ACIT-24(1), MUMBAI V. M/S.ATUL PROPERTIES, MUMBAI

ITA 4393/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8095 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Principle of natural justice; Initiation of penalty proceedings
• Section: 271(1)(c); 69C; 143(3); 153A; 68; 27

Judgement Text

1 ITA 4393/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO. 4393/MUM/2018 (ASSESSMENT YEAR : 2007-08) MRS NAZNEEN FAROOQ SARANG 302, SHABNAM APARTMENT 33, S.V. ROAD, ANDHERI (W) MUMBAI 400 058 PAN : BEJPS5270J VS DY.CIT, CENT.CIR.36, MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI PIYUSH CHHAJED RESPONDENT BY SHRI ARVIND KUMAR DATE OF HEARING 01-01-2019 DATE OF PRONOUNCEMENT 29-03-2019 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-53, MUMBAI DATED 27-02-2015 AND IT PERTAINS TO AY 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- THE GROUNDS MENTIONED HEREUNDER ARE WITHOUT PREJUD ICE TO ONE ANOTHER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE PEN ALTY ON ADDITION OF RS.2,73,815/- MADE U/S.68 TOWARDS CASH DEPOSITS WIT HOUT APPRECIATING THAT THE ABOVE ADDITION WAS BASED ON SURMISES WHEN THERE WAS SUFFICIENT CASH IN HAND. 2 ITA 4393/MUM/2015 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE PEN ALTY ON THE ADDITION TO THE TUNE OF RS.36,00,0007- U/S.69C WITHOUT APPRECIA TING THAT THE SAID ADDITION WAS BASED ON INCORRECT FACTS SINCE THE APP ELLANT HAD NEVER PURCHASED ANY SUCH FLAT AND IT WAS PURCHASED BY APP ELLANT'S HUSBAND AND WAS DULY DECLARED BY HER HUSBAND IN HIS RETURN OF I NCOME. 2. SUBSEQUENTLY, VIDE APPLICATION DATED 20-11-2017, THE ASSESSEE HAS FILED THE FOLLOWING REVISED GROUNDS OF APPEAL:- THE GROUNDS MENTIONED HEREUNDER ARE WITHOUT PREJUD ICE TO ONE ANOTHER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE NOTICE U/S.274 R.W.S. 271(1)(C) OF THE INCOME TAX ACT AS WELL AS ASSESSMENT ORDER DOES NOT MENTIONS AS TO WHY THE PENALTY IS INITIATED IN REGARD TO CONCEALME NT OR FURNISHING OF INACCURATE PARTICULARS AND THEREFORE THE PENALTY OR DER PASSED IS WITHOUT NATURAL JUSTICE AND THEREFORE SAME IS VOID AND CONS EQUENTLY THE ORDER PASSED IMPOSING THE PENALTY IS BAD-IN-LAW. AS HELD BY 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE PENALTY ON ADDITION OF RS.2,73,815/- MADE U/S.68 TOWARDS CA SH DEPOSITS WITHOUT APPRECIATING THAT THE ABOVE ADDITION WAS BASED ON S URMISES WHEN THERE WAS SUFFICIENT CASH IN HAND. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE PENALTY ON THE ADDITION TO THE TUNE OF RS.36,00,000/- U/S.6 9C WITHOUT APPRECIATING THAT THE SAID ADDITION WAS BASED ON IN CORRECT FACTS SINCE THE APPELLANT HAD NEVER PURCHASED ANY SUCH FLAT AND IT WAS PURCHASED BY APPELLANT'S HUSBAND AND WAS DULY DECLARED BY HER HU SBAND IN HIS RETURN OF INCOME. 3. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT ADDITI ONAL GROUND TAKEN BY THE ASSESSEE GOES TO THE ROOT OF THE MATTER IN ASSU MING JURISDICTION BY THE AO IN LEVYING PENALTY U/S 271(1)(C), THEREFORE, THE SA ME MAY BE ADMITTED, IN THE INTEREST OF JUSTICE. 3 ITA 4393/MUM/2015 4. HAVING CONSIDERED ARGUMENTS OF BOTH THE SIDES, W E FIND THAT ADDITIONAL GROUND TAKEN BY THE ASSESSEE IN LIGHT OF NOTICE ISS UED BY THE AO U/S 274 R.W.S. 271(1)(C) OF THE I.T. ACT, 1961 IS PURELY A LEGAL GROUND WHICH GOES TO QUESTION THE JURISDICTION OF THE AO IN LEVYING PENALTY U/S 2 71(1)(C) OF THE ACT; HENCE, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. 5. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CAS E, THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) R.W.S. 153A OF THE I.T. ACT, 1 961 ON 27-12-2010 DETERMINING TOTAL INCOME AT RS.60,37,690 WHERE THE AO HAS MADE ADDITION TOWARDS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT, 1961 AND ALSO ADDITION OF RS.56 LAKHS U/S 69C OF THE I.T. ACT TOWARDS UNDI SCLOSED INCOME OF THE ASSESSEE. THEREAFTER, THE AO INITIATED PENALTY PRO CEEDINGS U/S 271(1)(C) FOR CONEALMENT / FURNISHING OF INACCURATE PARTICULARS O F INCOME AND ACCORDINGLY NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSU ED. IN RESPONSE TO NOTICE, THE ASSESSEE, VIDE HIS LETTER DATED 14-03-2013, FILED R EPLY TO ARGUE THAT UNDER GIVEN FACTS AND CIRCUMSTANCES, THE PROVISIONS OF SECTION 271(1)(C) ARE NOT APPLICABLE. THE ASSESSEE ALSO CHALLENGED LEVY OF PENALTY TOWARD S ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT ON THE GROUND TH AT SAID ADDITION HAS BEEN MADE ON SUSPICIOUS AND SURMISES MANNER IGNORING ALL EVIDENCES FILED BY THE ASSESSEE. THE AO, AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME / FURN ISHED INACCURATE PARTICULARS 4 ITA 4393/MUM/2015 OF INCOME IN RESPECT OF ADDITION MADE BY THE AO TOW ARDS UNEXPLAINED CASH CREDITS AND ALSO UNDISCLOSED INCOME AND ACCORDINGLY , LEVIED PENALTY OF RS.19,77,138 WHICH IS 100% OF TAX SOUGHT TO BE EVAD ED, U/S 271(1)(C) OF THE ACT. 6. AGGRIEVED BY THE PENALTY ORDER, ASSESSEE PREFERR ED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS REITERATED HER SUBMISSIONS MADE BEFORE THE AO TO ARGUE THAT THE AO WAS ERRED IN LEV YING PENALTY U/S 271(1)(C) IN RESPECT OF ADDITIONS MADE TOWARDS UNEXPLAINED CA SH CREDIT AND ALSO UNDISCLOSED INCOME ON THE GROUND THAT MERE DISALLOW ANCE OF CERTAIN EXPENSES OR ADDITION ASSESSEE CANNOT LEAD TO A CONCLUSION TH AT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCE ALED PARTICULARS OF INCOME WHICH WARRANTS LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE LD.CIT(A), AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND ALSO RE LYING UPON VARIOUS JUDICIAL PRECEDENTS HELD THAT IN VIEW OF FAILURE OF THE ASSE SSEE TO SUBSTANTIATE HER EXPLANATION AS WELL AS TO PROVE BONAFIDES OF THE EX PLANATION IN RESPECT OF ADDITIONS, THE ONUS CAST UPON HER UNDER EXPLANATION 1 TO SECTION 271(1)(C) REMAINS UNDISCHARGED AND THE ASSESSEE IS DEEMED TO HAVE CONCEALED PARTICULARS OF HER INCOME IN RESPECT OF ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE SAID FLAT TO THE TUNE OF R.36 LAK HS AS AGAINST RS.56 LAKHS CONSIDERED BY THE AO. THEREFORE, THE LD.CIT(A) DIR ECTED THE AO TO MODIFY 5 ITA 4393/MUM/2015 PENALTY ORDER BY TAKING INTO ACCOUNT THE AMOUNT OF RS.36 LAKHS IN RESPECT OF ADDITION MADE TOWARDS INVESTMENT IN PROPERTY AND AL SO ADDITION TOWARDS UNEXPLAINED CASH DEPOSITS OF RS.2,73,850. AGGRIEVE D BY THE ORDER OF LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD.AR FOR THE ASSESSEE REFERRING TO MODIFIED GROUNDS OF APPEAL FILED, SUBMITTED THAT THE PENALTY LEVIED BY THE AO U/S 271 (1)(C) CONSEQUENT TO VAGUE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) IS BAD IN LA W AND LIABLE TO BE QUASHED BECAUSE THE AO HAS ISSUED VAGUE NOTICE WITHOUT STRI KING OFF OF INAPPROPRIATE PORTION OF THE NOTICE. THEREFORE, IT IS A CASE OF NON APPLICATION OF MIND BY THE AO BEFORE INITIATION OF PENALTY AS TO WHETHER THE P ENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING OF PARTICULARS OF INCOME. IN THIS REGARD, HE RELIED UPON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS (2016) 242 TAX MAN 180 (SC). 8. THE LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDE R OF THE LD.CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE ISSUE OF NOTICE U/S 274 R.W.S. 271(1)(C) IS NO LONGER A RES INTEGRA . THE CO-ORDINATE BENCH OF ITAT, MUMBAI BENCH C IN THE CASE OF M/S CENZAR IN DUSTRIES LTD VS ITO (SUPRA) HAS CONSIDERED AN IDENTICAL ISSUE IN THE LIGHT OF V AGUE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE I.T. ACT, 1961 AND BY FOLLO WING THE DECISION OF HONBLE 6 ITA 4393/MUM/2015 KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNAT HA COTTON & GINNING FACTORY 359 ITR 565 (KAR) HELD THAT WHEN THE AO IS SUED A VAGUE NOTICE WITHOUT STRIKING OFF INAPPROPRIATE PORTION IN THE NOTICE TO FRAME THE ASSESSEE AS TO WHETHER PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, IT IS A CLEAR CASE OF NON APPLICATION OF MIND BY THE AO. IN THAT EVENTUALITY , IT IS DIFFICULT FOR THE ASSESSEE TO MAKE OUT HIS CASE BEFORE THE AUTHORITIE S; THEREFORE, THE WHOLE PENALTY PROCEEDINGS IS BAD IN LAW AND LIABLE TO BE QUASHED. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER:- 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND ALSO GONE THROUGH THE ORDER S OF AUTHORITIES BELOW. THE AO HAS LEVIED PENALTY U/S 271(1)(C) IN RESPECT OF DISALLOWANCE OF REIMBURSEMENT OF SELLING AND DISTRI BUTION EXPENSES ON THE GROUND THAT THE ASSESSEE HAS CONCEALED PARTICUL ARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. T HE AO HAS INITIATED PENALTY BY ISSUING NOTICE U/S 274 R.W.S. 271(1)(C) IN A PRINTED FORM WITHOUT STRIKING OFF OF IRRELEVANT PORTION WHICH WE RE NOT APPLICABLE TO THE FACTS OF ASSESSEES CASE. THE AO HAS ISSUED NO TICE WHICH STATES THAT PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. IN THE ASSESSMENT ORDER, THE AO HAS INITIATED PENALTY PROC EEDINGS ON BOTH CHARGES, I.E. FOR CONCEALING THE PARTICULARS OF INC OME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE AO LEVIED TH E PENALTY ON BOTH THE CHARGES, I.E. FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. RIGHT FROM THE ASSESSMENT STAGES TO LEVY OF PENALTY, THE AO HAS IN ITIATED PENALTY ON BOTH CHARGES WHICH IS NOT THE CASE AS PER THE PROVI SIONS OF SECTION 271(1)(C) AS THE TWO CHARGES, I.E. CONCEALMENT OF P ARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME A RE TWO DIFFERENT CONNOTATIONS. THE ISSUE OF NOTICE U/S 274 R.W.S. 2 71(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, TH E AO HAS TO ARRIVE AT 7 ITA 4393/MUM/2015 A SATISFACTION AS TO WHETHER PENALTY PROCEEDINGS AR E INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE AO CANNOT TAKE BOTH THE CHARGES FOR LEVYING PENALTY BY STATING THAT THE ASSESSEE HAS CO NCEALED PARTICULARS 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 OFFENCES, T HAT 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 O VERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES, THE INITIATION OF T HE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BU T INITIATING PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSE E GUILTY OF ANOTHER OFFENCE OR HOLDING HIM GUILTY FOR EITHER ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. THIS LEGAL PROPOSITION IS CLEARL Y REITERATED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON & GINNING FACTORY LTD (SUPRA) WHEREIN IT WAS CATEGORI CALLY HELD THAT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIO NED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON INITIATION OF P ROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E GROUNDS AND THE SAID GROUND SHOULD BE SPECIFICALLY STATED SO THAT T HE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. INITIA TION OF PENALTY ON ONE GROUND AND LEVYING PENALTY ON ANOTHER GROUND WO ULD CAUSE INJUSTICE TO THE ASSESSEE AS THE ASSESSEE WAS KEPT IN BLANK TO JUSTIFY HIS CASE WHETHER THE AO SOUGHT TO INITIATED PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IF THE PROCEEDINGS ARE INITIATED ON A SPEC IFIC CHARGE, THEN, THE ASSESSEE CAN JUSTIFY ITS CASE BY ADVANCING ARGUMENT S ON THE CHARGE FRAMED BY THE AO. THUS, ONCE THE PROCEEDINGS ARE I NITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE S AME GROUND. IF PENALTY PROCEEDINGS ARE INITIATED ON ONE GROUND AND LEVIED PENALTY ON DIFFERENT GROUND OR PENALTY PROCEEDINGS ARE INITIAT ED ON TWO GROUNDS, I.E. CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICULARS OF INCOME WOULD DEFINITELY V ITIATE 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. CONCEALM ENT OF PARTICULARS OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICU LARS OF INCOME. THE AO ALSO LEVIED PENALTY ON BOTH THE GROUNDS OF C ONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNISHING OF INACCU RATE PARTICULARS OF 8 ITA 4393/MUM/2015 INCOME WHICH IS QUITE CONTRARY TO THE PROVISIONS OF SECTION 271(1)(C) WHERE IT WAS CATEGORICALLY STATED THAT BOTH THE CHA RGES ARE STANDING IN A DIFFERENT FOOTING AND THE AO HAS TO INITIATE PENA LTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. INITIATION OF PENALTY BY IN JECTING AND IN PLACE OF OR WOULD DEFINITELY GO AGAINST THE BASIC PROVISI ONS OF THE ACT. IN THIS CASE, THE AO HAS INITIATED PENALTY ON BOTH THE GROUNDS, WHICH CANNOT BE THE CASE FOR INITIATION OF PENALTY U/S 27 1(1)(C) OF THE ACT. WE FURTHER OBSERVE THAT IT IS NOT OPEN TO THE AUTHO RITY, 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 FI NAL ORDER IMPOSING PENALTY WOULD VIOLATE PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THE VALIDITY OF ORDER OF PENALTY MUST B E DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS I N THE POSSESSION OF THE AUTHORITY IMPOSING PENALTY AT THE TIME, THE ORD ER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSI TION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY. THE AO IS EM POWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATI SFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME. AS ALREADY STATED, FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES. IN CASE, THE AO HAS MADE MULTIPLE ADDITIONS, ONE MAY RELATES TO CONCEALMENT OF PARTICULARS OF INCOME AND ANOTHER MAY RELATE TO FURNISHING OF INAC CURATE PARTICULARS OF INCOME, BUT SINGLE ADDITION MADE CANNOT LEAD TO AN INFERENCE OF CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS. THEREFORE, WE ARE OF THE CONSIDERED V IEW 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 PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IF THE AO FAILS TO INITIATE PENALTY PROCEE DINGS BY ISSUANCE OF PROPER NOTICE, THEN THE WHOLE PENALTY PROCEEDINGS B ECOMES VITIATED AND VOID AB INITIO. 13. COMING TO THE CASE LAWS RELIED UPON BY THE ASSESSEE . THE ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE KA RNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FA CTORY VS CIT (SUPRA), WHEREIN THE HONBLE HIGH COURT HAS CATEGOR ICALLY OBSERVED THAT SENDING PRINTED FORM OF NOTICE WHERE ALL THE G ROUNDS MENTIONED IN SECTION 271(1)(C) ARE MENTIONED WOULD NOT SATISFY R EQUIREMENT OF LAW. NOTICE ISSUED U/S 274 OF THE ACT SHOULD SPECIFICALL Y STATE THE GROUND MENTIONED IN SECTION 271(1)(C), I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE 9 ITA 4393/MUM/2015 ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO ME ET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D. INITIATING THE PENALTY PROCEEDINGS ON ONE LIMB AND HOLDING THE ASS ESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. THE RELEVANT PORTION O F THE ORDER IS EXTRACTED BELOW:- THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED I N THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T OTAL INCOME ARE DIFFERENT. THUS, THE ASSESSING OFFICER W HILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT AS CASE OF FURNISHING OF INACCURATE PARTICULARS. TH E 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 D IFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI H IGH COURT IN THE CASE OF VIRGO MARKETING P.LTD., REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSIT ION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE , WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PATICULARS OF INCOME. THE STANDARD 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 BO MBAY HIGH COURT IN THE CASE OF CIT VS SAMSON PERINCHERY IN IN COME TAX APPEAL NO.1154 OF 2014 & ORS ORDER DATED 5 TH JANUARY, 2017. THE HONBLE BOMBAY HIGH COURT AFTER CONSIDERING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON & GINNING FACTORY (SUPRA) OBSERVED THAT THE SATISFACT ION OF THE AO WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED IN SECTION 271(1)(C) OF THE ACT FOR INITIATION OF PENALTY PROCEEDINGS WI LL NOT WARRANT / PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH TH E PENALTY HAS BEEN INITIATED / NOTICE ISSUED. IT MUST, THEREFORE , FOLLOW THAT THE ORDER 10 ITA 4393/MUM/2015 IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED AND IT CANNO T BE ON A FRESH GROUND OF WHICH ASSESSEE HAS NO NOTICE. THE RELEVA NT 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 FACTORY (SUPRA)]WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN S ECTION 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 UNDER SEC TION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PRO CEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE O THER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO TH E GROUND ON WHICH THE PENALTY HAS BEEN INITIATED / NOTICE ISSUE D. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY H AS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED AND IT CANNOT BE ON A FRESH GROUND OF WHI CH ASSESSEE HAS NO NOTICE. 15. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF CIT VS SSAS EMERALD M EADOWS (SUPRA) WHEREIN THE HONBLE SUPREME COURT DISMISSED SLP FIL ED BY THE REVENUE BY FOLLOWING THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY (SUPRA) BY OBSERVING THAT NOTICE ISSUED U/S 274 R.W.S. 271(1)( C) WAS BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271( 1)(C), PENALTY PROCEEDINGS HAD BEEN INITIATED. 16. COMING TO THE CASE LAWS RELIED UPON BY THE LD.DR. THE LD.DR RELIED UPON THE DECISION OF HONBLE BOMBAY HI GH COURT IN THE CASE OF CIT VS SMT.KAUSHALYA (SUPRA). WE HAVE GONE THROUGH THE CASE LAW RELIED UPON BY THE LD.DR IN THE LIGHT OF T HE FACTS OF THE PRESENT CASE AND FIND THAT THE ITAT, MUMBAI IN THE CASE OF DCIT VS DR. SARITA MILIND DAVARE IN ITA NO.1789/MUM/2014 DA TED 21-12- 2016 HAS CONSIDERED THE DECISION RENDERED BY HONBL E BOMBAY HIGH COURT IN THE LIGHT OF SUPREME COURT JUDGEMENT IN TH E CASE OF DILIP N SHROFF 291 ITR 519 (SC) AND OBSERVED THAT THERE SH OULD BE APPLICATION OF MIND ON THE PART OF THE AO AT THE TI ME OF ISSUING NOTICE. SINCE THE CO-ORDINATE BENCH HAS ALREADY CONSIDER ED THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT, WE ARE OF THE VIEW THAT CASE LAW RELIED UPON BY THE LD.DR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 11 ITA 4393/MUM/2015 10. IN THIS CASE, FACTS ARE IDENTICAL, THEREFORE, C ONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH IN THE CASE OF M/S CENZAR INDUSTRIES LTD (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY ORDER P ASSED BY THE AO IS BAD IN LAW AND LIABLE TO BE QUASHED AS THE AO HAS ISSUED A VAGUE NOTICE WITHOUT STRIKING OFF INAPPROPRIATE PORTION IN THE NOTICE. ACCORDINGLY, WE QUASH THE PENALTY ORDER PASSED BY THE AO. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29-03-2 019. SD/- SD/- (SANDEEP GOSAIN) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 29 TH MARCH, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI