MOHD. SHARIF KHAN, Jaipur V. DCIT, Jaipur

ITA 441/JPR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1984 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: RAJEEV SOGANICA
• Keywords: Gift; Search and seizure; Principle of natural justice; Question of law
• Section: 143(3); 142(1); 131; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 441/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09. SHRI MOHD. SHARIF KHAN, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ANPPS 4165 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI(CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14.07.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27/07/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT (A), CENTRAL, JAIPUR DATED 15.04.2014 PERTAINING TO ASSE SSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL :- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. AO IN IMPOSING PENALTY U/S 271(1)(C) OF INCOME TAX ACT, 1961 AMOUNTING TO RS. 21,76,000/-. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIE D, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTE D BY QUASHING THE PENALTY OF RS. 21,76,000/- IMPOSED U/S 271(1)(C). 2. THE ASSESSEE CRAVES HIS RIGHT TO ADD, AMEND OR A LTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 2. ON THE LAST DATE OF HEARING, THE ADDITIONAL GROUND FILED BY THE ASSESSEE WAS ADMITTED AND THE ADDITIONAL GROUND AS RAISED RE ADS AS UNDER:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO HAS ERRED IN IMPOSING PENALTY U/S 271(1)(C) WITHOUT SPECIFICALLY POINTING OUT IN THE SHOW CAUSE NOTICE, WHETHER THE PENALTY WAS PROPOSED ON C ONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ACTION OF THE LD. AO IS ILLEGAL, UNJUSTIFIED, ARBIT RARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALTY AMOUNTING TO RS. 21,76,000/- IMPOSED U/S 271(1)(C). 3. BRIEFLY STATED THE FACTS ARE THAT WHILE FRAMING THE ASSESSMENT AND ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT). THE ASSESSING OFFICER INITIATED PENALTY PROCE EDINGS U/S 271(1)(C) OF THE ACT OR CONCEALING THE PARTICULARS OF HIS INCOME. SUBSEQUE NTLY, A NOTICE U/S 274 READ WITH SECTION 271 AND 272 OF THE ACT WAS ISSUED ON 29/9/2 010 AND A PENALTY ORDER U/S 271(1)(C) OF THE ACT WAS PASSED IMPOSING PENALTY O F RS. 21,76,000/- HAD CONCEALED INCOME ON RS. 64,63,010/- . 4. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APP EAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DISMISSED THE AP PEAL. THE APPEAL VIDE ORDER DATED 30 TH APRIL 2014, AGAINST THIS THE ASSESSEE IS IN PRESEN T APPEAL. 5. LD. COUNSEL FOR THE ASSESSEE IN RESPECT OF GROUN D NO. 1, REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS FILE D ON 09/06/2017. THE GIST OF SUBMISSIONS OF THE ASSESSEE IN RESPECT OF GROUND NO. 1 ARE REPRODUCED AS UNDER:- I. FOR THE RELEVANT PREVIOUS YEAR, ASSESSEE DERIVED IN COME FROM SUPERVISION OF CONSTRUCTION WORK AND INCOME FROM OT HER SOURCES. 3 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. ASSESSEE FILED HIS RETURN OF INCOME ON 28.05.2008, FOR THE RELEVANT ASSESSMENT YEAR, DECLARING TOTAL INCOME OF RS. 2,04 ,270/- II. ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3), VIDE ORDER DATED 29.09.2010, AT A TOTAL INCOME OF RS. 68,53,970 (PB : 48-55 ). AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREFERR ED APPEAL BEFORE CIT (A)-CENTRAL, JAIPUR, WHO DISMISSED THE APPEAL V IDE ORDER DATED 31.10.2011 IN APPEAL NO. 320/10/-11 (PB : 38-47). APPEAL BEFORE HON'BLE ITAT JAIPUR BENCH JAIPUR, IN ITA NO. 34/JP/ 12, WAS PARTLY ALLOWED. (PB : 28-37) III. IN THE PENALTY PROCEEDINGS, LD. AO LEVIED PENA LTY, UNDER SECTION 271 (1)(C), W.R.T THE ADDITIONS CONFIRMED IN THE FIRST APPELLATE PROCEEDINGS. SUBSEQUENTLY SUCH PENALTY WAS ALSO CONFIRMED IN THE FIRST APPELLATE PROCEEDINGS BY THE LD. CIT (A). SYNOPSIS OF THE OU TCOME IN THE QUANTUM AND PENALTY PROCEEDINGS IS AS UNDER:- S. NO. PARTICULARS QUANTUM PROCEEDINGS PENALTY PROCEEDINGS ADDITION BY AO CONFIRMED BY CIT (A) CONFIRMED BY ITAT PENALTY LEVIED BY AO PENALTY CONFIRMED BY CIT (A) 1. ADDITION AS UNDISCLOSED INCOME 56,50,000/- 56,50,000 56,50,000 19,02,000 19,02,000 2. PURCHASE OF PROPERTY OUT OF GIFT RECEIVED CONSIDERED AS UNDISCLOSED INVESTMENT U/S 69 8,13,010/- 8,13,010/- 2,74,000 2,74,000 3. AGRICULTURAL INCOME TREATED FROM OTHER SOURCES 1,16,400/- 65,79,410/- 56,50,000 21,76,000 21,76,000 4 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. IV. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT UND ER SECTION 132 AGAINST SHRI SHANKAR LAL KHANDELWAL ('SLK'). DURING THE COURSE OF SEARCH PROCEEDINGS SLK WAS FOUND INVOLVED IN DEVELO PING A REAL ESTATE PROJECT IN THE NAME OF GLOBAL CITY . FACTS EMERGING OUT PURSUANT TO SUCH SEARCH OPERATIONS AGAINST SLK WERE AS UNDER:- STATEMENTS OF SLK WERE RECORDED U/S 132 (4) WHO STA TED THEREIN THAT SHRI MOHD. SHARIF KHAN (APPELLANT) WAS A PARTNER IN THE GLOBAL CITY PROJECT AND HAD INTRODUCED CASH, WITHOUT SPECIFICALLY MENTIONIN G THE AMOUNT INVESTED, IN THE PARTNERSHIP FIRM CONSTITUTED FOR THE PURPOSE OF DEVELOPING THE GLOBAL CITY PROJECT (PB : 22) SLK HOWEVER RETRACTED FROM HIS ABOVE STATEMENT BY W AY OF AN AFFIDAVIT DATED 01.08.2008. (PB : 10) SHRI MOHD. SHARIF KHAN (ASSESSEE) IN HIS STATEMENT U/S 131 ADMITTED HAVING INVESTED THE SAID SUM OF RS. 56,50,000/- IN CASH IN THE FIRM. (PB : 12). THEREAFTER, ASSESSEE ALSO RETRACTED FROM HIS STATEM ENT VIDE LETTER DATED 17.06.2010 ( AO ORDER-QUANTUM-PAGE 3 ) ONE UNSIGNED PARTNERSHIP DEED WAS FOUND AT THE BUSI NESS PREMISES OF THE SLK WHEREIN THE ASSESSEE WITH SHRI RANJIT SINGH YAD AV JOINTLY WERE MENTIONED AS ONE SINGLE PARTY. (PB : 1-9) LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF GLOB AL CITY PROJECT WAS SUBMITTED BY SLK DURING ASSESSMENT AND IT WAS FOUND DURING SEARCH CONDUCTED ON HIM. (AO ORDER-QUANTUM-PAGE 3) V. LD. AO, DURING THE COURSE OF QUANTUM PROCEEDINGS, M ADE ADDITIONS OF RS. 56,50,000/- TREATING THE SAME AS UNDISCLOSED IN COME BASED ON THE STATEMENT OF SHRI MOHD. SHARIF KHAN (APPELLANT) U/S 131 LD. AO DID NOT GIVEN OPPORTUNITY OF CROSS-EXAMINATION OF SLK TO TH E ASSESSEE WHEN STATEMENTS OF SLK WERE USED AGAINST HIM. VI. LD. AO IN TOTAL DISREGARD OF THE FACT ON RECORD AND GIVING CREDENCE TO THE ORAL STATEMENT RECORDED OF SHRI MOHD. SHARIF KH AN (APPELLANT) AND SLK, DOUBTED THE TRANSACTION. SUCH ADDITIONS WERE CONFIRMED BY LD. CIT (A) AND HON'BLE ITAT ON THE SAME PREMISE. 5 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. GROUND NO. 1 PENALTY U/S 271 (1) (C) OF RS. 21,76,0 00/- 1. ASSESSING OFFICER (PENALTY PROCEEDINGS) 1.1. DURING THE COURSE OF PENALTY PROCEEDING BEFORE THE LD. AO, ELABORATE SUBMISSIONS WERE MADE. THE SAME HAVE ALS O BEEN REPRODUCED BY THE LD. AO FROM PG 1 PG 7 OF HIS ORDE R. SUMMARIZED POSITION OF THE CONTENTIONS RAISED BEFOR E HIM ARE AS UNDER:- 1.1.I NO CORROBORATIVE DOCUMENTARY EVIDENCES WERE A VAILABLE WITH THE DEPARTMENT TO CONFIRM THAT THE INVESTMENT WAS ACTUA LLY DONE BY THE ASSESSEE IN THE PARTNERSHIP FIRM. SOLE RELIANCE WA S PLACED ON ORAL EVIDENCES. 1.1.II PARTNERSHIP DEED SEIZED FROM THE PREMISES OF SLK WAS UNSIGNED WHICH WAS NOTHING BUT A DUMB DOCUMENT. 1.1.III A WORST THE DOCUMENTS CAN BE CONSIDERED AS ONE WHICH THE PARTIES INTENDED TO ENTER. 1.1.IV PRESUMPTION OF SECTION 132 (4) IS AGAINST TH E PERSON IN POSSESSION OF THE DOCUMENT. IT CANNOT, IN ANY WAY, BE EXTENDED TO THIRD PARTY. 1.1.V ENTRIES IN BOOKS OF THIRD PARTY CANNOT BE TRE ATED AS EVIDENCE. 1.1.VI ORAL ADMISSIONS, WITH NOT CONTRARY EVIDENCE ON RECORD, SUBSEQUENTLY RETRACTED HAVE NO EVIDENTIARY VALUE. 1.1.VII NO OPPORTUNITY OF CROSS-EXAMINATION OF SLK WAS PROVIDED TO THE ASSESSEE. 1.1.VIII CONTENTS OF THE AFFIDAVIT CANNOT BE IGNORE D. 1.2 LD. AO BRUSHED ASIDE THE CONTENTIONS RAISED WITHOUT ANY COGENT BASIS AND LEVIED PENALTY ON THE ASSESSEE . 6 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 2. COMMISSIONER OF INCOME TAX (APPEALS) 2.1. ELABORATE SUBMISSIONS WERE ALSO MADE BEFORE TH E LD. CIT (A) WHICH ARE PLACED AT PB PAGES 56-62. 2.2 LD. CIT (A) ON THE FOLLOWING PREMISE CONFIRMED THE PENALTY LEVIED BY THE LD. AO:- 2.2.I NO NEW FACTS WERE BROUGHT TO THE NOTICE OF LD . AO DURING THE COURSE OF PENALTY PROCEEDINGS AS COMPARED TO QUANTU M PROCEEDINGS. 2.2.II SINCE ORDER OF AO, IN QUANTUM PROCEEDINGS, B ECAME FINAL NEITHER PARTY CAN SEEK TO REOPEN IT IN PENALTY PROCEEDINGS. 2.2.III SLK AND THE APPELLANT BOTH WERE EXAMINED. SINCE BOTH ADMITTED TO THIS TRANSACTION OF RS. 56.50 LACS, IT IS A CONCLUSIVE EVIDENCE GATHERED BY THE DEPARTMENT. 2.2IV ABOVE MENTIONED EVIDENCE CANNOT BE VITIATED F OR WANT OF CROSS- EXAMINATION AND ANY DENIAL OF THE OPPORTUNITY OF CR OSS-EXAMINATION IN THE PRESENT CASE, HAS NOT RESULTED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2.2.V AFFIDAVIT SUBMITTED BY SLK IS SELF-SERVING. FURTHER, SUCH AFFIDAVIT OF SLK HAS BEEN DENIED BY HIM, AS A RESULT IT WAS U NRELIABLE. 3. SUBMISSION 3.1 AT THE OUTSET, IT IS SUBMITTED THAT OUT OF THE TOTAL ADDITION OF RS. 64,63,010 ON WHICH PENALTY WAS LEVIED BY THE LD. AO , ADDITION OF RS. 8,13,010 HAS BEEN DELETED BY THE HON'BLE ITAT, JAIP UR BENCH, VIDE ORDER DATED 23.05.2016, IN ITA NO. 34/JP/12. THUS PENALTY AMOUNTING TO RS. 2,74,000 QUA SUCH ADDITIONS, DESERVES TO BE DELETED. 7 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 3.2 APROPOS THE ADDITIONS SUSTAINED BY THE HON'BLE ITAT, JAIPUR BENCH OF RS. 56,50,000 BELOW MENTIONED SUBMISSIONS MAY PLEAS E BE CONSIDERED. 3.3 SUBMISSIONS MADE BEFORE THE LD. CIT (A), PLACED AT PB PAGES 56-62 AND THOSE MADE BEFORE LD. AO, REPRODUCED BY HIM IN HIS ORDER FROM PG 1 TO PG 7 MAY PLEASE BE CONSIDERED IN CORRECT PERSP ECTIVE. 3.4 LOWER AUTHORITIES HAVE ERRED IN NOT APPRECIATIN G A SETTLED PROPOSITION THAT ADDITION CAN BE MADE IN THE QUANTUM PROCEEDING HOWEVER THAT DOES NOT IPSO FACTO RESULT INTO PENALTY BEING IMPOS ED. MUCH HIGHER DEGREE OF PRECISION W.R.T. FACTS/EVIDENCES AGAINST THE ASSESSEE IS REQUIRED FOR ANY PENALTY TO BE LEVIED U/S 271 (1) ( C). 3.5 SLK ON DIFFERENT OCCASIONS I.E AT THE TIME OF S EARCH, THEREAFTER, AT THE TIME OF GIVING AFFIDAVIT, DURING STATEMENTS RECORDE D U/S 131 GAVE DIFFERENT VERSIONS OF HIS INVOLVEMENT WITH THE ASSE SSEE. AT ONE TIME SLK ACCEPTS TO HAVE RECEIVED INVESTMENT IN THE FIRM FROM THE ASSESSEE, THEREAFTER, WHEN AFFIDAVIT WAS GIVEN BY HIM HE DENI ED SUCH INVOLVEMENT. THEREAFTER, WHEN BEING SUMMONED U/S 1 31 HE BACKTRACKED FROM HIS EARLIER VERSION. EVIDENTIARY VALUE OF SUCH STATEMENTS CANNOT BE RELIED UPON AS HELD BY THE HON 'BLE ITAT DELHI BENCH IN THE CASE OF AMARJIT SINGH BAKSHI (HUF) [20 03] 86 ITD 13 (DELHI) (TM). SO FAR AS THE PENALTY IS CONCERNED, NO PERSON SHOULD BE PENALIZED BASED ON SUCH. 3.6 ANY WITNESS WHO INDULGES IN DOUBLE TAX IS A SHI FTY WITNESS. HIS TESTIMONY IS NOT RELIABLE. HE IS NOT A TRUSTWORTHY WITNESS AS IT IS DIFFICULT FOR THE COURT TO COME TO ANY CONCLUSION ON WHICH OC CASION THE WITNESS TOLD THE TRUTH ON WHICH OCCASION HE DID NOT. SUCH STATEMENT, WHETHER GIVEN BY WAY OF AN ORAL STATEMENT IN AN AFFIDAVIT O R IN HIS EXAMINATION , 8 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. HAS LITTLE EVIDENTIARY VALUE. THIS WAS HELD BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EASTERN COMMERCIAL ENTERPRISES [1994] 210 ITR 103 (CAL) . IN THIS CASE, INITIALLY, THE WITNESS STATED THAT ALL THE SALES WERE GENUINE BUT SUBSEQUENTLY HE CHANGED HIS STAND BEFORE THE ASSESSING OFFICER CLAIMING THAT THE SALE S WERE GENUINE AND HE RECEIVED PAYMENTS BY ACCOUNT PAYEE CHEQUE. HIS STATEMENT WAS NOT BELIEVED AS HE WAS FOUND TO BE SHIFTY WITNESS. HON'BLE CALCUTTA HIGH COURT OBSERVED AS UNDER:- '.......WE HAVE CONSIDERED THE CONTESTING CONTENTIO NS OF THE PARTIES. IT IS TRUE THAT SHRI SUKLA HAS PROVED TO BE SHIFTY PER SON AS A WITNESS. AT THE EARLIER STAGES, HE CLAIMED ALL HIS SALES TO BE GENUINE BUT BEFORE THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE, HE D ISOWNED THE SALES SPECIFICALLY MADE TO THE ASSESS. THIS STATEMENT CA N AT THE WORST SHOW THAT SHRI SUKLA IS NOT A TRUSTWORTHY WITNESS AND LI TTLE VALUE CAN BE ATTACHED TO WHAT HE STATED EITHER IN HIS AFFIDAVITS OR IN HIS EXAMINATION BY THE ASSESSING OFFICER. HIS CONDUCT NEUTRALISES HIS VALUE AS A WITNESS. A MAN INDULGING IN DOUBLE-SPEA KING CANNOT BE SAID BY ANY MEANS A TRUTHFUL MAN AT ANY STAGE AND N OT COURT CAN DECIDE ON WHICH OCCASION HE WAS TRUTHFUL: IF SHRI SUKLA IS NEUTRALISED AS A WITNESS WHAT REMAINS IS THE ACCOUNTS, VOUCHERS , CHALLANS, BANK ACCOUNTS, ETC...' 3.7. FINDING OF THE HON'BLE ITAT, IN QUANTUM PROCEEDING S ARE CONTAINED AT PARA 2.4, 2.5 AND 2.6, INTERNAL PAGES 4,5 AND 6, OF THE OTHER. (PB 31: 33) 3.8 ADDITIONS HAVE BEEN CONFIRMED BY THE HON'BLE IT AT MAINLY ON THE BASIS OF ORAL EVIDENCES OF THE APPELLANT AS WELL AS SLK. NEEDLESS TO MENTION THAT BOTH ORAL ADMISSIONS WERE RETRACTED SU BSEQUENTLY. WHATEVER TANGIBLE EVIDENCES WERE FOUND DID NOT INDI CATE INVESTMENT BY THE ASSESSEE. 9 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 3.9 IN QUANTUM PROCEEDINGS ADDITIONS CAN BE MADE EV EN WHEN BOTH 'MAY' OR 'MAY NOT' SITUATIONS EXIST USING THE THEORY OF H UMAN PROBABILITY OR PREPONDERANCE OF PROBABILITY. HOWEVER, WHEN IT COM ES TO PENALTY PROCEEDINGS IF SLIGHTEST OF 'MAY NOT' SITUATION EXI STS THE PENALTY CANNOT BE IMPOSED. PENALTY CAN BE IMPOSED ONLY WHEN 'MAY NOT SITUATION IS FULLY RULED OUT. IN THE PRESENT CASE ENOUGH POSSIB ILITY EXISTS OF APPELLANT REALLY NOT HAVE INVESTED REST. 56, 50,000 IN THE GLOBAL CITY PROJECT. 3.10 HON'BLE ITAT AFTER REFERRING TO THE HON'BLE SUPREME COURT DECIS ION IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA & ANR. (1973) 91 ITR 0018 OBSERVED AT PAGE 6 (PB : 33) OF THE ORDER THAT ASSESSEE HAS NOT PRODUCED ANY MATERI AL TO SHOW THAT THE ADMISSION MADE BY HIM WAS INCORRECT. IT IS SUB MITTED THAT NEGATIVE I.E NOT INVESTING THE SAID SUM OF RS. 56,5 0,000 CAN NOT BE EXPECTED TO BE PROVED BY PRODUCING ANY EVIDENCES. 3.11 ADDITION BASED ON SUCH EVIDENCES MAY BE MADE I N ANY QUANTUM PROCEEDINGS BUT THESE EVIDENCES CLEARLY DO NOT PROV E INVOLVEMENT OF THE ASSESSEE IN CONCEALING HIS INCOME WHICH IS SINE QUA NON FOR LEVY OF PENALTY U/S 271 (1) (C). IT IS FOR THIS REASON THA T LAW FOR MAKING ADDITION IN QUANTUM PROCEEDINGS IS DIFFERENT FROM T HE LAW FOR IMPOSING PENALTY. IN RECOGNITION OF THIS FUNDAMENTAL DIFFER ENCE, BOTH PROCEEDINGS HAVE BEEN KEPT SEPARATE AND INDEPENDENT . 3.12 FOLLOWING QUESTIONS, ALTHOUGH NOT ANSWERED IN THE QUANTUM PROCEEDINGS NEEDS TO BE DEALT WITH IN THE PENALTY P ROCEEDINGS:- 3.12.I WHY NO DEED WAS EXECUTED AND SIGNED WHEN THE SAME WAS READY FOR SIGNING BY PARTIES? 3.12.II WHY T HE MONEY WAS RETURNED ON THE SAME DAY? 10 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 3.12.III WHY WILL ANYONE INVEST SUCH A HUGE SUM OF RS. 56,50,00 0 IN CASH WITHOUT SIGNING ANY DEED WHEN THE SAME WAS REA DY FOR SIGNING? 3.12.IV WHY THE FIRM WILL ALLOW WITHDRAWAL OF MONEY WITHOUT EXECUTING A RETIREMENT DEED ESPECIALLY WHEN THE PRO JECT WAS RELATED TO REAL ESTATE HAVING LARGE STAKES? 3.13 HON'BLE BOMBAY HIGH COURT IN THE CASE OF UPENDRA V. MITHANI ITA (L) NO. 1860 OF 2009, DECIDED ON 05.08.2009, OBSERV ED IN THE MATTER OF LEVY OF PENALTY U/S 271 (1) (C) OF THE ACT. THAT IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISP ROVED I.E IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO TH E REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE 'S CASE IS FALSE, THEN NO PENALTY CAN BE IMPOSES IN SUCH CASES . SAME RATION WAS LAID DOWN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES (2001) 249 ITR 0125 (GUJ- HC). 3.14 POINT BY POINT REBUTTAL OF THE CONTENTION RAIS ED BY LD. CIT (A) IN HIS ORDER ARE AS UNDER:- 3.14.I NO NEW FACTS WERE BROUGHT TO THE NOTICE OF L D. AO DURING THE COURSE OF PENALTY PROCEEDINGS AS COMPARED TO QUANTUM PROCE EDINGS . IT IS SUBMITTED IN PENALTY PROCEEDINGS FACTS EMERGI NG OUT OF THE QUANTUM PROCEEDINGS ARE CONSIDERED. HOWEVER FOR LEVY OF PE NALTY ANY FACT AGAINST THE ASSESSEE HAS TO BE CONCLUSIVE AND SHOULD HOLD THE A SSESSEE GUILTY OF CONSCIOUSLY TRYING TO CONCEAL HIS/HER INCOME. WHER EAS SUCH PRECISION MAY NOT BE REQUIRED WHILE IN THE QUANTUM PROCEEDINGS. 3.14.II SINCE ORDER OF AO, IN QUANTUM PROCEEDINGS, BECAME FINAL NEITHER PARTY CAN SEEK TO REOPEN IT IN PENALTY PROCEEDINGS . PENALTY PROCEEDINGS ARE INDEPENDENT TO THAT OF QUAN TUM PROCEEDINGS. ALL THE FACTS EMERGING OUT OF THE QUANTUM PROCEEDINGS HAVE TO BE REVISITED AGAIN FROM THE BEGINNING IN ORDER TO ARRIVE AT THE CONCLU SION WHETHER THE PENALTY HAS TO BE LEVIED OR NOT. THUS EVEN THOUGH ADDITION S MAY HAVE BEEN CONFIRMED 11 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. IN QUANTUM PROCEEDING THE SAME CANNOT, IN AN AUTOMA TICE MANNER, RESULT IN PENALTY BEING IMPOSED. 3.14.III SLK AND THE APPELLANT BOTH WERE EXAMINED. SINCE BO TH ADMITTED TO THIS TRANSACTION OF RS. 56.50 LACS, IT IS A CONCLUS IVE EVIDENCE GATHERED BY THE DEPARTMENT. LD. CIT (A) HAS NOT CONSIDERED THE FACTS OF THE CAS E IN TOTALITY. BOTH SLK AND THE ASSESSEE NEVER ADMITTED TO THE TRANSACTION. BE LOW MENTIONED IS THE SUMMARY:- THE TRAIL OF EVENTS, AS MENTIONED ABOVE, BY NO STRE TCH OF IMAGINATION CAN PROVE THE INVOLVEMENT OF THE ASSESSEE CONCLUSIVELY. UNDER SUCH CIRCUMSTANCES, NO CERTAINLY EMERGES FOR WHICH ASSES SEE CAN BE HELD LIABLE FOR PENALTY U/S 271 (1) (C). 3.14.IV ABOVE MENTIONED EVIDENCE CANNOT BE VITIATED FOR WANT OF CROSS- EXAMINATION AND ANY DENIAL OF THE OPPORTUNITY OF CR OSS-EXAMINATION IN THE PRESENT CASE, HAS NOT RESULTED IN VIOLATION OF PRIN CIPLES OF NATURAL JUSTICE. LD. CIT (A) MENTIONED THAT CROSS-EXAMINATION WAS NO T REQUIRED WHEN THE AFFIDAVIT OF SLK WAS SUBMITTED BY THE ASSESSEE HIMS ELF. IT IS PERTINENT TO NOTE THAT THE STATEMENT OF SLK WITH REGARD TO INVOLVEMEN T WITH THE ASSESSEE CHANGED DRASTICALLY WHEN THE SAME WAS GIVEN IN HIS PRESENCE AND WITHOUT HIS DEDENIED ACCEPTED LETTER DATED 17.06.2010 (AO- QUANTUM ORDER- PAGE 3) WHEN SUMMONED U/S 131 STATEMENT MADE DURING SEARCH U/S 132 (4) 16.11.2017 ( PB : 17 - 26 ) AFFIDAVIT DATED 1.08.2008 (PB : 10) DENIED STATEMENT MADE U/S 131 (PB : 11-16) SLK ASSESSEE ACCEPTED DENIED ACCEPTED ACCEPTED 12 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. PRESENCE. IN SUCH CIRCUMSTANCES CROSS-EXAMINATION WAS ALL THE MORE IMPORTANT SO THAT SLK COULD HAVE BEEN CONFRONTED BY THE ASSESSEE FOR HIS TWO DIFFERENT VERSIONS. 3.14.V AFFIDAVIT SUBMITTED BY SLK IS SELF SERVING. FURTHER SUCH AFFIDAVIT OF SLK HAS BEEN DENIED BY HIM, AS A RESULT IT WAS UNRE LIABLE. AFFIDAVIT, BY NO STRETCH OF IMAGINATION, CAN BE CON SIDERED TO BE SELF SERVING. AS PER SECTION 277, ANY PERSON MAKING A FALSE STATE MENT UNDER THE ACT CAN BE PUNISHED WITH A PENALTY AND ALSO RIGOROUS IMPRISONM ENT. IT IS PERTINENT TO NOT THAT IF LD. AO WAS OF THE VIEW THAT WRONG INFORMATI ON HAS BEEN FURNISHED BY SLK IN THE AFFIDAVIT, THE LD. AO HAD ALL THE POWERS TO IMPLICATE HIM U/S 277. HOWEVER, LD. AO DID CHOOSE TO DO SO, AS HE HIMSELF WAS NOT FULLY CONVINCED W.R.T. THE FACTS EMERGING OUT OF THE DIFFERENT EVID ENCE. 3.15 THE PARTNERSHIP DEED FOUND FROM THE PREMISES OF SLK WAS AN UNSIGNED ONE AND HAD THE NAME OF SHRI RANJEET SINGH YADAV AL ONGWITH THE ASSESSEE AS ONE SINGLE PARTY. SINCE THE PARTNERSHI P DEED REFERRED TO THE ASSESSEE AND SHRI RANJIT SINGH YADAV TO BE ONE PARTY, IT COULD NOT BE, WITH PROCESSION, HELD THAT THE MONEY BELONGED T O THE ASSESSEE ONLY. (PB :2) 3.16 FURTHER, THE LEDGER ACCOUNT OF THE ASSESSEE MA INTAINED BY SLK IN HIS BOOKS, ON WHICH HEAVY RELIANCE WAS PLACED BY THE LD . AO IN QUANTUM PROCEEDINGS, WAS SUBSEQUENTLY SUBMITTED BY SLK TO T HE DEPARTMENT AND WAS NOT FOUND DURING THE COURSE OF SEARCH. THU S THE FACT THAT IT WAS AN AFTERTHOUGHT OF SLK CANNOT BE RULED OUT. 3.17 BORROWING THE ACCOUNTING TERMINOLOGY ADDITIONS CAN BE MADE IN THE QUANTUM PROCEEDINGS ON THE BASIS OF EVIDENCE S HAVING A REASONABLE CERTAINTY WHEREAS UNLESS THE EVIDENCES P ROVIDE VIRTUAL CERTAINLY PENALTY CANNOT BE IMPOSED . IN VIEW OF THE ABOVE, PENALTY LEVIED BY THE LD. AO AND CONFIRMED BY THE LD. CIT (A) DESERVES TO BE DELETED. 13 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 6. ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTATIVE S OPPOSED THE SUBMISSIONS, AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7. THE ASSESSEE HAS ALSO TAKEN THE ADDITIONAL GROUN D THAT READS AS UNDER:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO HAS ERRED IN IMPOSING PENALTY U/S 271(1)(C) WITHOUT SPECIFICA LLY POINTING OUT IN THE SHOW CAUSE NOTICE, WHETHER THE PENALTY WAS PROPOSED ON C ONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ACTION OF THE LD. AO IS ILLEGAL, UNJUSTIFIED, ARBIT ARARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALTY AMOUNTING TO RS. 21,76,000/- IMPOSED U/S 271(1)(C). WE DEEM IT PROPER TO ADJUDICATE THIS ADDITIONAL GRO UND BEFORE DECIDING THE ISSUE ON MERIT AS SAME RELATE TO VALIDITY OF NOTICE U/S 271( 1)(C) OF THE ACT. IT IS STATED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THIS ISSUE IS COV ERED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SH EVETA CONSTRUCTION COMPANY PVT. LTD. VS. ITO IN DB INCOME TAX APPEAL NO. 534/2008. 7.1 IN SUPPORT OF THIS ADDITIONAL GROUND THE ASSESS EE HAD REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. TH E SUBMISSION IN RESPECT OF ADDITIONAL GROUND THAT READS AS UNDER:- SUBMISSION 1.1 IT IS SUBMITTED THAT FOR LEVY OF PENALTY U/S 271(1) (C), LD. AO HAS TO APPLY HIS MIND AND COME TO A CONCLUSION THAT WHETHE R THE PENALTY IS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 1.2 IN THE PENALTY PROCEEDINGS, THERE IS HEAVY ONUS ON THE LD. AO, INITIATING PENALTY, OF PROVING THE ASSESSEE GUILTY OF CONCEALMENT OF INCOME AS PENALTY PROCEEDINGS RESULT INTO UNDUE HAR DSHIP FOR THE 14 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. ASSESSEE. THUS IT IS INEVITABLE THAT THE AUTHORITY LEVYING PENALTY SHOULD BE FULLY SATISFIED, AFTER PROPER APPLICATION OF MIN D, THAT IT IS FIT CASE FOR LEVY OF PENALTY. 1.3 ATTENTION IS DRAWN TOWARDS THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) (COPY ENCLOSED). 1.4 ANY NOTICE ISSUED UNDER SECTION 274, READ WITH SECT ION 271(1)(C) OF THE INCOME TAX ACT, 1961, SHOULD SPECIFY UNDER WHICH LI MB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF WHICH NO PENALTY SHOULD BE LEVIED ON THE ASSESSEE A S DETERMINATION OF SUCH LIMB IS SINE QUA NON FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). 1.5 IT IS PERTINENT TO NOTE THAT IN THE SAID NOTICE LD. AO HAS NOT CLEARLY MENTIONED THE LIMB, ON THE BASIS OF WHICH, PENALTY WAS PROPOSED TO BE IMPOSED. LD. AO HAS SIMPLY ISSUED A PRE-PRINTED NO TICE WITHOUT STRIKING OFF THE UNNECESSARY PORTIONS OF THE NOTICE . IF THE LD. AO WAS OF THE VIEW THAT THE ASSESSEE HAS CONCEALED THE INC OME BY FURNISHING INACCURATE PARTICULARS OF INCOME THEN HE SHOULD HAV E DELETED OR NOT MENTIONED THE OTHER LIMB FOR IMPOSITION OF PENALTY I.E. CONCEALING THE PARTICULARS OF INCOME. THE ABOVE ACT OF THE LD. AO CLEARLY SHOWS THAT THE ENTIRE EXERCISE OF INITIATION OF PENALTY PROCEE DINGS HAS BEEN DONE WITHOUT APPLICATION OF MIND. 1.6 HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565 (KARNATAKA) AFTER REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF T. ASHOK PAI (SUPRA) HELD AS UNDER:- .. CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION 15 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE C ASE OF ASHOK PAI REPORTED N 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. 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 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 POSITION BEING UNCLEAR P ENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO I NVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOM E. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON- APPLICATION OF MIND 1.7 IN THE CASE OF JYOTI LTD. [2013] TAXMANN.COM 65 (HC -GUJ), THE ASSESSING OFFICER IN HIS PENALTY ORDER NOTED AS UND ER:- 'IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE A SSESSEE CONCEALED INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME. I, THEREFORE, CONSIDER IT A FIT CASE FOR LEVY OF PENALTY U/S 271 (1) (C)' HON'BLE GUJRAT HIGH COURT N THE ABOVE CASE HELD THAT, WHERE THE ASSESSING OFFICER IN ORDER OF PENALTY DID NOT COME TO A CLEAR FINDING REGARDING THE PENALTY BEING IMPOSED ON CONCEALMENT OF INCOME OR O N FURNISHING INACCURATE PARTICULARS OF INCOME, THE TRIBUNAL WAS JUSTIFIED I N SETTING ASIDE THE IMPUGNED PENALTY ORDER. HON'BLE GUJRAT HIGH COURT FOLLOWED T HE RATI LAID DOWN IN THE CASE OF NEW SORATHIA ENGG. CO. [2006] 282 ITR 642 (GUJ-HC). 1.8 THE ABOVE RATIO LAID DOWN IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA) HAS BEEN FOLLOWED BY VARIOUS HIGH COURTS IN THE BELOW MENTIONED CASES : 1.8.I SHRI SAMSON PERINCHERY, ITA 1154,953,1097,1226 OF 2 014 (ORDER DATE - 5.01.2017) (BOMBAY HIGH COURT) 1.8.II SSA'S EMERALD MEADOWS [2016] 73 TAXMANN.COM 241 (KA RNATAKA HIGH COURT) 16 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 1.8.III MITSU INDUSTRIES LTD. ITA NO. 216 OF 2004, GUJARAT HIGH COURT 1.9 SLP FILED BY THE DEPARTMENT AGAINST THE SAID ORDER WAS DISMISSED BY THE HON'BLE SUPREME COURT IN THE CASE OF SSA'S EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC). HON'BLE APEX COURT IN THE ABOVE MENTIONED CASE HELD THAT ' WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS, ACCORDINGLY, DISMIS SED' (EMPHASIS SUPPLIED). THUS THE MATTER HAS STAMP OF APPROVAL OF THE HON'BLE APED COURT. 1.10 FURTHER ATTENTION IS DRAWN TOWARDS THE JUDGMENT OF THE HON'BLE ITAT, JAIPUR BENCH (AUTHORED BY HON'BLE JM OF THE P RESENT BENCH) IN THE CASE OF MRS. MRADULA AGARWAL V. ITO - ITA NO. 176/JP/2016 WERE THE PENALTY WAS DELETED BY FOLLOWING THE RATIO LAID DOWN IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA). IT WAS HELD AS UNDER (CASE LAW PAGE 29): '....WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS NOT FILED ANY PAPER BOOK. HOWEVER, ALONGWITH THE WRITTEN SUBMISSION, ASSESSEE HAS FILED A COPY OF LE TTER DATED 16TH FEBRUARY, 2015. IN THE NOTICE DATED 13.03.2013, THE AO HAS T ICKED ON STEREOTYPED FORMAT THE REASON WHICH READS 'CONCEALED PARTICULAR S OF INCOME OF FURNISHED INACCURATE PARTICULARS OF INCOME'. HOWEVER, WHILE LEVYING PENALTY, THE AO HAS LEVIED THE PENALTY ON THE GROUND OF FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE INCOME. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MAN JUNATH COTTON AND GINNING FACTORY (SUPRA) HAS HELD AS UNDER:- IN THE PRESENT CASE ALSO NOTICE HAS BEEN ISSUED BY TICKING THE STEREOTYPED FORMAT. THIS FACT IS NOT CONTROVERTED BY THE REVEN UE. THEREFORE, IN OUR CONSIDERED VIEW, PENALTY PROCEEDING IS NOT VALIDLY INITIATED. HENCE, THE INITIATION OF PENALTY ON THE BASIS OF THE NOTICE DA TED 13TH MARCH, 2013 IS NOT 17 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. IN ACCORDANCE WITH THE REQUIREMENT OF LAW IN VIEW O F THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT REFERRED ABOVE. THE ADDITIONA L GROUND IS ALLOWED.....' 1.11. HON'BLE ITAT, JAIPUR BENCH IN THE FOLLOWING MENTIONED CASES HAS ALSO FOLLOWING THE RATIO LAID DOWN IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA): 1.11.I SHANKAR LAL KHANDELWAL V. DCIT - ITA NO. 878/JP/2003 1.11.II RADHA MOHAN MAHESHWARI V. DCIT - ITA NO. 773/JP/2013 . 1.12. ATTENTION IS DRAWN TOWARDS THE RECENT JUDGMENT OF T HE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHEVATA CONSTRUCTION CO. PVT. LTD. ITA NO. 534/2008(COPY ENCLOSED), WHEREIN THE HON'BLE HIGH COURT AT PARRA 9 OF THE ITS ORDER HELD AS UNDER:- '.....TAKING INTO CONSIDERATION THE DECISION OF THE ANDHRA PRADESH HIGH COURT WHICH VIRTUALLY CONSIDERED THE SUBSEQUENT LAW AND T HE LAW WHICH WAS PREVAILING ON THE DATE THE DECISION WAS RENDERED ON 27.08.2012. IN VIEW OF THE OBSERVATION MADE IN THE SAID JUDGMENT, WE ARE O F THE OPINION THAT THE CONTENTION RAISED BY THE APPELLANT IS REQUIRED TO B E ACCEPTED AND IN THE FINDING OF ASSESSING OFFICER IN THE ASSESSMENT ORDE R IT IS HELD THAT THE AO, HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. HE CANNOT HAVE BOTH THE CONDITIONS AND IF IT IS SO HE HAS TO SAY SO IN THE NOTICE AND RECORD A FINDING IN THE PENALTY ORDER.....' (EMPHASIS SUPPLIED) IN VIEW OF THE ABOVE, PENALTY LEVIED BY THE LD. AO DESERVES TO BE DELETED AS THE SAME HAS BEEN LEVIED BY HIM IN A MECHANICAL MAN NER AND WITHOUT APPLICATION OF MIND. 18 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 8. LD. D/R OPPOSED THE SUBMISSION; HE SUBMITTED THA T THE PENALTY HAS BEEN VALIDLY INITIATED, AND ANY TECHNICAL OR PROCEDURAL DEFECT SHOULD NOT BE THE BASIS FOR CANCELLING THE PENALTY. 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO HAS MERELY TICKED THE PRE-TYPED NOTICE U/S 274 READ WITH SECTION 271 AND 272 OF THE INCOME-TAX ACT. TH E RELEVANT CONTENTS ARE REPRODUCED AS UNDER:- U/S 271(1)(B) FAILED TO COMPLY WITH A NOTICE UNDER SECTION 142(1) OR SECTION 143(2) OR FAILED TO COMPLY WITH A DIRECTION UNDER SECTION 142(2A). U/S 271(1)(C) CONCEALED PARTICULARS OF INCOME OR FU RNISHED INACCURATE PARTICULARS OF INCOME. FROM THE ABOVE, IT IS EVIDENT THAT THERE IS NO SPEC IFIC GROUND FOR WHICH THE NOTICE HAS BEEN ISSUED. IT MERELY STATED THAT CONCEALED P ARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THIS CANNOT BE C ONSTRUED AS THE CONCEALING PARTICULARS OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME. 10. LD. D/R COULD NOT CONTROVERT THE CONTENTS OF TH E NOTICE. HOWEVER, HE SUBMITTED THAT ANY TECHNICAL DEFECT SHOULD NOT GROU ND FOR QUASHING THE PENALTY ORDER. HOWEVER, THE LD. AUTHORIZE REPRESENTATIVE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, UNDER THE IDENTI CAL FACTS, THE HONBLE RAJASTHAN HIGH COURT HAD UPHELD THE DELETION OF PENALTY ON TH IS BASIS. 19 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 11. LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF DB INCOME TAX APPEAL NO. 534/2008 IN THE CASE OF SHEVETA CONSTRUCTION COMPANY PVT. LTD. VS. ITO, WAR D 3(4), JAIPUR. THE HONBLE HIGH COURT HAD FORMULATED THE SUBSTANTI AL QUESTION OF LAW THAT READS AS UNDER: CAN PENALTY FOR ALLEGED CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME BE LEVIED WHEN LEGALITY OF A SSESSMENT PROCEEDINGS ITSELF IS SUBJUDICE BEFORE HONBLE HIGH COURT AND T HE QUESTION TO THAT EFFECT HAS ALREADY BEEN ADMITTED IN QUANTUM APPEAL? THE HONBLE HIGH COURT AFTER CONSIDERING THE VARIO US JUDGMENTS AND THE JUDGMENTS OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CHENNAKESAVA PHARMACEUTICAL VS. CIT 349 ITR 196 AND ALSO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHOFF VS. JOINT COMMISSIONER OF INCOME TAX & ANR. 291 ITR 519 (SC) HELD AS UNDER:- 9. TAKING INTO CONSIDERATION THE DECISION OF THE ANDH RA PRADESH HIGH COURT WHICH VIRTUALLY CONSIDERED THE SUBSEQUENT LAW AND THE LAW WHICH WAS PREVAILING ON THE DATE THE DECISION WAS RENDERED ON 27.08.2012. IN VIEW OF THE OBSERVATIONS MADE IN THE SAID JUDGMENT, WE ARE OF THE OPINION THAT THE CONTENTION RAISED BY THE APPELLANT IS REQUIRED TO B E ACCEPTED AND IN THE FINDING OF ASSESSING OFFICER IN THE ASSESSMENT ORDE R IT IS HELD THAT THE AO, HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. HE CA NNOT HAVE BOTH THE CONDITIONS AND IF IT IS SO HE HAS TO SAY SO IN THE NOTICE AND RECORD A FINDING IN THE PENALTY ORDER. 20 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 10. IN THAT VIEW OF THE MATTER, THE ISSUE IS ANSWER ED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. THE FACTS ARE IDENTICAL AS WERE IN THE CASE BEFORE THE JURISDICTIONAL HIGH COURT. THEREFORE, RESPECTFULLY FOLLOWING THE JURISDICTIONA L HIGH COURT, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY IMPOSED IN PURSUAN CE OF NOTICE DATED 29/09/2010 IS BAD IN LAW, SAME IS HEREBY DELETED. THE LD. DEP ARTMENTAL REPRESENTATIVES HAD RELIED UPON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GRASS FIELD FARMS & RESORTS (P.) LTD. VS. DEPUTY CO MMISSIONER OF INCOME- TAX . THE FACTS OF THAT CASE ARE DISTINGUISHABLE AS IN THAT CASE THE ISSUE OF VALIDITY OF NOTICE WAS NOT UNDER CONSIDERATION. AS IN THAT CAS E ISSUE OF SATISFACTION BY THE AO WAS CONSIDERED BY THE HONBLE HIGH COURT. HOWEVER, IN THE CASE OF SHEVETA CONSTRUCTION COMPANY PVT. LTD., VS. ITO (SUPRA). T HE HONBLE HIGH COURT RULED THAT THE AO HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOS ES TO LEVY A PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE P ARTICULARS OF INCOME. HE CANNOT HAVE BOTH THE CONDITIONS AND IF IT SO HE HAS TO SAY SO IN THE NOTICE AND RECORD THE FINDING IN THE PENALTY ORDER. HENCE, WE DO NOT SEE ANY MERIT INTO THE ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVES. THE ADDITION AL GROUND AS RAISED BY THE ASSESSEE IS ALLOWED. AS WE HAVE ALREADY QUASHED TH E NOTICE U/S 271(1)(C) OF THE ACT. WE THEREFORE, ARE NOT EXPRESSING OUR VIEW ON GROUND NO. 1 WHICH IS ON MERIT. 12. GROUND NO. 2, IS GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDIC ATION. THEREFORE, APPEAL OF THE ASSESSEE IS ALLOWED. 21 ITA NO. 441/JP/2014. SHRI MOHD. SHARIF KHAN, JAIPUR. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 441/JP/2014 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 27 TH DAY OF JULY 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 27/07/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI MOHD. SHARIF KHAN, JAIPUR. 2. THE RESPONDENT- THE DCIT CIRCLE-1, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 441/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR