COAST LINE SHIPPING (INDIA) PVT. LTD., MUMBAI V. DCIT , CC- 5(1), MUMBAI

ITA 4941/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0043 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 23-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Period of limitation; Question of law; Initiation of penalty proceedings; Time period of passing order; Revised return; Rule 8D
• Section: 271(1)(c); 143(3); 14A; 201; 274; 73; 13; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA , HON'BLE ACCOUNTANT MEMBER IT A. NO S . 4941, 4942 & 4943 /MUM/201 8 (A.Y S : 2013 - 14, 2014 - 15 & 2015 - 16 ) M/S COAST LINE SHIPPING (INDIA) PVT. LTD., 405 - 406 - 407, MINT CHAMBERS , 45/47 MINT ROAD, F ORT, MUMBAI 400 001 PA N: AACCC4110G V. DY . COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 5 ( 1 ) AIR INDIA BUILDING , NARIMAN POINT MUMBAI 400 021 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAVI SAWANA DEPARTMENT BY : SHRI KUMAR PADMAPANI BORA DATE OF HEARING : 13.12.2019 DATE OF PRONOUNCEMENT : 30 .12.2019 O R D E R PER C.N. PRASAD (JM) 1. THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 53, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 21.05.2018 FOR THE A.Y.2013 - 14, 2014 - 15 & 2015 - 16. 2 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., ITA.NO. 4941 & 4942/MUM/2018 (A.YS. 2013 - 14 & A.Y. 2014 - 15 ) : 2. IN BOTH THESE APPEALS ASSESSEE CHALLENGED THE ORDER OF THE LD.CIT(A) IN SUSTAINING LEVY OF PENALTY ON MERITS AS WELL AS ON TECHNICAL GROUNDS. ADDITIONAL GROUNDS WERE ALSO RAISED BY THE ASSESSEE RAISING TECHNICAL GROUND STATING THA T PENALTY U/S. 271(1)(C) OF THE ACT WAS LEVIED WITHOUT SPECIFYING SPECIFIC LIMB OF SECTION. 271(1)(C) FOR VIOLATION OF WHICH ASSESSING OFFICER INTENTS TO IMPOSE PENALTY BY STRIKING OFF THE INAPPROPRIATE WORDS IN THE SHOW CAUSE NOTICE. SINCE ADDITIONAL GRO UND RAISED BY THE ASSESSEE IS PURELY A LEGAL GROUND , IT IS SUBMITTED THAT THE SAME BE ADMITTED AND ADJUDICATED . 3. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: (A). NATIONAL THERMAL POWER CO. LTD [229 ITR 383 (SC)] (B). DILIP N. SHROFF V. JOINT CIT [291 ITR 519 (SC)] (C). SSAS EMERALD MEADOWS [ 2016] 73 TAXMANN.COM (KAR) CONFIRMED BY THE SUPREME COURT IN [2016] 73 TAXMANN.COM 248 (SC) / [2016] 242 TAXMAN 180 (SC) (D). SAMSON PERINCHERY [2017] 88 TAXMANN.COM 413 (BOM ) ON HEARING BOTH THE PARTIES , WE ADMIT THE ADDITIONAL GROUND SINCE THE GROUND TAKEN IS ONLY A LEGAL GROUND. 4. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE NOTICE ISSUED U/S. 274 R.W.S 271(1)(C) OF THE ACT WHICH ARE PLACED AT PAGE NOS. 10 9 AND 69 OF THE PAPER BOOK, SUBMITTED THAT THE AS SESSING OFFICER IS NOT CLEAR AS TO THE 3 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., CHARGE FOR WHICH THE PENALTY IS INITIATED I.E. EITHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS. REFERRING TO THE NOTICE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INAPPROPRIATE LIMB IN THE NOTICE WAS NOT STRIKE OFF. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE ASSESSMENT ORDER SUBMITTED THAT THE ASSESSING OFFICER STATED THAT PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. REFERRING T O THE NOTICE AND PENALTY ORDER, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER DID NOT SPECIFY CHARGE FOR WHICH THE PENALTY PROCEEDINGS WERE INITIATED BUT IN THE PENALTY ORDER PENALTY WAS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FOR CONCEALMENT OF INCOME WITHIN THE MEANING OF THE SECTION 271(1)(C) OF THE ACT AND THEREFORE, THE INITIATION OF PENALTY PROCEEDINGS ITSELF IS IMPROPER AND NOT VALID. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS COMPLETE NON - APPLICATION OF M IND BY THE ASSESSING OFFICER IN INITIATING PENALTY PROCEEDINGS AND THEREFORE , LEVY OF PENALTY IS ILLEGAL, VOID, BAD IN LAW, INITIATED BY NON - APPLICATION OF MIND AND IS WITHOUT JURISDICTION AS THE PENALTY NOTICE ISSUED BY THE ASSESSING OFFICER DOES NOT STRI KE OFF THE IRRELEVANT PORTION THEREON. 5. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: - (I) SAMSON PERINCHERY [2017] 88 TAXMANN.COM 413 (BOM) (II) MANJUNATH COTTON & GINNING FACTORY [359 ITR 565 (KAR)] (III) ACIT V. SHRI HARESH S. JHAVEIR IN ITA.NO. 2561/MUM/2017 DATED 28.09.2018 4 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., (IV) M/S. WADHWA ESTATE & DEVELOPERS INDIA PVT. LTD., V. ACIT IN ITA.NO. 2155/MUM/2016 DATED 02.02.2017 (V) DR. SARITA MILIND DAVRE V. ACIT IN ITA.NO. 2187/MUM/2014 DATED 12.12.2016. (VI) DILIP N. SHROFF V. JOINT CIT [291 ITR 519 (SC)] (VII) CIT V. SAMSON PERINCHE RY [2017] 392 ITR 4 (BOM) (VIII) PR. CIT V. GOA COASTAL RESORTS AND RECREATION PVT. LTD., [TAX APPEAL NO. 24 OF 2019, HIGH COURT OF BOMBAY AT GOA, DATED 11.11.2019. (IX) PR.CIT V. NEW ERA SOVA MINE [TAX APPEAL NO. 70 OF 2018, HIGH COURT OF BOMBAY AT GOA DATED 18.06.20 19] (X) PR. CIT V. GOA DOURADO PROMOTIONS PVT. LTD., [TAX APPEAL NO . 18 OF 2019, HIGH COURT OF BOMBAY AT GOA, DATED 26.11.2019 (XI) ACIT V. GOA DOURADO PROMOTIONS PVT. LTD., [ITA.NO. 276/PAN/2017 DATED 01.01.2019] (XII) ACIT V. GOA DOURADO PROMOTIONS PVT. LTD., [ITA.NO. 277/PAN/2017 DATED 03.01.2019] (XIII) M/S. G.L PANGAM & ASSOCIATES V. ITO [ITA.NO. 5860/MUM/2018 DATED 03.12.2019] 6. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD.CIT(A) AND ALSO RELIED ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SUNDARAM FINANCE WHEREIN IT WAS HELD THAT EVEN ASSUMING THAT THERE WAS DEFECT IN NOTICE IT HAD CAUSED NO PREJUDICE TO ASSESSEE AS THE ASSESSEE UNDERSTOOD WHAT WAS THE PURPOSE OF NOTICE. LD. DR SUBMITTED THAT SLP FILED BY THE ASSESSEE WAS ALSO DISMISSED BY THE HON' BLE SUPREME COURT REPORTED IN 259 TAXMAN 220 . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW, NOTICE ISSUED U/S. 274 R.W.S 271(1)(C) OF THE ACT FOR INITIATION OF PENALTY PROCEEDINGS IN BOTH THE ASSESSMENT Y EARS I.E. A.Y.20 13 - 14 AND A.Y. 2014 - 15 . WE OBSERVE THAT ASSESSING OFFICER DID 5 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., NOT STRIKE OFF AND SPECIFY THE CHARGE/LIMB FOR WHICH HE IS PROPOSING TO INITIATE THE PENALTY PROCEEDINGS. IN THE ASSESSMENT ORDER ASSESSING OFFICER RECORDS THAT THE PENALTY PROCEEDINGS ARE INI TIATED FOR FURNISHING INACCURATE PARTICULARS AND FOR CONCEALMENT OF INCOME. HOWEVER, IN THE PENALTY ORDER PASSED U/S. 271(1)(C) OF THE ACT THE ASSESSING OFFICER RECORDS THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT FOR FURNISHED INAC CURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME . 8. AN IDENTICAL SITUATION HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN MEHERJEE CASSINATH HOLDINGS V. ACIT IN ITA.NO. 2555/MUM/2012 DATED 28.04.2017 AS TO WHETHER THE ACTION OF THE ASSESSING OFFICER IN INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WITHOUT STRIKING OFF ONE OF THE LIMBS AND WITHOUT SPECIFYING THE SPECIFIC CHARGE IN THE NOTICE INIT IATING PENALTY PROCEEDINGS FOR INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER AND THE COORDINATE BENCH CONSIDERING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SAMSON PERINCHERY [392 ITR 4] AND ALSO VARIOUS DECISION S HELD THAT ACTION OF THE ASSESSING OFFICER IN NON - STRIKING OFF RELEVANT CLAUSE IN THE NOTICE SHOWS THAT THE CHARGE BEING MADE AGAINST THE ASSESSEE IS NOT FIRM THEREFORE PROCEEDINGS SUFFER FROM NON - COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE IN AS MUCH A S THE ASSESSING OFFICER HIMSELF IS NOT SURE OF THE CHARGE AND 6 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF SECTION 271(1)(C) OF THE ACT HE HAS TO RESPOND. 9. FOLLOWING THE ABOVE DECISION, SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH I N THE CASE OF ORBIT ENTERPRISES V. ITO [60 ITR(TRIB.) 252]. IN THE CASE OF DCIT V. SHRI DHAVAL D. SHAH IN ITA NO. 1337/MUM/2016 DATED 16.05.2018 THE COORDINATE BENCH CONSIDERED SIMILAR AND IDENTICAL ISSUE AND FOLLOWING THE RATIO LAID DOWN IN THE DILIP N. SHROFF [210 CTR 228 (SC)] AND THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SAMSON PERINCHERY (SUPRA) HELD THAT THE PENALTY PROCEEDINGS INITIATED BY THE ASSESSING OFFICER IS BAD IN LAW. WHILE HOLDING SO THE COORDINATE BENCH H ELD AS UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. WE BEGIN WITH THE DECISIONS RELIED ON BY THE LD. DR. IN THE CASE OF SMT. KAUSHALYA & ORS. (SUPRA), THE HONBLE BOMBAY HIGH COURT HELD: 9. WE WILL FIRST TAKE UP THE SHOW - CAUSE NOTICE DATED MARCH 29, 1972, PERTAINING TO THE ASSESSMENT YEARS 1968 - 69 AND 1969 - 70. THE ASSESSMENT ORDERS WERE ALREADY MADE AND THE REASONS FOR ISSUING THE NOTICE UNDER SECTION 274 R EAD WITH SECTION 271(1)(C) WERE RECORDED BY THE INCOME - TAX OFFICER. THE ASSESSEE FULLY KNEW IN DETAIL THE EXACT CHARGE OF THE DEPARTMENT AGAINST HIM. IN THIS BACKGROUND, IT COULD NOT BE SAID THAT EITHER THERE WAS NON - APPLICATION OF MIND BY THE INCOME - TAX O FFICER OR THE SO - CALLED AMBIGUOUS WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF THE ASSESSEE TO REASONABLE OPPORTUNITY OF BEING HEARD. AFTER ALL, SECTION 274 OR ANY OTHER PROVISION IN THE ACT OR THE RULES, DOES NOT EITHER MANDATE THE GIVING OF NOTICE OR ITS 7 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., ISSUANCE IN A PARTICULAR FORM. PENALTY PROCEEDINGS ARE QUASI - CRIMINAL IN NATURE. SECTION 274 CONTAINS THE PRINCIPLE OF NATURAL JUSTICE OF THE ASSESSEE BEING HEARD BEFORE LEVYING PENALTY. RULES OF NATURAL JUSTICE CANNOT BE IMPRISONED IN ANY ST RAIGHT - JACKET FORMULA. FOR SUSTAINING A COMPLAINT OF FAILURE OF THE PRINCIPLES OF NATURAL JUSTICE ON THE GROUND OF ABSENCE OF OPPORTUNITY, IT HAS TO BE ESTABLISHED THAT PREJUDICE IS CAUSED TO THE CONCERNED PERSON BY THE PROCEDURE FOLLOWED. THE ISSUANCE OF NOTICE IS AN ADMINISTRATIVE DEVICE FOR INFORMING THE ASSESSEE ABOUT THE PROPOSAL TO LEVY PENALTY IN ORDER TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DONE. MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRIKING OF THE INACCURATE PORTION CANNOT BY I TSELF INVALIDATE THE NOTICE. THE ENTIRE FACTUAL BACKGROUND WOULD FALL FOR CONSIDERATION IN THE MATTER AND NO ONE ASPECT WOULD BE DECISIVE. IN THIS CONTEXT, USEFUL REFERENCE MAY BE MADE TO THE FOLLOWING OBSERVATION IN THE CASE OF CIT V. MITHILA MOTOR'S (P.) LTD. [1984] 149 ITR 751 (PATNA) (HEAD NOTE): UNDER SECTION 274 OF THE INCOME - TAX ACT, 1961, ALL THAT IS REQUIRED IS THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO SHOW CAUSE. NO STATUTORY NOTICE HAS BEEN PRESCRIBED IN THIS BEHALF. HENCE, IT IS SUFFI CIENT IF THE ASSESSEE WAS AWARE OF THE CHARGES HE HAD TO MEET AND WAS GIVEN AN OPPORTUNITY OF BEING HEARD. A MISTAKE IN THE NOTICE WOULD NOT INVALIDATE PENALTY PROCEEDINGS. IN M/S MAHARAJ GARAGE & CO. (SUPRA), THE HONBLE BOMBAY HIGH COURT AT PARA 15 HELD : THE REQUIREMENT OF SECTION 274 OF THE INCOME TAX ACT FOR GRANTING REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER CANNOT BE STRETCHED TO THE EXTENT OF FRAMING A SPECIFIC CHARGE OF ASKING THE ASSESSEE AN EXPLANATION IN RESPECT OF THE QUANTUM OF PENAL TY PROPOSED TO BE IMPOSED, AS HAS BEEN URGED. THE ASSESSEE WAS SUPPLIED WITH THE FINDINGS RECORDED IN THE ORDER OF RE - ASSESSMENT, WHICH WAS PASSED ON THE SAME DATE ON WHICH THE NOTICE U/S 271(1)(C) WAS ISSUED, INITIATING THE PROCEEDINGS OF IMPOSING THE PEN ALTY. THE ASSESSEE HAD SUFFICIENT NOTICE OF THE ACTION OF IMPOSING PENALTY. WE, THEREFORE, DO NOT FIND EITHER ANY JURISDICTION ERROR OR UNJUST EXERCISE OF POWER BY THE AUTHORITY. IN SKY LIGHT HOSPITALITY LLP (SUPRA), THE ASSESSEE (SKY LIGHT HOSPITALITY LL P) WHO HAD TAKEN OVER ON 13.05.2016 AND ACQUIRED RIGHTS AND LIABILITIES OF M/S SKY LIGHT HOSPITALITY PVT. LTD. UPON CONVERSION UNDER THE LIMITED LIABILITY PARTNERSHIP ACT, 2008, FILED A 8 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., WRIT PETITION IMPUGNING NOTICE DATED 30.03.2017 ISSUED BY THE AO U/S 1 47/148 FOR THE AY 2010 - 11. THE CONTENTION OF THE ASSESSEE BEFORE THE HONBLE HIGH COURT WAS THAT NOTICE U/S 147/148 OF THE ACT DATED 30.03.2017 WAS ADDRESSED AND ISSUED TO M/S SKY LIGHT HOSPITALITY PVT. LTD., PAN NO. AALCS3800N, A COMPANY WHICH HAD CEASED TO EXIST AND WAS DISSOLVED ON 13.05.2016. IT WAS STATED THAT THE SAID NOTICE ISSUED TO A DEAD JURISTIC PERSON IS INVALID AND VOID IN THE EYES OF LAW. ALSO CONTENTIONS WERE RAISED STATING THAT SECTION 292B WAS INAPPLICABLE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. OUR ATTENTION WAS DRAWN TO PARASHURAM POTTERY WORKS CO. LTD. V. ITO, CIRCLE I, WARD A, RAJKOT, (1977) 106 ITR 1 (SC) WHICH RECORDS THAT THE ASSESSING OFFICER ENTRUSTED WITH THE TASK OF CALCULATING AND REALIZING TAX SHOULD FAMILIARIZE THEMSE LVES WITH THE RELEVANT PROVISIONS AND BECOME WELL VERSED WITH THE LAW ON THE SUBJECT. THIS IS A SALUTARY ADVICE. INDEED, THERE HAVE BEEN LAPSES AND FAULTS RESULTING IN THE PRESENT LITIGATION. NOTICE UNDER SECTION 147/148 OF THE ACT WAS ISSUED AT THE END OF THE LIMITATION PERIOD. NOTICEABLY, ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2013 - 2014 WAS PASSED ON 31.03.20I6, ONE YEAR EARLIER. SECOND LAPSE IS ALSO APPARENT. DESPITE CORRECTLY NOTING THE BACKGROUND, NOTICE UNDER SECTION 147/148 OF THE ACT WAS NOT ADDR ESSED IN THE CORRECT NAME AND EVEN THE PAN NUMBER MENTIONED WAS INCORRECT. NEVERTHELESS, HUMAN ERRORS AND MISTAKES CANNOT AND SHOULD NOT NULLIFY PROCEEDINGS WHICH ARE OTHERWISE VALID AND NO PREJUDICE HAD BEEN CAUSED. THIS IS THE EFFECT AND MANDATE OF SECTI ON 292B OF THE ACT. IN SMT. SHANTIDEVI MAHAVIR PRASAD GUPTA (SUPRA), THE TRIBUNAL HELD AS UNDER: 10. THE QUESTION BEFORE US IS NOT WHETHER THE INCOME IS OF THE NATURE OF NOTIONAL INCOME BUT THE QUESTION IS WHETHER THE ASSESSEE HAS FILED INACCURATE PART ICULARS OR CONCEALED THE TRUE FACTS. AS STATED HEREINABOVE, IN OUR HUMBLE OPINION, THE ASSESSEE HAS CONCEALED THE TRUE FACTS THEREBY FILED INACCURATE PARTICULARS. THEREFORE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). THE PENAL TY U/S. 271(1)(C) IS LEVIABLE ON THE FACTS OF THE CASE. THE RELIANCE ON THE DECISION OF THE TRIBUNAL IS CLEARLY DISTINGUISHABLE ON THE FACTS. WE, ACCORDINGLY CONFIRM THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. IN MS. LAUDRES AUSTIN (SUPRA), THE TRIBUNA L HELD THE FOLLOWING: IN THE INSTANT CASE ALSO WE HOLD THAT PENALTY PROCEEDINGS WERE INITIATED PROPERLY AS THERE IS NO DEFECT IN THE RECORDING OF SATISFACTION BY THE AO AS WELL THERE IS NO DEFECT IN THE NOTICE ISSUED U/S 271 R.W.S. 274 OF THE 1961 ACT. TH E DECISION OF HONBLE BOMBAY HIGH COURT IN SAMSON PERINCHERRY (SUPRA) IS 9 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., CONCERNING THE ISSUANCE OF PENALTY PROCEEDINGS UNDER ONE LIMB WHILE LEVYING OF PENALTY UNDER ANOTHER LIMB OF SECTION 271(1)(C) WHICH IS NO PERMISSIBLE AS PER RATIO OF THIS DECISION. T HE HONBLE SUPREME COURT IN SSAS EMERALD MEADOWS (SUPRA) WHILE DISMISSING SLP RECORDED FINDING THAT THE HONBLE LORDSHIPS DID NOT FIND ANY MERIT IN THIS PETITION WHICH MEANS RATIO OF DECISION OF HONBLE KARNATAKA HIGH COURT IN SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 STOOD CONFIRMED. THE HONBLE KARNATAKA HIGH COURT IN SSAS EMERALD MEADOWS HAS AFFIRMED THE RATIO OF JUDGMENT OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). WE HAVE ALREADY SEEN THAT HONBLE KARNATAKA HIGH COURT IN MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS AFFIRMED THAT ALTERNATE CHARGE IS POSSIBLE UNDER BOTH THE LIMBS SIMULTANEOUSLY. 9.1 IN THE INSTANT CASE, THE AO VIDE HIS ORDER U/S 143(3) DATED 28.12.2011 HAS INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING INAC CURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IN THE DRAFT PENALTY ORDER U/S 271(1)(C) DATED 24.03.2014, THE AO HAS IMPOSED PENALTY OF RS.46,59,047/ - FOR CONCEALMENT OF INCOME. ALSO WE FIND THAT THERE IS NO PROVISION IN THE INCOME TAX ACT, 1961 FO R A DRAFT PENALTY ORDER U/S 271(1)(C) OF THE ACT. 9.2 IT WOULD BE APPOSITE TO REFER HERE TO THE DECISION IN DILIP N. SHROFF V. JCIT (2007) 210 CTR (SC) 228, WHEREIN IT HAS BEEN HELD: 83. IT IS OF SOME SIGNIFICANCE THAT IN THE STANDARD PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. 84. TH E IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON - APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. [SEE MALABAR INDUSTRIAL CO. LTD. V. COMMISSIONER OF INCOME TAX, KERALA STATE, (2000) 2 SCC 718] IN CIT VS. SAMSON PERINC HERRY (ITA NO. 953, 1097, 1154 & 1226 OF 2014), THE HONBLE BOMBAY HIGH COURT HELD: 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 PR OCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE ORDER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN 10 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN DILIP N. SHROFF (SUPRA) AND SAMSON PERINCHERRY (SUPRA) , WE HOLD THAT THE PENALTY PROCEEDINGS INITIATED BY THE AO IS BAD IN LAW. WE MAY HEREIN OBSERVE THAT SINCE THE ORDER OF THE AO HAS BEEN HELD AS BAD IN LAW ON THE PRELIMINARY GROUND, THE OTHER GROUNDS RAISED BY THE REVENUE ON MERITS BEFORE US HAVING BEEN RE NDERED AS ACADEMIC, ARE THUS NOT BEING DEALT WITH. 10. THE HON'BLE TELANGANA AND ANDHRA PRADESH HIGH COURT IN THE CASE OF PR. CIT V. SMT BAISETTY REVATHI [ 398 ITR 88 (T & AP ) ] HELD AS UNDER: 7. PERUSAL OF THE ORDER REFLECTS THAT THE ASSESSEE DID NOT RAISE THE ISSUE OF INVALIDITY OF THE PENALTY NOTICE BEFORE THE COMMISSIONER. IN HER SECOND APPEAL BEFORE THE INCOME - TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM, IN ITA NO.599/VIZAG/2014 , THE ASSESSEE, FOR THE FIRST TIME, RAISED THE ISSUE THAT THE SHOW - CAUSE NOTICE UNDER SECTION 271(1)(C) DID NOT SPECIFY AS TO WHETHER IT WAS PROMPTED BY CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. DEALING WITH THIS CONTENTION, THE TRIBUNAL PLACED RELIANCE ON THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CIT V/S. M/S. MANJUNATHA COTTON AND GINNING FACTORY AND OPINED THAT UNLESS THE SHOW - CAUSE NOTICE IS CLEAR AS TO WHETHER THE PENALTY PROPOSED TO BE IMPOSED IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME, NO PENALTY COULD BE IMPOSED, AS SUCH A NOTICE WOULD BE DEFECTIVE. THE TRIBUNAL TOOK NOTE OF THE FACT THAT IN THE PENALTY ORDER; THE ASSESSING OFFICER HAD NOT GIVEN A CONCLUSIVE FINDING AS TO WHETHER THE PENALTY IMPOSED WAS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY HELD IMPOSITION OF THE PENALTY TO BE I NVALID. 8. SMT.M. KIRANMAYEE, LEARNED COUNSEL REPRESENTING SRI J.V.PRASAD, LEARNED SENIOR STANDING COUNSEL FOR THE REVENUE, WOULD ARGUE THAT THE ASSESSEE NEVER RAISED THE ISSUE AS TO AMBIGUITY IN THE SHOW - CAUSE NOTICE BEFORE ANY OF THE LOWER AUTHORITIES AN D THAT THIS INDICATED SHE WAS FULLY AWARE AS TO WHAT WAS THE ALLEGATION LEVELED AGAINST HER. LEARNED COUNSEL WOULD POINT OUT THAT IN HER REPLY TO THE SHOW - CAUSE NOTICE, THE ASSESSEE SOUGHT TO EXPLAIN THE LAPSES ON HER PART WHICH EVIDENCED HER AWARENESS AS TO THE EXACT ALLEGATIONS MADE AGAINST HER IN THE SAID SHOW - CAUSE NOTICE. LEARNED COUNSEL WOULD THEREFORE ARGUE THAT RAISING THE ISSUE OF LACK OF CLARITY IN THE SHOW - CAUSE NOTICE FOR THE FIRST TIME BEFORE THE TRIBUNAL WAS AN 11 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., AFTERTHOUGHT AND THAT THE TRIBU NAL OUGHT NOT TO HAVE GIVEN THE ASSESSEE THE BENEFIT OF DOUBT IN THIS REGARD. 9. PER CONTRA, SRI R.RAGHUNANDAN, LEARNED SENIOR COUNSEL REPRESENTING SRI T.BALA MOHAN REDDY, LEARNED COUNSEL FOR THE ASSESSEE, WOULD RELY UPON THE DECISIONS OF THE KARNATAKA AND GUJARAT HIGH COURTS AND ASSERT THAT WHEN PENAL PROCEEDINGS ARE INITIATED UNDER SECTION 271(1)(C) OF THE ACT OF 1961, AN ASSESSEE MUST BE MADE AWARE IN NO UNCERTAIN TERMS AS TO WHAT IS THE SPECIFIC ALLEG ATION WHICH FORMS THE BASIS FOR THE PROPOSED PENALTY. 10. A COPY OF THE PROFORMA NOTICE UNDER SECTION 271 READ WITH SECTION 274 OF THE ACT OF 1961 AD DRESSED TO THE ASSESSEE ON 22.03.2013 IS PRODUCED. PERUSAL THEREOF REFLECTS THAT THE IRRELEVANT CONTENTS THEREIN, WHICH HAD NO APPLICATION TO THE ASSESSEE, WERE STRUCK OUT LEAVING ONLY ONE CLAUSE WHICH READS AS UNDER: WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2010 - 11 IT APPEARS TO ME THAT YOU HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 11. IT WOULD BE APPOSITE AT THIS STAGE TO CONSIDER THE JUDGMENT OF THE KARNATAKA HIGH CO URT IN M/S. MANJUNATHA COTTON AND GINNING FACTORY. THEREIN, A DIVISION BENCH OF THE KARNATAKA HIGH COURT OBSERVED THAT SECTION 271 OF THE ACT OF 1961 IS A SPECIFIC PROVISION PROVIDING FOR IMPOSITION OF P ENALTIES AND IS A COMPLETE CODE IN ITSELF REGULATING THE PROCEDURE FOR SUCH IMPOSITION. THE BENCH THEREFORE HELD THAT PENALTY PROCEEDINGS HAVE TO BE CONDUCTED IN ACCORDANCE THEREWITH, SUBJECT ALWAYS TO THE RULES OF NATURAL JUSTICE. IT WAS POINTED OUT THAT SECTION 271 MAKES APPROPRIATE PROVISION FOR LEVYING PENALTIES ON AN ASSESSEE IN DIFFERENT EVENTUALITIES AND ONE SUCH EVENTUALITY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SU CH INCOME. IT WAS HELD THAT FOR STARTING THE PENALTY PROCEEDINGS, THE CONDITION PRECEDENT IS THAT THE ASSESSING OFFICER MUST BE SATISFIED THAT A PERSON HAS EITHER CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE P ERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE AWARE OF THE GROUNDS ON WHICH IMPOSITION OF PENALTY IS PROPOSED AS HE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAV E A FULL OPPORTUNITY TO MEET THE CASE OF THE REVENUE SO AS TO SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AND THAT HE IS NOT LIABLE TO PAY THE PENALTY. IT WAS FURTHER HELD THAT THE PRACTICE OF THE REVENUE IN SENDING A PRINTED FORM WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW WHEN THE CONSEQUENCE OF THE ASSESSEE NOT REBUTT ING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAS TO PAY A PENALTY RANGING FROM 100% TO 300% OF THE TAX LIABILITY. AS THE PROVISIONS OF SECTION 271(1)(C) HAVE TO BE STRICTLY CONSTRUED, 12 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., THE BENC H MANDATED THAT THE NOTICE ISSUED SHOULD SET OUT THE GROUNDS WHICH THE ASSESSEE HAS TO MEET SPECIFICALLY, OTHERWISE THE PRINCIPLES OF NATURAL JUSTICE WOULD BE OFFENDED AS THE SHOW - CAUSE NOTICE WOULD BE VAGUE. DEALING WITH CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE BENCH OBSERVED THAT SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME, THERE MAY BE OVERLAPPING OF BOTH, BUT IN SUCH CASES INITIATION OF THE PENALTY PROCEEDINGS MUST BE SPECIFICALLY FOR BOTH THE OFFENCES. DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OR FINDING HIM GUILTY FOR EITHER, THE ONE OR THE OTHER, WAS HELD TO BE UNSUSTAINABLE IN LAW. 12. IN CIT V/S. MANU ENGINEERING WORKS [122 ITR 3006 (GUJ)] , A DIVISION BENCH OF THE GUJARAT HIGH COURT OBSERVED THAT THE ASSESSING OFFICER MUST GIVE A POSITIVE FINDING AS TO WHETHER THERE IS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSE E. IN THE EVENT THERE WAS NO SUCH CLEAR - CUT FINDING, THE PENALTY ORDER WAS HELD LIABLE TO BE STRUCK DOWN. 13. SMT.KIRANMAYEE, LEARNED COUNSEL, PLACED RELIANCE ON THE JUDGMENT OF THE SUPREME COURT IN K.P.MADHUSUDHANAN V/S. CIT [251 ITR 99 (SC)]. THEREIN, TH E SUPREME COURT HELD THAT IT IS NOT NECESSARY FOR THE ASSESSING OFFICER, WHILE ISSUING A NOTICE UNDER SECTION 271(1)(C) , TO EXPRESSLY INVOKE EXPLANATION 1(B) APPENDED TO THE PROVISION. IT IS HOWEVER RELE VANT TO NOTE THAT EXPLANATION 1(B) MERELY ADVERTS TO A CASE OF FAILURE OF AN ASSESSEE TO SUBSTANTIATE THE EXPLANATION OFFERED WHEREBY THE AMOUNT ADDED OR DISALLOWED WHILE COMPUTING THE TOTAL INCOME OF SUCH PERSON FOR THE PURPOSES OF THE PENALTY PROVISION S HALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAD BEEN CONCEALED. THE SUPREME COURT OBSERVED THAT THE STATUTORY PROVISION INCLUDED THE EXPLANATION AND ONCE THE ASSESSEE WAS PUT ON NOTICE, NO EXPRESS INVOCATION OF THE EXPLANATION IS NECESSARY. 14. THIS JUDGMENT HAS NO APPLICATION TO THE CASE ON HAND AS WHAT WE ARE CONCERNED WITH PRESENTLY IS WHETHER THE ASSESSEE IS REQUIRED TO BE PUT ON NOTICE AS TO WHETHER SHE IS TO BE PENALIZED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. THESE ARE TWO DIFFERENT ACTS. CONCEALMENT OF INCOME IS AN ACT OF OMISSION WHILE FURNISHING OF INACCURATE PARTICULARS OF INCOME IS AN ACT OF COMMISSION. THE CONSEQUENCES OF SUCH ACTS, BEING PENAL IN NATURE, AN ASSESSEE HAS TO BE INFORMED AS TO WHAT EXACTLY IS THE CHARGE AGAINST HIM SO THAT HE MAY RESPOND THERETO. 15. NO DOUBT, IN THE PRESENT CASE, THE ASSESSEE SEEMS TO HAVE SUBMITTED HER EXPLANATION ON MERITS WITHOUT RAISING A DOUBT AS TO WHAT WAS THE PRECISE ALLEGATION LEVELED AGAINST HER. HOWEVER, WE ARE MORE CONCERNED WITH THE PRINCIPLE INVOLVED AND NOT JUST THE 13 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., ISOLATED CASE OF ITS APPLICATION AGAINST THE ASSESSEE. FURTHER, THE PENALTY ORDER DEMONSTRATES THAT THE ASSESSING OFFICER WAS NOT EVEN CERTAIN AS TO WHAT WAS THE FINDING ON THE STRENGTH OF WHICH HE IMPOSED THE PENALTY. THIS IS CLEAR FROM THE FACT THAT THE ASSESSING OFFICER RECORDED THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED/FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF A CLEAR FINDING BY THE ASSESSING OFFICER HIMSELF, THE BENEFIT OF DOUBT CANNOT BE GIVEN TO THE REVENUE MERELY BECAUSE THE ASSESSEE DID NOT COMPLAIN OF VAGUENESS IN THE SHOW - CAUSE NOTICE EARLIER. 16. RELIANCE PLACED BY THE REVENUE UPON MAK DATA PRIVATE LIMITED V/S. CIT [35 8 ITR 593 (SC)], IS OF NO ASSISTANCE AS THE SUPREME COURT MERELY OBSERVED THEREIN THAT THE ASSESSING OFFICER IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER WHILE IMPOSING THE PENALTY OR REDUCE IT TO WRITING. THAT IS NOT THE CONTROVERSY I N THE CASE ON HAND. 17. ON PRINCIPLE, WHEN PENALTY PROCEEDINGS ARE SOUGHT TO BE INITIATED BY THE REVENUE UNDER SECTION 271(1)(C) OF THE ACT OF 1961, THE SPECIFIC GROUND WHICH FORMS THE FOUNDATION THEREFO R HAS TO BE SPELT OUT IN CLEAR TERMS. OTHERWISE, AN ASSESSEE WOULD NOT HAVE PROPER OPPORTUNITY TO PUT FORTH HIS DEFENCE. WHEN THE PROCEEDINGS ARE PENAL IN NATURE, RESULTING IN IMPOSITION OF PENALTY RANGING FROM 100% TO 300% OF THE TAX LIABILITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. WHEN THE CHARGE IS EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF, THE REVENUE MUST SPECIFY AS TO WHICH ONE OF THE TWO IS SOUGHT TO BE PRESSED INTO SERVICE AND CANNOT BE PER MITTED TO CLUB BOTH BY INTERJECTING AN OR BETWEEN THE TWO, AS IN THE PRESENT CASE. THIS AMBIGUITY IN THE SHOW - CAUSE NOTICE IS FURTHER COMPOUNDED PRESENTLY BY THE CONFUSED FINDING OF THE ASSESSING OFFICER THAT HE WAS SATISFIED THAT THE ASSESSEE WAS GUILTY O F BOTH. 18. WE ARE THEREFORE OF THE OPINION THAT THE ORDER UNDER APPEAL DOES NOT BROOK INTERFERENCE ON ANY GROUND. WE FIND NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL ONE, ARISING FOR CONSIDERATION WARRANTING ADMISSION OF THIS APPEAL. 11. RECENTLY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF THE PCIT V. GOA COASTAL RESORTS AND RECREATION PVT. LTD., IN TAX APPEAL N O. 24 OF 2019 ORDER DATED 11.11.2019 , HELD AS UNDER: - 3. MS RAZAQ , LEARNED ADVOCATE SUBMITS THAT IN THIS CASE THE REVISED RETURNS FILED BY THE RESPONDENTS INDICATED THAT THE DISCLOSURES WERE MADE ONLY BY PIECEMEAL. RELYING UPON MAK DATA 14 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., (P.) LTD V/S. COMMISSIONER OF INCOME TAX 1 , SHE SUBMITS THAT SUCH DISCLOSURE DOES N OT RELIEVE THE ASSESSEE OF THE REQUIREMENT OF PAYING PENALTY. HE SUBMITS THAT THE ASSESSMENT ORDER IN THE PRESENT CASE MAKES REFERENCE TO CONCEALMENT AND/OR INACCURATE PARTICULARS. IN THIS VIEW OF THE MATTER, SHE SUBMITS THAT THE SUBSTANTIAL QUESTIONS OF L AW AS AFORESAID WILL BE ARISES AND THE VIEW TAKEN BY THE COMMISSIONER (APPEALS) AS WELL AS THE ITAT IN RELATION THE DELETION OF PENALTY, WARRANTS INTERFERENCE. 4. MR RAO, LEARNED ADVOCATE FOR THE ASSESSEE POINTS OUT THAT THERE IS ABSOLUTELY NO FINDING AS R EGARDS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. HE FURTHER POINTS OUT THAT IN THE NOTICE ISSUED TO THE ASSESSEE ON 30/09/2016, THE DEPUTY COMMISSIONER HAD NOT EVEN BOTHERED TO STRIKE DOWN THE RELEVANT PORTION OF THE PRINTED FORM IN ORDER TO IND ICATE WHETHER THE SATISFACTION IS BASED UPON THE CONCEALMENT OF PARTICULARS OR FURNISHING OF INACCURATE PARTICULARS. HE RELIES ON COMMISSIONER OF INCOME TAX - 11 V/S. SHRI SAMSON PERINCHERY2 AND PRINCIPAL COMMISSIONER OF INCOME TAX V/S. NEW ERA SOVA MINE3 TO SUBMIT THAT ON THE BASIS OF SUCH A DEFECTIVE NOTICE, AWARD OF PENALTY CAN NEVER BE SUSTAINED. 5. WE HAVE CAREFULLY EXAMINED THE RECORD AS WELL AS DULY CONSIDERED THE RIVAL CONTENTIONS. BOTH THE COMMISSIONER (APPEALS) AS WELL AS THE ITAT HAVE CATEGORICALLY HELD THAT IN THE PRESENT CASE, THERE IS NO RECORD OF SATISFACTION BY THE ASSESSING OFFICER THAT THERE WAS ANY CONCEALMENT OF INCOME OR THAT ANY INACCURATE PARTICULARS WERE FURNISHED BY THE ASSESSEE. THIS BEING A SINE QUA NON FOR INITIATION OF PENALTY PROC EEDINGS, IN THE ABSENCE OF SUCH PETITION, THE TWO AUTHORITIES HAVE QUITE CORRECTLY ORDERED THE DROPPING OF PENALTY PROCEEDINGS AGAINST THE PETITIONER. 6. BESIDES, WE NOTE THAT THE DIVISION BENCH OF THIS COURT IN SAMSON(SUPRA) AS WELL AS IN NEW ERA SOVA MIN E(SUPRA) HAS HELD THAT THE NOTICE WHICH IS ISSUED TO THE ASSESSEE MUST INDICATE WHETHER THE ASSESSING OFFICER IS SATISFIED THAT THE CASE OF THE ASSESSEE INVOLVES CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR BOTH , WITH CLARITY. IF THE NOTICE IS ISSUED IN THE PRINTED FORM, THEN, THE NECESSARY PORTIONS WHICH ARE NOT APPLICABLE ARE REQUIRED TO BE STRUCK OFF, SO AS TO INDICATE WITH CLARITY THE NATURE OF THE SATISFACTION RECORDED. IN BOTH SAMSON PERINCHERY AND NEW ERA SOVA MINE(SUPRA), THE NOTICES ISSUED HAD NOT STRUCK OF THE PORTION WHICH WERE INAPPLICABLE. FROM THIS, THE DIVISION BENCH CONCLUDED THAT THERE WAS NO PROPER RECORD OF SATISFACTION OR PROPER APPLICATION OF MIND IN MATTER OF INITIATION OF PENALTY PROCEEDINGS . 7. IN THE PRESENT CASE, AS WELL IF THE NOTICE DATED 30/09/16 (AT PAGE 33) IS PERUSED, IT IS APPARENT THAT THE RELEVANT PORTIONS HAVE NOT 15 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., BEEN STRUCK OFF. THIS COUPLED WITH THE FACT ADVERTED TO IN PARAGRAPH (5) OF THIS ORDER, LEAVES NO GROUND FOR INTERFER ENCE WITH THE IMPUGNED ORDER. THE IMPUGNED ORDER ARE QUITE CONSISTENT BY THE LAW LAID DOWN IN THE CASE OF SAMSON PERINCHERY AND NEW ERA SOVA MINE(SUPRA) AND THEREFORE, WARRANT NO INTERFERENCE. 8. THE CONTENTION BASED UPON MAK DATA (P.) LTD.(SUPRA) ALSO DOE S NOT APPEAL TO US IN THE PECULIAR FACTS OF THE PRESENT CASE. THE NOTICE IN THE PRESENT CASE IS ITSELF IS DEFECTIVE AND FURTHER, THERE IS NO FINDING OR SATISFACTION RECORDED IN RELATION TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS . 12. FACTS BEING I DENTICAL, RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE SAID DECISIONS, WE HOLD THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 274 R.W.S 271(1)(C) OF THE ACT IS ON ACCOUNT OF NON - APPLICATION OF MIND AND THEREFORE THE PENALTY PROCEEDINGS INITIATED ARE BAD IN LAW. THUS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT FOR BOTH THESE APPEALS FOR THE A.Y. 2013 - 14 AND A.Y.2 014 - 15 . 13. AS WE HAVE HELD THAT THE PENALTY BE DELETED ON THE PRELIMINARY POINT, THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE NOT BEING DEALT WITH AS THEY BECOME ONLY ACADEMIC. ITA.NO. 4943/MUM/2018 (A.Y. 2015 - 16) : 14. COMING TO THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2015 - 16, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: - (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN CONFIRMING THE PENALTY U/S. 271AAB OF THE ACT IN PRINCIP LE. 16 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN EXERCISING HIS JURISDICTION IN PARTLY ALLOWING THE APPEAL AND PROVIDING FOR THE PROCEEDINGS TO REVIVE IN CASE THE APPELLANT SUCCEEDS IN THE EARLIER YEARS APPEALS. THE LD.CIT(A) COULD NOT HAVE PASSED SUCH AN ORDER UNDER THE PROVISIONS OF THE ACT 15. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY ORDER PASSED U/S. 271AAB OF THE ACT FOR THE A SSESSMENT Y EAR UNDER CONSIDERATION I.E. A.Y. 2015 - 16 IS ILLEGAL A S NO SEARCH HAS BEEN INITIATED U/S. 132 OF THE ACT IN ASSESSEES CASE AND T HEREFO RE NO SUCH PENALTY IS LEVIABLE. 16. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS IN SUPPORT OF THE ABOVE PROPOSITION. (I) DCIT V. M/S. SHREEJI CORPORATION IN I.T. (SS) NOS. 73 & 74/ AHD/2017 DATED 01.11.2018 (II) DCIT V. M/S. VOLGA DRESSES IN ITA.NO. 201 & 202/PAN/2016 DATED 27.03.2017 (III) DCIT V. VELJI RUPSHI FARIA [2018] 172 ITD 445 (MUM. TRIB) (IV) ACIT V. MR. PRAVIN S. JAIN IN ITA.NO. 4005/MUM/2014 DATED 16.12.2015 (V) DCIT V. JAINCO DEVELOPERS PVT. LTD., IN ITA.NO. 6319/DEL/2016 DATED 12.02.2018 (VI) M/S. ASHWATHI PARA BOILERS & BULK DRYERS V. ACIT IN ITA.NO. 2172/BANG/2016 DATED 20.04.2018. 17. ON MERITS, THE LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT DURING CURRENT ASSESSMENT YEAR THE OPENING WRITTEN - DOWN VALUE [FOR SHORT WDV ] ON BLOCK OF ASSETS CAME TO BE REDUCED DUE TO THE REASON THAT THE BLOCK OF ASSETS GOT REDUCED IN THE EARLIE R ASSESSMENT Y EARS I.E. A.Y. 2013 - 14 AND A.Y. 2014 - 15 ON ACCOUNT OF DISALLOWANCE MADE . THEREFOR E, HE SUBMITS 17 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS DURING THE CURRENT ASSESSMENT YEAR. 18. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW . 19. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE ON A READING OF THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT FOR THE A.Y. 2015 - 16 IT IS OBSERVED THAT SEARCH AND SEIZURE OPERATION U/S. 132(1) WAS CONDUCT ED ON M/S. GEOCHEM LABORATORIES PVT. LTD., ON 11.11.2014. CONSEQUENT TO THIS SEARCH OPERATION THE CASE OF THE ASSESSEE WA S ALSO CENTRALIZED WITH DCIT - (5)(1) FOR THE PURPOSE OF ASSESSMENTS. THE ASSESSING OF FICER COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT BY MAKING DISALLOWANCE U/S. 14A R.W. RULE 8D AND ALSO INTEREST ON SERVICE TAX. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS T HE ASSESSING OFFICER ACCEPTED THE REVISED COMPUTATION FILED BY THE ASSESSEE REDUCING THE WDV BLOCK OF ASSETS CONSEQUENT TO THE ADJUSTMENTS MADE IN THE A.Y. 2013 - 14 AND A.Y. 2014 - 15. ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S. 271AAB OF THE ACT AND SUBSEQUENTLY PASSED PENALTY ORDER ON 3 1.05.2017 LEVYING PENALTY OF .2,83,200/ - U/S. 271AAB(1)(C) OF THE ACT . THE PENALT Y WAS SUSTAINED BY THE LD.CIT(A). 18 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., 20. THE PROVISIONS OF SECTION 271AAB READ AS UNDER: - 271AAB. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JULY, 2012, [BUT BEFORE THE DATE ON WHICH THE TAXATION LAWS (SECOND AMENDMENT) BILL, 2016 RECEIVES THE ASSENT OF THE PRESIDENT], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT. OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFI ES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT. OF TH E UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II) ON OR BEFORE THE SPECIFIED DATE (A) DECLARES S UCH INCOME IN THE RETURN OF INCOME FURNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME; (C) A SUM [COMPUTED AT THE RATE OF SIXTY PER CENT] OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PRO VISIONS OF CLAUSES (A) AND (B). 19 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., 21. AS COULD BE SEEN FROM THE ABOVE, A PLAIN READING OF THE PROVISION SUGGESTS THAT PENALTY U/S. 271AAB OF THE ACT IS LEVIED IN A CASE WHERE SEARCH HAS BEEN INITIATED U/S. 132 OF THE ACT ON OR AFTER THE FIRST DAY OF JULY, 2012. IT IS THE CONTENTION OF THE ASSESSEE THAT NO SEARCH HAS BEEN INITIATED IN ITS CAS E U/S. 132 OF THE ACT. WE HAVE PERUSED THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT ON 30.11.2016 AS WELL AS T HE PENALTY ORDER PASSED ON 31.05.2017 U/S. 271AAB OF THE ACT AND FOUND THAT THE SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED ON M/S. GEOCHEM LABORATORIES PVT. LTD., ON 11.11.2014 AND NO WHERE IT IS MENTIONED EITHER IN THE ASSESSMENT O RDER OR IN THE PENALTY ORDER THAT SEARCH AND SEIZURE WAS INITIATED U/S. 132 OF THE ACT IN ASSESSEES CASE . WE HAVE ALSO PERUSED THE ASSESSMENT ORDERS FOR THE A.Y. 2013 - 14 AND A.Y. 2014 - 15 AND FOUND THAT SEARCH AND SEIZURE OPERATION WAS CONDUCTED U/S. 132 OF THE ACT ON 11.11.2014 ON M/S. GEOCHEM LABORATORIES PVT. LTD., B ASED ON WHICH THE ASSESSMENTS WERE FRAMED IN ASSESSEES CASE AND NOWHERE IN THE ASSESSMENT ORDERS PASSED FOR THE A.Y. 2013 - 14 AND A.Y.2014 - 15 U/S. 153C OF THE ACT, IT HAS BEEN MENT IONED THAT SEARCH WAS INITIATED IN ASSESSEES CASE. WE ALSO OBSERVED THAT PENALTY PROCEEDINGS WERE INITIATED U/S. 271(1)(C) OF THE ACT FOR THE A.Y. 2013 - 14 AND A.Y. 2014 - 15 IN ASSESSEE CASE. THEREFORE, WE ARE OF THE VIE W THAT FOR LEVY OF PENALTY U/S. 271A AB OF THE ACT, THE FIRST AND FOREMOST CONDITION TO BE SATISFIED IS 20 ITA.NOS. 4941, 4942 & 4943/MUM/2018 M/S COAST LINE SHIPPING (INDIA) PVT. LTD., TH AT SEARCH U/S. 132 OF THE ACT SHOULD HAVE B E EN INITIATED ON THE ASSESSEE FOR INVOKING THE PROVISIONS OF SECTION 271AAB OF THE ACT AND LEVYING PENALTY UNDER THIS PROVISION . SIMILAR VIEW H AS BEEN TAKEN BY VARIOUS TRIBUNALS AS REFERRED TO ABOVE. IN THE CASE BEFORE US SINCE THERE WAS NO SEARCH AND SEIZURE OPERATION INITIATED U/S. 132 OF THE ACT , THE PENALTY PROCEEDINGS INITIATED U/S.271AAB A S AGAINST THE PROVISIONS OF STATUTE. THUS, WE QUASH THE PENALTY ORDER PASSED U/S. 271AAB OF THE ACT FOR THE A.Y. 2015 - 16 . 22. IN THE RESULT, APPEAL S OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DECEMBER, 2019 SD/ - SD/ - ( G. MANJUNATHA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 30 / 1 2 / 2019 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM