P.K. JOSHUA, NAVI MUMBAI V. ITO 26(2)(3), MUMBAI

ITA 4488/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0282 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Gift; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Source of fund; Question of law; Initiation of penalty proceedings; Reasonable cause; Assessment record
• Section: 143(3); 148; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO S.4487 TO 4491 / MUM/ 20 1 4 ( / ASSESSMENT YEAR S : 20 01 - 2002 TO 2005 - 06 ) P K JOSHUA,MARATHA TOWER BUILDING, 6 TH FLOOR, SEA BRIDGE CHS, SECTOR 16, NERUL, NAVI MUMBAI. / VS. INCOME TAX OFFICER - 26(2)(3), PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : A DCPJ6884A ( / APPELLANT) : ( / RESPONDENT ) / A SSESSEE BY : SHRI RAJESH SHAH /R EVENUE BY : SHRI RAJAT MITTAL / DATE OF HEARING : 9.5. 2017 / DATE OF PRONOUNCEMENT : 7. 6 . 201 7 / O R D E R PER BENCH : THESE ARE FIVE APPEALS FILED BY THE ASSESSEE AGAINST THE COMMON ORDER DATED 26.5.2014 PASSED BY THE LD.CIT(A) - 28, MUMBAI FOR THE ASSESSMENT YEARS 2001 - 2002 TO 2005 - 06 ARISING OUT OF P ENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 IN RESPECT OF FIVE ASSESSMENT YEARS OF RESPECTIVE DATE. SINCE THESE APPEALS PERTAIN TO THE 2 ITA NOS.4487 TO 4491/MUM/2014 SAME ASSESSEE AND ISSUE INVOLVED THEREIN ARE COMMON, THEREFORE , THESE APPEALS WERE CLUBBED TOGETHER, H EARD TOGETHER AND ARE BEING DISPOSE OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO . 4491/MUM/2014 (AY - 2005 - 06) 2. LEAD YEAR IS TAKEN AS ASSESSMENT YEAR 2005 - 06 AND HENCE THIS APPEAL IS BEING DEALT FIRST WHE RE IN VARIOUS GROUNDS RAISED WH ICH ARE AS UNDER : BEING AGGRIEVED AGAINST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 28, MUMBAI, THIS APPEAL PETITION IS BEING FILED TO CONSIDER THE FOLLOWING GROUNDS OF APPEAL, WHICH ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER: 1. ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE PENALTY ON ADDITION OF RS.5,66,608/ - (RS.7,35,728/ - RS.1,69,1201 - ) LEVIED UNDER SECTION 271 (1 )(C) OF THE ACT . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE PENALTY ON RS.23,101/ - BEING THE GIFTS RECEIVED IN INDIA AND ARE NOT GIFTS FROM THE FOREIGN COUNTRY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX ( A) ERRED IN CONFIRMING THE PENALTY ON RS.1,21,282/ - BEING THE GIFTS RECEIVED FROM RELATIVES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE PENALTY ON GIFTS OF RS.4,10,225/ - RECEIVED I N FOREIGN CURRENCY AND THE CONFIRMATIONS IN RESPECT OF MAJOR DONORS HAVE BEEN FILED. THE CIT(A) OUGHT TO HAVE ACCEPTED THE SUBMISSION MADE AND SHOULD NOT HAVE LEVIED THE PENALTY ON THE SAME. 3 ITA NOS.4487 TO 4491/MUM/2014 3 . AT THE TIME OF HEARING, THE ASSESSEE FILED AN ADDITIONAL GROUND OF APPEAL WHEREIN THE GRIEVANCE OF THE ASSESSEE IS THAT THE ORDER PASSED BY THE AO U/S 271(1)(C) OF THE ACT AND ITS FURTHER CONFIRM ATION BY THE LD.CIT(A) W AS BAD IN LAW AS THE AO HAS NOT S TATED I N THE NOTICE I SSUED U/S 271(1)(C) R.W.S 274 OF THE ACT AS TO WHETHER THE PENALTY IS FOR CONCEALMENT OF THE INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND HENCE THE PENALTY ORDER PASSED BY THE AO IS VOID ABINITIO. THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE ARE AS UNDER : 1. ON FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN UPHOLDING THE IMPOSING OF PENALTY U/S 271(1)(C) OF THE ACT. 2. ON FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW CIT(A) ERRED IN UPHOLDING THE PENALTY THOUGH THE AO HAS NOT SPECIFIED IN THE NOTICE NOR IN THE AS SES SMENT ORDER AS TO THE WHETHER THE PENALTY WAS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME . THEREFORE THE PENALTY IMPOSED WAS VOID AB - INITIO 4. AFTER HEARING BOTH THE SIDES ON THE ADMISSION OF ADDITIONAL G ROUND , WE FIND THAT THE ISSUE S RAISED BY MEANS OF ADDITIONAL GROUND ARE ARISING OR EMANATING FROM THE ASSESSMENT RECORDS BEFORE THE AUTHORITIES BELOW AND PURELY OF LEGAL IN NATURE AND THEREFORE WE ARE INCLINED TO ADMIT THE SAME FOR ADJUDICATION. THE LD . CO UNSEL FOR THE ASSESSEE ARGUED THAT NO PENALTY U/S 271(1)(C) OF THE ACT COULD BE IMPOSED WHEN THE AO HAS NOT MENTIONED THE SPECIFIC CHARGE ON WHICH THE PENALTY IS PROPOSED TO BE LEIVIED I.E WHETHER IT IS PROPOSED TO BE LEV IED FOR INACCURATE PARTICULARS OF 4 ITA NOS.4487 TO 4491/MUM/2014 INCOME OR FOR CONCEALMENT OF INCOME . SO WITHOUT GOING INTO THE MERIT OF LEVYING PENALTY, WE ARE FIRST DECIDING THE ISSUE OF VALIDITY OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. 5 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF I NCOME ON 30.2.2006 DECLARING TOTAL INCOME OF RS.89,400/ - . NOTICE UNDER SECTION 148 WAS ISSUED AFTER RECORDING THE REASONS FOR REOPENING THE ASSESSMENT ON 11.7.2006 AFTER T HE AO RECEIVED INFORMATION FROM DIT(INV) UNIT - I, MUMBAI THAT THE ASSESSEE WAS NOT ASS ESSED TO TAX AS HE WAS NOT FILING T HE RETURN OF INCOME . ON FURTHER INQUIRY IT WAS FOUND THAT HE OWN ED TWO RESIDENTIAL PROPERTIES IN NAVI MUMBAI AND THE SOURCE OF INVESTMENT S WE RE OUT OF FOREIGN GIF T S. THE GIFTS WERE RECEIVED FROM OUTSIDE INDIA AND WERE ENCASHED THROUGH VARIOUS FOREIGN CURRENCY DEALERS. AS PER THE GUIDELINES OF RESERVE BANK OF INDIA, DIRECT FOREIGN CURRENCY CANNOT BE BROUGHT INTO INDIA UNLESS IT IS BROUGHT THROUGH DRAFTS , BANKER CHEQUE AND OTHER B ANK ING CHANNELS. THE FOREIGN GIFT S RECEIV ED IN INDIA IS NOT A GIFT AND THEREFORE ASSESSABLE IN THE HANDS OF THE ASSESSEE FROM UNDISCLOSED SOURCES OF INCOME . THE AO ACCORDINGLY ASSESSED TO THE TAX THESE GIFTS OF RS.7,35,728/ - AS INCOME UNDISCLOSED SOURCE S A ND ASSESSED THE TOTAL INCOME UNDER SECT ION 144 READ WITH SECTION 143(3) OF THE ACT AT RS. 8,25,130/ - VIDE ORDER DATED 28.12.2007 AND THE PENALTY PROCEEDINGS W ERE ALSO INITIATED IN THE SAID ORDER WITHOUT RECORDING ANY SATISFACTION AND SIMPLY STAT ING THAT THE PENALTY WAS BEING INITIATED . THE QUANT UM APPEAL BY 5 ITA NOS.4487 TO 4491/MUM/2014 THE ASSESSEE WAS ALSO DISMISSED BY THE LD CIT(A) VIDE ORDER DATED 26.5.2014 AS MADE BY THE AO VIDE ORDER DATED 28.12.2007 . THEREAFTER THE AO ISSUED SHOW CAUSE NOTICE DATED 28.12.2007 U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT AS TO WHY T HE PENALTY SHOULD NOT BE IMPOSED U/S 271(1)( C) R.W.S.274 OF THE ACT WITHOUT SPECIFYING THE LIMB ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED . ULTIMATELY , THE AO IMPOSED THE PENALTY AFTER REJECTING THE VARIOUS CONTENTIONS PUT FORTH BY THE ASSESSEE EQ UAL TO 100% OF THE TAX SOUGHT TO BE EVADED OF RS.2,45,472/ - VIDE ORDER DATED 3.9.2013 PASSED UNDER SECTION 271(1)( C) OF THE ACT. 6 . THE LD COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED BEFORE US THAT T HE AO , WHILE PASSING THE ASSESSMENT ORDER DID NOT R ECORD ANY SATISFACTION AND INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT BY SIMPLY STATING IN THE ASSESSMENT ORDER THAT THE PENALTY PROCEEDINGS WERE BEING INITIATED SEPARATELY WITHOUT RECORDING ANY SATISFACTION . THE LD.AR WHILE TAKING U S THROUGH THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) DATED 28.12.2007 DREW OUR ATTENTION TO THE STANDARD LANGUAGE/PROFORMA FOR ISSUING NOTICE WITHO UT SPECIFYING THE CHARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED AGAINST THE ASSESSEE I.E WH ETHER THE PENALTY IS BEING INITIATED FOR FILING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF INCOME. T HE LD . AR CONTENDED THAT ACCORDING TO THE PROVISIONS OF THE ACT IT IS MANDATORY FOR THE AO TO POINT OUT 6 ITA NOS.4487 TO 4491/MUM/2014 SPECIFICALLY THAT UNDER WHICH LIMB THE PE NALTY IS BEING LEVIED WHICH HAS NOW BEEN SETTLED BY THE JURISDICTIONAL HIGH COURT AND IN THE VARIOUS OTHER DECISIONS OF THE TRIBUNAL WHEREIN IT HA VE BEEN HELD THAT IT IS MANDATORY FOR THE AO TO RECORD SATISFACTION WITH SPECIFIC CHARGE UNDER WHICH THE PENA LTY PROCEEDINGS IS BEING INITIATED AND FAILING WHICH, IT WOULD BE CONSTRUED THAT THE NOTICE WAS ISSUED BY THE AO IS WITHOUT APPLICATION OF MIND WHICH IS BAD IN LAW AND SO IS THE CONSEQUENTIAL ORDER PASSED U/S 271(1)(C) OF THE ACT WHICH IS BAD IN LAW. IN SUPPORT OF HIS CONTENTION, THE LD. AR RELIED UPON THE NUMBER OF DECISION AS UNDER : I ) CIT VS. MANJUNATH COTTON & GINNING FACTORY (359 ITR 565) (KAR HC) II ) CIT VS. V.S. LAD & SONS (SLP) (SC) III ) CIT VS. VEERABHADRAPPA SANGAPPA& CO. (SLP) (SC) IV ) CIT VS. SSA'S EMER ALD MEADOWS (SLP) (SC) ABOVE SLPS HAVE AFFIRMED THE HIGH COURT DECISIONS THE CASE OF CIT VS. MANJUNATH COTTON & GINNING FACTORY V ) DR. SARITA MILIND DAVARE VS ACIT (MUMBAI TRIBUNAL) I.T.A. NO. 2187/MUM/2014(AY - 2009 - 10) 21.12.2016 VI ) CIT VS MA NU ENGG. (122 ITR 306) (GUJ. HC) VII ) DILIP N. SHROOF VS. JCIT (291 ITR 519) (SC) VIII ) UOL VS. DHARAMENDRA TEXTILE PROCESSORS (295 ITR 244) (SC) IX ) CIT V/S RELIANCE PETROPHODUCTS (P) LTD (322 ITR 159) (SC) FINALLY, THE LD.AR PRAYED BEFORE THE BENCH THAT IN V IEW OF T HE DEFECTIVE NOTICE WHICH WAS INCURABLE IN VIEW OF THE RATIO LAID DOWN BY THE VARIOUS DECISIONS OF THE HONBLE HIGH COURTS AND THE DECISIONS OF THE TRIBUNAL, THE PENALTY PROCEEDINGS INITIATED BY THE AO WA S VOID ABINITIO AND THEREFORE 7 ITA NOS.4487 TO 4491/MUM/2014 THE APPEAL O F THE ASSESSEE SHOULD BE ALLOWED ON LEGAL ISSUE BY QUASHING THE PENALTY PROCEEDINGS AND CONSEQUENTIAL ORDER . 7 . ON THE OTHER HAND, THE LD. DR WHILE CONTROVERTING THE ARGUMENTS OF THE LD.AR DEFENDED THE INITIATION OF PENALTY PROCEEDINGS AND PENALTY IMPO SED BY THE AO . THE LD. DR SUBMITTED THAT U/S 274 OF THE ACT THE MANDATORY CONDITIONS ARE THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO REPLY THE SHOW CAUSE. NO SPECIFIC FORMAT HAS BEEN PRESCRIBED UNDER THE ACT OF THE SAID NOTICE. HENCE IT WAS SUFFI CIENT IF THE ASSESSEE WAS AWARE OF THE CHARGES, HE HAD TO MEET ON AN OPPORTUNITY OF BEING HEARD AND THE MISTAKE IN THE NOTICE WOULD NOT INVALIDATE THE PENALTY PROCEEDINGS. THE LD.DR SPECIFICALLY CONTENDED THAT THE AO HAS APPLIED HIS MIND WHILE INITIATING P ENALTY PROCEEDINGS AS VARIOUS ADDITIONS HAVE BEEN MADE AFTER DISCUSSING THE SAME IN LENGTH WITH REASONING FOR MAKING SUCH ADDITIONS AND ALSO CLEARLY MENTIONED IN THE ASSESSMENT ORDER PENALTY PROCEEDINGS WILL BE INITIATED SEPARATELY U/S 271(1)(C) OF THE A CT. UNDER THESE CIRCUMSTANCES, THE ARGUMENTS OF THE LD.AR THAT THE LIMB OF THE PENALTY NOTICE UNDER WHICH THE PENALTY WAS INITIATED WAS NOT STRUCK - OFF WAS WRONG AND WITHOUT SUBSTANCE. THE LD. DR HEAVILY RELIED ON THE DECISION IN THE CASE OF CIT V/S SMT. KAUSHALYA AND ATHERS(1995) 216 ITR 660 (BOM) IN WHICH IT HAS BEEN HELD THAT MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRIKING OF THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE . THE LD.DR FURTHER SUBMITTED THAT THE UNDER 8 ITA NOS.4487 TO 4491/MUM/2014 SECTION 274 OR IN ANY OTHER SECTION OF THE INCOME TAX ACT, THERE IS NO PARTICULAR FORMAT OF NOTICE SINCE STATUTORY NOTICES HAVE BEEN PRESCRIBED IN THE INCOME TAX ACT. THE LD. DR SUBMITTED THAT FOR ISSUING NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) THE REASO NS WERE RECORDED IN THE ASSESSMENT ORDER AND THE ASSESSEE WAS FULLY AWARE OF THE DETAILS AND CHARGE S LEVEL L ED BY THE AO AGAINST HIM AND THEREFORE, IT WOULD BE WRONG AND CONTRARY TO THE FACTS ON RECORD TO ALLEGE THAT THE AO DID NOT APPLY HIS MIND WHILE ISSUING SHOW CAUSE NOTICE U/S 274 R.W.S.271(1)(C). THE LD. DR ALSO ARGUED THAT ISSUANCE OF THE NOTICE WA S ADMINISTRATIVE PROCEDURE FOR INITIATING THE PROPOSAL IN ORDER TO IMPOSE PENALTY. A MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRIKING O F F THE IN ACCURATE PORTION COULD NOT BY ITSELF INVALIDATE THE NOTICE. THE LD. DR ON THE BASIS OF FACTUAL BACKGROUND PRAYED FOR CONFIRMATION OF THE PENALTY ORDER. THE LD.DR RELIED UPON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DHAVAL K JAIN V/S ITO IN ITA NO.996/MUM/2014 (AY - 2003 - 04) ORDER DATED 30.9.2016 WHICH WAS PASSED AFTER CONSIDERING T HE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. KAUSHALYA AND O THERS(SUPRA) THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON & GINN ING FACTORY(SUPRA) . THE LD.DR FINALLY PRAYED THAT IN VIEW OF THE RATIO LAID DOWN IN THE AFORE SAID DECISIONS, THE ORDER OF THE AO LEVYING THE PENALTY AND CONFIRM ATION BY THE LD.FAA PASSED UNDER SECTION 274 R.W.S271(1)(C) SHOULD BE UPHELD BY DISMISSING THE APPEAL OF THE ASSESSEE. 9 ITA NOS.4487 TO 4491/MUM/2014 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS , PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAW RELIED UPON BY THE PARTIES. THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAS ONLY STATED THAT THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY WITHOUT SPECIFYING OR MENTIONING ANY SPECIFIC CHARGE UNDER WHICH THE ASSESSEE IS BEING PROPOSED TO BE PENALIZED I.E. WHETHER THE ASSESSEE HAS CONCEA LED A PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WE ALSO FIND FROM THE SHOW CAUSE NOTICE DATED 2 8.12.2007 ISSUED UNDER SECTION 271(1) (C) R.W.S.274 OF THE ACT EXTRACTED HEREINBELOW , THE AO DID NOT MENTION OR STRUCK OFF THE ONE OF THE TWO LIMBS UNDER WHICH THE PENALTY WAS BEING PROPOSED TO BE IMPOSED . THE SHOW NOTICE ISSUED U.S 271(1) OF THE ACT IS EXTRACTED BELOW FOR THE SAKE OF READY REFERENCE AND CONVENIENCE: - NOTICE U/S 274 R.W.S.271 OFTHE INCOME TAX ACT, 1961. OFFICE OF TH E INCOME TAX, 28(2)(3), MUMBAI DATE: 28.12.2007 TO, SHRI P K JOSHUA,NAVI MUMBAI. PAN:AAAC15902J WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2005 - 06 IT APPEARS TO ME THAT YOU: - 10 ITA NOS.4487 TO 4491/MUM/2014 * HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE INDIAN INCOME TAX ACT,1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) OR BY A NOTICE GIVEN UNDER SECTION 139(2)/148 OF THE INCOME TAX ACT, 1961, NO. --- ---------------- DATED --------------- OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED TO BY THE SAID SECTION 139(1) OR BY SUCH NO TICE. *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIAN INCO ME TAX ACT, 1922 OR UNDER SECTION 142(1 )/143(2) OF THE INCOME TAX ACT, 1961. *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME - OR ----- ------ ----------- FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT A.M. / P.M. ON *****20____ AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER - SECTION - 271 OF THE INCOME TAX ACT, 1961. I F YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE, YOU MAY SNOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271(1)(C) **** WITHIN 07 DAYS FROM THE RECEIPT OF THIS NOTICE. (INCOME TAX OFFICER 28(2)(3), MUMBAI . F INALLY , THE AO IMPOSED THE PENALTY AFTER REJECTING THE CONTENTIONS AND SUBMISSIONS AS RAISED BY THE ASSESSEE AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EV ADED ON 7,35,728/ - WHICH IS RS.2,45,472/ - WITHOUT POINTING OUT THE SPECIFIC LIMB UNDER WHICH THE PENALTY WAS LEVIED AS IS APPARENT FROM THE HIGHLIGHTED PORTION OF NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT . IN THE APPELLATE PROCEEDING CHALLENGING THE PENA LTY , THE FAA PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . NOW, THE ASSESSEE IS IN APPEAL BEFORE US. NOW F IRST WE WILL DECIDE THE TECHNICAL GROUND NO 2 RAISED IN THE ADDITIONAL GROUNDS OF APPEAL BY THE ASSESSEE . WE FIND FROM THE NOTICE THAT 11 ITA NOS.4487 TO 4491/MUM/2014 IT WAS ISSUED IN STANDARD FORMAT WITHOUT STRIKING OFF ANY OF THE TWO LIMBS I.E . FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME OF SUCH INCOME UNDER WHICH THE PENALTY WAS INITIATED AGAINST THE ASSESSEE. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT THE AO LACKED APPLICATION OF MIND IN INITIATING PENALTY PROCEEDINGS WHILE FRAMING ASSESSMENT AND ALSO WHILE ISSUING THE NOTICE INITIATING PENALTY PROCEEDINGS U/S 274 R.W.S 271(1)(C) OF THE ACT WHICH WOULD GO TO THE ROOT OF THE ORD ER AND IS NOT CURABLE . IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY(SUPRA), THE HONBLE KARNATAKA HIGH COURT HAS HELD AS UNDER : NOTICE UNDER SECTION 274 SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CO NCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. SENDING PRINTED FORM, WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED, WOULD NOT SATISFY REQUIREMENT OF LAW. THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SP ECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. [PA RA 63] IN THE CASE OF CIT VS. SSA'S EMERALD MEADOWS ITA 380 OF 2015, THE HONBLE KARNATKA HIGH COURT HAS ALSO DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW AROSE FOR DETERMINATION IN THIS APPEAL WHI CH WAS FILED AGAINST THE ORDER OF THE TRIBUNAL WHEREIN THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE BY QUASHING THE PENALTY PROCEEDINGS AND CONSEQUENT ORDER WHERE THE AO DID 12 ITA NOS.4487 TO 4491/MUM/2014 NOT SPECIFY THE UNDER WHICH LIMB THE PENALTY HAD BEEN INITIATED BY FOLLOWING AN D RELYING ON THE DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (2013)359ITR 565. THE REVENUE FILED SLP AGAINST THE DECISION OF KARNATKA HIGH COURT IN THE ABOVE DECISION WHICH HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT 05.0 8.2016. IN THE CASE OF CIT V/S SAMSON PERINCHERY IN INCOME TAX APPEAL NO. 1154 OF 2014(BOM) ORDER DATED 5.1.2017 THE HONBLE BOMBAY HIGH COURT HAS BEEN HELD AS UNDER: 6 THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING I MPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALT Y PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7 . THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT-ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF MANJU NATH COTTON AND GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). 13 ITA NOS.4487 TO 4491/MUM/2014 9 . WE ARE THEREFORE RESP ECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT AND SUPREME COURT HOLD THAT THE ORDER OF THE CT(A) UPHOLDING THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WHERE THE AO HAD NOT SPECIFIED OR MENT IONED THE CHARGE ON WHICH THE PENALTY HAS BEEN IMPOSED IS NOT CORRECT AND CANNOT BE SUSTAINED. IN VIEW OF THE FOREGOING DISCUSSION WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)( C ) OF THE ACT. 10 . IN THE RE MAINING APPEALS I.E ITA NO S.4487 TO 4490/ MUM/ 2014 (ASSESSMENT YEAR S : 2001 - 2002 TO 2004 - 05 ) THE LEGAL ISSUE TAKEN BY THE ASSESSEE ARE IDENTICAL AND HENCE THE DECISION TAKEN IN ITA NO. 4491/MUM/2014 DELETING THE PENALTY WOULD MUTATIS MUTANDIS APPLY TO THE SE APPEALS AS WELL. ACCORDINGLY, THESE APPEALS ARE ALSO ALLOWED . 11 . IN THE RESULT, THE ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH JUNE , 2017. S D SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 7. 6 .2017 SRL,SR.PS 14 ITA NOS.4487 TO 4491/MUM/2014 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI