Sujit Kumar Bhagat, Kolkata V. I.T.O Wd - 28(2),kolkata., Kolkata

ITA 483/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4648 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 27-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 08-03-2013
• Court: TRIBUNAL
• Assessee Lawyers: K K GOSWAMI; ANKIT JALAN
• Keywords: Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3); 142(1)

Judgement Text

I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 483/KOL/ 2013 ASSESSMENT YEAR: 2006-2007 SUJIT KR. BHAGAT,.................................. ......................................APPELLANT C/O. COLORS, 8, HO CHI MINH SARANI, KOLKATA-700 071 [PAN : ADTPB 8219 J] -VS.- INCOME TAX OFFICER,................................ ..................................RESPONDENT WARD-28(2), KOLKATA, 2, GARIAHAT ROAD, AAYAKAR BHAWAN DAKSHIN, KOLKATA-700 031 APPEARANCES BY: SHRI K.K. GOSWAMI, ADVOCATE & SHRI ANKIT JALAN, A.R ., FOR THE ASSESSEE SHRI SALLONG YADEN, ADDL. CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 27, 2016 DATE OF PRONOUNCING THE ORDER : JUNE 29, 2016 O R D E R PER SHRI S.S. VISWANETHRA RAVI :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKATA D ATED 21.01.2013 FOR THE ASSESSMENT YEAR 2006-07, WHEREBY CIT-A CONFIRME D THE LEVY OF PENALTY OF RS.48,78,921/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS A PARTNER IN M/S. ANGELINA & M/S. TRESSBAY, BOTH FIRMS ENGAGE D IN THE BUSINESS OF RUNNING BEAUTY PARLOURS. THE ASSESSEE FILED HIS RET URN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 26.12.2006 DECLARING AN INCOME OF RS.2,33,159/-. UNDER SCRUTINY, NOTICES UNDER SECTI ON 143(2) AND 142(1) I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 9 WERE SERVED ON THE ASSESSEE. IN COMPLIANCE TO THOSE NOTICES, THE LD. A.R. OF THE ASSESSEE AND ASSESSEE HIMSELF APPEARED. AS P ER THE AIR INFORMATION THE AO FOUND, THAT THE ASSESSEE INVESTE D IN MUTUAL FUNDS IN SBI AND HSBC. THE AO WAS OF THE VIEW THAT THE INVES TMENTS WERE MADE THROUGH THE SAVINGS BANK ACCOUNT OF ASSESSEE. THE A SSESSEE EXPLAINED THAT THE AMOUNTS WERE SALE OF ANCESTRAL BUSINESS AN D PROPERTY SITUATED AT ODHISA. IT WAS ALSO EXPLAINED THAT THE AMOUNTS BELO NGED TO HUF. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION MA DE BY THE ASSESSEE AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT DETERMINING THE TOTAL INCOME AT RS.62,82,784/- AND TREATED THE AMOUNT TO BE THE INCOME OF THE ASSESSEE AND ADDED THE SAME. 3. THE PENALTY ORDER WAS CHALLENGED BEFORE THE CIT( APPEALS). THE ASSESSEE SUBMITS THAT THE CIT (APPEALS) FAILED TO A PPRECIATE THE FACTS OF THE CASE AND ALSO DID NOT ACCEPT THE SUBMISSION MAD E BY THE ASSESSEE AND CONFIRMED THE ORDER OF PENALTY PASSED BY THE AO. BE ING AGGRIEVED WITH THE ORDER OF THE CIT(APPEALS), THE ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD.AR SUBMITS THAT DURING THE PEN ALTY PROCEEDINGS, COMPLETE EXPLANATION WAS OFFERED BY THE ASSESSEE RE GARDING THE SOURCE OF AMOUNTS WAS EXPLAINED AND THE ASSESSING OFFICER DID NOT RAISE ANY FURTHER OBJECTIONS NOR SOUGHT ANY OTHER EXPLANATION . FURTHER SUBMITS THAT NEITHER THE PENALTY ORDER NOR THE ASSESSMENT ORDER HAD THE SATISFACTION OF THE ASSESSING OFFICER WHETHER IT IS CASE OF CONCEAL MENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME AND IMP OSED PENALTY @ 300%. THE LD.AR ARGUED DREW OUR ATTENTION TO THE SHOW-CAU SE NOTICE ISSUED UNDER SECTION 274 OF THE ACT, THAT THE SAID SHOW CA USE NOTICE DO NOT INDICATE THE GROUND ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED, I.E. AS TO WHETHER THE ASSESSEE IS GUILTY FOR HAVING CONCEA LED PARTICULARS OF INCOME OR OF FURNISHING INACCURATE PARTICULARS OF I NCOME. THE AO DID NOT STRIKE OUT THE IRRELEVANT PORTION, VIZ. CONCEALED P ARTICULARS OF SUCH INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E IN THE SAID PRINTED I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 9 NOTICE AND IMPOSITION OF PENALTY UNDER SUCH CIRCUMS TANCES IS NOT JUSTIFIED, BAD IN LAW AND IS LIABLE TO BE QUASHED. HE FURTHER SUBMITS THAT THE IMPOSITION OF PENALTY ON THE BASIS OF SUCH INVA LID SHOW CAUSE NOTICE CANNOT BE SUSTAINED. HE RELIED ON THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS.- MANJUNATHA COTT ON & GINNING FACTORY REPORTED IN [2013] 218 TAXMANN 423 (KAR.) AS WELL A S THE DECISION OF THIS TRIBUNAL IN THE CASE OF MAHAVIR PRASAD AGARWAL IN I TA NOS. 738 & 739/KOL/2013 ORDER DATED 15.01.2016 AND IN THE CASE OF IDEAL UNEMPLOYED ENGINEERS COOPERATIVE SOCIETY LTD IN ITA NO. 2460/KOL/2013 ORDER DATED 15.06.2016. 5. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DERS OF BOTH THE LOWER AUTHORITIES AND PRAYED THAT THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) BE UPHELD. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. AR F OR THE ASSESSEE BEFORE US HAS RAISED A PRELIMINARY ISSUE CHALLENGING THE V ALIDITY OF THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER ON THE GROUN D THAT IN THE ABSENCE OF ANY SPECIFIC MENTION IN THE SHOW-CAUSE NOTICE IS SUED UNDER SECTION 274 OF THE ACT FOR THE YEAR UNDER CONSIDERATION BY THE ASSESSING OFFICER AS TO WHETHER THE ASSEESSEE IS GUILTY OF HAVING FURNISHE D INACCURATE PARTICULARS OF INCOME OR OF HAVING CONCEALED PART ICULARS OF SUCH INCOME, THE INITIATION OF PENALTY PROCEEDINGS ITSE LF WAS BAD IN LAW AND THE PENALTY ORDER PASSED IN PURSUANCE THEREOF IS LI ABLE TO BE QUASHED BEING INVALID. HE HAS INVITED OUR ATTENTION TO THE SHOW-CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION UNDER SECTION 274 IN THE PRINTED FORM TO POINT OUT THAT T HE IRRELEVANT PORTION, VIZ. FURNISHED INACCURATE PARTICULARS OF INCOME O R CONCEALED PARTICULARS OF SUCH INCOME WAS NOT STRUCK OFF BY T HE ASSESSING OFFICER. ALTHOUGH THE LD. D.R. HAS CONTENDED IN THIS REGARD THAT THE RELEVANT PORTION IN THE PENALTY NOTICE HAVING BEEN PROPERLY TICKED BY THE ASSESSING OFFICER AND IT IS CLEAR THAT THE OTHER CH ARGE WAS INVOKED BY HIM I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 9 AND THERE WAS THUS NO INFIRMITY IN THE NOTICE ISSUE D BY THE ASSESSING OFFICER UNDER SECTION 274 AS ALLEGED BY THE LD. AR FOR THE ASSESESE. WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS.- ACIT (IN ITA NO. 13 03/KOL/2010) HAD AN OCCASION TO CONSIDER A SIMILAR ISSUE IN THE IDEN TICAL FACTS AND THE ORDER PASSED BY THE ASSESSING OFFICER IMPOSING PENALTY UN DER SECTION 271(1)(C) WAS HELD TO BE INVALID RELYING ON THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANOTHER VS.- MANJU NATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 AFTER DISCU SSING THE PROPOSITION LAID DOWN THEREIN IN GREAT DETAIL IN PARAGRAPH NO. 8 TO 8.2 OF ITS ORDER DATED 06.11.2015, WHICH READ AS UNDER:- 8. THE NEXT ARGUMENT THAT THE SHOW CAUSE NOTICE U/S.2 74 OF THE ACT WHICH IS IN A PRINTED FORM DOES NOT STRIKE OUT AS TO WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURATE PARTICULARS OF INCO ME OR CONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SHO W CAUSE NOTICE U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THEREFORE NOT SPELT OUT AS TO WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS O F SUCH INCOME. 8.1 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CI T & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENAL TY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURT HER LAID DOWN THAT CERTAIN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 2 71 ARE GIVEN WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INI TIATING PENALTY PROCEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID DEC ISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BA D IN LAW AND LIABLE TO BE QUASHED. 8.2 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CI T & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN THE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER OF IMPOSING PENALTY U/S.271(1 )(C) OF THE ACT. NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDINGS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AU THORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAI D GROUNDS MENTIONED I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 5 OF 9 THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASS ED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCE RNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CON TAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST S UCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTME NT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WO ULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSES SEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD T O PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SA TISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NA TURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTI CULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CA SES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCE S. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CA NNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXIS TENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR I NITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASS ESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HI S VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSW ER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTH ERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROU ND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTI CAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PE NALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERM INED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS O F THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASS ED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SU STAINABLE. I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 6 OF 9 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PA RTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NO TICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT O F INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEA LMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DI FFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REP ORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETI NG REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO B E CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENA LTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVO KE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME . THE STANDARD PRO FORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON- APPLICATION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FOLL OWS:- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMERGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERN IBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING T HE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BEC AUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASS ESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SE CTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROC EEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE T O THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 7 OF 9 K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENA LTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMEN T ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIE S IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLA NATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN ORDER IMPOSING PENALTY COULD BE P ASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTA NTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE AND ALL FACT S RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE B EEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO S ECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SAT ISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDING S, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PRO CEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSES SING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIF ICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTION ED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO M EET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED . ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSE SSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASS ESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANA TE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT O F THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDIN GS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVI ED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED AS INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 8 OF 9 IT IS CLEAR FROM THE AFORESAID DECISION THAT ON THE FA CTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED. FOLLOWIN G THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HOLD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE TO BE HELD AS INVALID AND CONSE QUENTLY PENALTY IMPOSED IS CANCELLED. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF PEN ALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDERS IMPOSIN G PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. 7. IN OUR OPINION, THE DECISION OF THE COORDINATE B ENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF SUVAPRASANNA BHATT ACHARYA VS.- ACIT RENDERED VIDE ITS ORDER DATED 06.11.2015 IN ITA NO. 1303/KOL/2010 BY RELYING ON THE DECISION OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT & ANOTHER VS.- MANJUNATHA COTTON & GINNING FAC TORY REPORTED IN 359 ITR 565 IS CLEARLY APPLICABLE IN THE PRESENT CASE A ND RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE SHOW-CAUSE NOT ICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 FOR THE YEAR UN DER CONSIDERATION NOT BEING IN ACCORDANCE WITH LAW, THE PENALTY ORDER PAS SED BY THE ASSESSING OFFICER IN PURSUANCE THEREOF IS LIABLE TO BE CANCEL LED BEING INVALID. WE ACCORDINGLY CANCEL THE ORDER PASSED BY THE ASSESSIN G OFFICER IMPOSING PENALTY UNDER SECTION 271(1)(C) FOR THE YEAR UNDER CONSIDERATION AND ALLOW THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 29 TH , 2016. SD/- SD/- (WASEEM AHMED) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEM BER KOLKATA, THE 29 TH DAY OF JUNE, 2016 I.T.A. NO. 483/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 9 OF 9 COPIES TO : (1) SHRI SUJIT KR. BHAGAT, C/O. COLORS, 8, HO CHI MINH SARANI, KOLKATA-700 071 (2) INCOME TAX OFFICER, WARD-28(2), KOLKATA, 2, GARIAHAT ROAD, AAYAKAR BHAWAN DAKSHIN, KOLKATA-700 031 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, KOLK ATA, (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.