LD. AO HAS FAILED TO SPECIFY THAT THE ALLEGED ADDITIONS/DISALLOWANCES ON WHICH THE PENALTY PROCEEDING S STI(INDIA) LTD. ITANO.42/IND/2017 8 HAVE BEEN INITIATED COME UNDER WHICH CATEGORY OUR LIMB . IN THE IMPUGNED NOTICE BOTH THE CHARGES HAVE BEEN MENTIONED WITHOUT ANY PROPER SPECIFICATION SHOWING IT S NEXUS TO THE ALLEGED ADDITIONS/DISALLOWANCES. THERE SEE MS NO DISPUTE TO THE FACT THAT LD. AO FAILED TO ISSUE A PR OPER NOTICE U/S 274 R.W. SECTION 271(1)(C) OF THE ACT. U NDER SUCH CIRCUMSTANCES, WHETHER THE PENALTY PROCEEDINGS INITIAT ED U/S 271(1)(C) OF THE ACT ARE VALID NEEDS TO BE EXAMINE D. 15. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS. KULWANT SINGH BHATIA(SUPRA) ADJUDICATING SIMILAR FACTS OBSERVED THAT THOUGH A PROPER SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER IN THE BODY OF THE ASSESSMEN T ORDER FRAMED U/S 143(3) OF THE ACT BUT THERE WAS A FATAL ERROR COMMITTED BY HIM BY NOT SPECIFYING THE CHARGE IN THE NOTICE ISSUED U/S 274 R.W. SECTION 271(1)(C) OF THE ACT. IN THESE GIVEN FACTS HON'BLE COURT CONFIRMED THE VIEW T AKEN BY THE TRIBUNAL THAT THE SHOW CAUSE NOTICE DOES NOT SAT ISFY THE REQUIREMENT OF LAW AS THE NOTICE WAS NOT SPECIFIC. RELEVANT PORTION OF THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KULW ANT SINGH (SUPRA) IS MENTIONED BELOW WHICH ALSO CONTAINS STI(INDIA) LTD. ITANO.42/IND/2017 9 THE RELEVANT DETAILS OF THE FACTS AND PLEADING OF BOTH T HE SIDES. 4. BEING AGGRIEVED WITH THE PENALTY, THE ASSESSE F ILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS), INDORE. THE LEARNED APPELLATE AUTHORITY HAS PASSED AN ORDER CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFI CER ON 30.4.2012. THE LEARNED APPELLATE AUTHORITY, WHILE D ISMISSING THE APPEAL HAS HELD THAT THE PROVISIONS OF SECTION 27(1)(C) TOGETHER WITH THE EXPLANATION 5A BRINGS HIM LIABLE FOR IMPOSITION OF PENALTY IN RESPECT OF THE ADDITIONAL INCOME, WHICH HAS BEEN OFFERED FOLLOWING THE SEARCH, THAT TO BASE D ON UNEXPLAINED DEPOSITS IN THE VARIOUS BANK ACCOUNTS A ND FDR'S AS WELL AS INCRIMINATING TRANSACTION. AS PER SEIZED DOCUMENTS, THE LEARNED APPELLATE AUTHORITY DISMISSED ALL SIX A PPEALS AND CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER DURING THE ASSESSMENT YEARS 2002-03 TO 2007-08. 5. THE RESPONDENT - ASSESSEE CHALLENGED THE SAID OR DER BY FILING SEPARATE SIX APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, INDORE, BENCH INDORE. THE LEARNED TRIBUNAL CONSIDER ING THE FACT THAT THESE SIX APPEALS INVOLVED A COMMON ISSUE ARIS ING OUT OF THE SAME SET OF FACTS AND HEARD TOGETHER AND ALL TH E SIX APPEALS ARE BEING DISPOSED OF BY PASSING A CONSOLIDATED ORD ER ON 11.8.2017. THE GROUND RAISED BEFORE THE ITAT, WAS T HAT THE IMPOSITION OF PENALTY IS ILLEGAL IN AS MUCH AS VAGU E AND CRYPTIC SHOW-CAUSE NOTICE WAS ISSUED TO THE ASSESSEE UNDER SECTION 274 OF THE ACT OF 1961, WITHOUT MAKING HIM AWARE OF TH E SPECIFIC CHARGE LEVIED AGAINST HIM AND, THEREFORE, IN VIEW OF THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT V/S. MANJUNATHA COTTON GINNING FACTORY, (2013) 359 ITR 5 65 (KAR), THE PENALTY SO IMPOSED BY THE ASSESSING OFFICER DES ERVE TO BE DELETED. 6. THE LEARNED TRIBUNAL RELYING ON THE DECISION OF THE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD . V/S. CIT, (1998) 229 ITR 383 (SC) PERMITTED THE ASSESSEE TO R AISE THE ADDITIONAL GROUND AS THERE IS PURE QUESTION OF LAW AND NO STI(INDIA) LTD. ITANO.42/IND/2017 10 FURTHER INQUIRY OR INVESTIGATION ON FACTS IS REQUIR ED. IT WAS SUBMITTED BEFORE THE TRIBUNAL THAT THE INCOME SHOWN IN THE RETURN WERE OFFERED UNDER SECTION 132 (4) AS WELL AS RETURNS FILED UNDER SECTION 153A . THESE INCOMES HAVE BEEN ACCEPTED IN THE ASSESSMENT ORDER WITHOUT ANY VARIATION AND OBJECTIO N. THE BLANKET PENALTY PROCEEDINGS WERE INITIATED IN ALL C ASES UNDER SECTION 271(1)(C) . THE PENALTY NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) WERE ISSUED IN THE TYPED FORMAT WITHOUT STRIKING OFF EITHER OF TWO CHARGES, I.E., W HICH IS REPRODUCED AS : '* HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR .............OR 'FURNISHED INACCURATE PARTICULARS OF INCOME'. 7. IT IS SUBMITTED THAT THE SHOW-CAUSE NOTICE UNDER SECTION 274 IS NOT MERE EMPTY FORMALITY BUT IT HAS A DEFINITE P URPOSE TO MAKE THE ASSESSEE AWARE OF THE EXACT CHARGES AGAINS T HIM AND THE CASE, WHICH IS REQUIRED TO MEET OUT. A CLEAR NO TICE NOT ONLY A STATUTORY REQUIREMENT BUT EVEN FOR THE PURPOSE OF P RINCIPLE OF 'AUDI ALTERAM PARTEM' WHICH REQUIRES THAT NO ONE SH OULD BE CONDEMNED UNHEARD, A NOTICE IN CLEAR TERM SPECIFYIN G THE CLEAR CHARGES AGAINST AN ASSESSEE IS REQUIRED TO BE GIVEN BY AN ASSESSING OFFICER BEFORE IMPOSING A PENALTY. IT WAS SUBMITTED THAT BY NOT STRICKING OFF THE INAPPLICABLE CLAUSE, THE LEARNED ASSESSING OFFICER HAS LEFT THE MATTER OPEN FOR A CO MPLETE GUESS WORK ON THE PART OF THE APPELLANT FOR PRESUMING CHA RGES LEVELLED AGAINST HIM AND IN SUCH SITUATION, IT CANNOT BE SAI D THAT AN EFFECTIVE OPPORTUNITY OF BEING HEARD WAS GIVEN TO T HE APPELLANT AS CONTEMPLATED UNDER SECTION 274 OF THE ACT OF 1961. THUS, THE PENALTY PROCEEDINGS WERE INITIATED WITHOUT SPECIFYI NG ANY PARTICULARS OR SPECIFIC CHARGE AGAINST THE ASSESSEE IN EITHER THE ASSESSMENT ORDER OR EVEN THE PENALTY NOTICE. IT IS IMPORTANT TO POINT OUT THAT NO CHARGE EITHER OF 'CONCEALMENT OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS' WAS MADE IN THE ASSESSMENT ORDERS IN ALL THESE CASES. THE PERUSAL O F THE ASSESSMENT ORDER WOULD SHOW THAT IT WAS STATED THAT PENALTY PROCEEDINGS ARE INITIATED UNDER SECTION 271(1)(C) AND UNDER SECTION 271(AAA) . STI(INDIA) LTD. ITANO.42/IND/2017 11 8. IN THE CASE OF CIT V/S. MANJUNATHA COTTON GINNIN G FACTORY (SUPRA), IT WAS OBSERVED BY THE KARNATAKA HIGH COUR T IN PARA 59 THAT THE PRACTICE OF THE DEPARTMENT SENDING A PR INTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INIT IATED PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE PROV ISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED, NOTICES ISSUED UN DER SECTION 274 SHOULD SATISFY THE GROUNDS, WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLE OF NATURAL JUSTI CE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. EVEN IN THE MATTER OF SEARCH CASE WHERE PENALTY IS LEVIED UNDER EXPLANATION 5A T O SECTION 271(1)(C) , IT WAS HELD BY THE KARNATAKA HIGH COURT THAT THE SHOW-CAUSE NOTICE UNDER SECTION 274 WAS DEFECTIVE AS IT DOES NOT SPELLED OUT THE GROUND ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED AND CONSEQUENTLY PENALTY IMPOSED WAS CANCEL LED. THE DECISION OF CIT V/S. MANJUNATHA COTTON GINNING FACT ORY (SUPRA) WAS FURTHER FOLLOWED BY THE KARNATAKA HIGH COURT IN THE CASE OF CIT V/S. SSA'S EMERALD MEADOWS, (2016) 73 TAXMAN.CO M 248 (SC) / DATED 23.11.2015 (ITA 380/2015), THE HIGH CO URT HAS DISMISSED THE APPEAL OF THE REVENUE BY OBSERVING TH AT THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE HOL DING THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT OF 1961 WAS BAD-IN- LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT OF 1961, THE PENALTY PROCEEDINGS HAD BEEN INITI ATED, I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THE TRIBUNAL WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAD RELIED ON THE DECISION OF THE DIVISION BENCH OF KARNATAKA HIGH COURT DECISION IN THE CASE OF CIT V/S. MANJUNATHA COTTON GINNING FACTORY (SUPRA). IT IS FU RTHER POINTED OUT THAT THE SLP FILED BY THE DEPTT. BEFORE THE APE X COURT ON 5.8.2016 IN THE MATTER OF CIT V/S. SSA'S EMERALD ME ADOWS (SUPRA) WAS DISMISSED. IN THE CASE OF CIT V/S. SURE SH CHANDRA MITTAL, (2000) 251 ITR 9 (SC), THE APEX COURT HAS U PHELD THE DECISION OF M.P. HIGH COURT WHEREIN, IN SIMILAR CIR CUMSTANCES, IT WAS HELD THAT THE INITIAL BURDEN LIES ON THE REVENU E TO ESTABLISH THAT THE ASSESSEE HAD CONCEALED THE INCOME OR HAD F URNISHED STI(INDIA) LTD. ITANO.42/IND/2017 12 INACCURATE PARTICULARS OF SUCH INCOME. IN THE PRESE NT CASE, IN SHOW-CAUSE NOTICE THE ASSESSING OFFICER HAS NOT SPE CIFIED SPECIFICALLY CHARGES, THERE WAS NO SUCH MENTION. 9. CONSIDERING THE AFORESAID, THE TRIBUNAL HAS HELD THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT OF 1961 IS NOT SUSTAINABLE IN LAW, AS NO SPECIFIC CHARGE WAS LEVIE D IN PENALTY SHOW-CAUSE NOTICES AND ALLOWED THE APPEAL NO.ITA (A PPEAL) 414/IND/2012 AND OTHER FIVE APPEALS. 10. IT IS SUBMITTED THAT THE PROVISION OF SECTION 271(1)(C) TOGETHER WITH EXPLANATION 5(A) BRINGS THE ASSESSEE LIABLE FO R IMPOSITION OF PENALTY IN RESPECT OF ADDITIONAL INCOME, WHICH H AS BEEN OFFERED FOLLOWING THE SEARCH AND THE ASSESSING OFFI CER IS SATISFIED THAT IT IS A FIT CASE FOR INITIATION OF P ENALTY PROCEEDINGS UNDER SECTION 271(1)(C) AND 271(AA) OF THE ACT OF 1961. THE LEARNED TRIBUNAL HAS COMMITTED AN ERROR IN ALLOWING THE APPEAL AND SETTING ASIDE THE WELL REASONED ORDER OF PENALT Y. SHE ALSO SUBMITS THAT THE ITAT ERRED IN NOT CONSIDERED THE S ATISFACTION RECORDED BY THE ASSESSING OFFICER. SHE DURING THE C OURSE OF THE ARGUMENTS VERY SPECIFICALLY ADMITTED THAT TAX EFFEC T IN THIS CASE IS ONLY RS.2,84,090/- FOR THE ASSESSMENT YEAR 2002- 03. THE TOTAL AMOUNT OF PENALTY FOR THE ASSESSMENT YEAR IN ALL THESE APPEALS FOR THE ASSESSMENT YEARS 2002-03 TO 2007-08 IS RS.24,39,753 AND THE LEARNED ITAT HAS DECIDED ALL T HESE APPEALS BY COMPOSITE ORDER DATED 11.8.2017. IT IS C OVERED IN PARA 5 OF THE CIRCULAR NO.21 OF 2015 DATED 10.12.20 15 AND, THEREFORE, THE PRESENT APPEALS HAVE BEEN FILED. 11. ON DUE CONSIDERATION OF THE ARGUMENTS OF THE LE ARNED COUNSEL FOR THE APPELLANT, SO ALSO CONSIDERING THE FACT THAT THE GROUND MENTIONED IN SHOW-CAUSE NOTICE WOULD NOT SAT ISFY THE REQUIREMENT OF LAW, AS NOTICE WAS NOT SPECIFIC, WE ARE OF THE VIEW THAT THE LEARNED TRIBUNAL HAS RIGHTLY RELYING ON THE DECISION OF CIT V/S. MANJUNATHA COTTON GINNING FACT ORY (SUPRA) AND CIT V/S. SSA'S EMERALD MEADOWS (SUPRA) RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER OF PENALTY IMPOSED BY THE AUTHORITIES. NO SUBSTANTIAL QUESTION OF LAW IS ARISING IN THESE APPEALS. ITA.NO(S).9/2018, 10/2018 , 11/2018, STI(INDIA) LTD. ITANO.42/IND/2017 13 12/2018, 13/2018 AND 14/2018, FILED BY THE APPELLAN T HAVE NO MERIT AND ARE HEREBY DISMISSED . 16. AFTER EXAMINING THE FACTS OF THE INSTANT APPEAL IN T HE LIGHT OF THE ABOVE JUDGMENT, WE ARE OF THE CONSIDERED VIEW THAT THE LEGAL ISSUE RAISED THROUGH ADDITIONAL GROUND B Y LD. COUNSEL FOR THE ASSESSEE NEEDS TO BE ALLOWED AS THE PE NALTY PROCEEDINGS INITIATED BY WAY OF ISSUANCE OF NOTICE U/ S 274 R.W. SECTION 271(1)(C) OF THE ACT SUFFERS FROM A FATAL ERROR AND NON-APPLICATION OF MIND BY THE ASSESSING OFFICER AS HE FAILED TO STRIKE OFF ONE OF THE LIMB AS PROVIDED IN S ECTION 271(1)(C) OF THE ACT THEREBY NOT LEVELING ANY SPECIF IC CHARGE AGAINST THE ASSESSEE. LD. AO SHOULD HAVE APPRECIATED THE FACT THAT MERELY ISSUING NOTICE IN GENERAL PRO-FORMA W ILL NEGATE THE PURPOSE OF NATURAL JUSTICE AS HELD BY HON'B LE APEX COURT IN THE CASE OF DILIP SHROFF 161 TAXMANN.CO M 28 THAT THE QUASI CRIMINAL PROCEEDINGS U/S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUST ICE. 17. WE, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGM ENT OF HON'BLE JURISDICTION HIGH COURT AS WELL AS IN THE GIV EN FACTS AND CIRCUMSTANCES OF THE CASE, ARE OF THE CONSIDER ED VIEW THAT THE ALLEGED NOTICE U/S 274 DATED 19.12.2007 IS INVALID, UNTENABLE AND SUFFERS FROM THE INFIRMITY OF NON- APPLICATION OF MIND BY THE ASSESSING OFFICER. WE, THER EFORE, STI(INDIA) LTD. ITANO.42/IND/2017 14 DIRECT TO DELETE THE PENALTY OF RS.7,00,000/- LEVIED U/S 271(1)(C) OF THE ACT ON THIS LEGAL GROUND ITSELF. 18. SINCE, THE PENALTY U/S 271(1)(C) HAS ALREADY BEEN D EALT BY US ON THE PRIMARY POINT OF THE ASSESSEE RAISING LEG AL GROUND WHICH HAS BEEN ALLOWED BY US, THE MERITS OF T HE CASE FOR LEVY OF PENALTY NEED NOT TO BE DEALT AS THE S AME ARE RENDERED TO BE ACADEMIC IN NATURE. 19 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11 .12.20 18. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 11/12/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR