Minitex Systems (I) Pvt. Ltd., Nashik V. Deputy Commissioner of Income-tax,

ITA 532/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7163 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKET JISHI
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings; Documents seized
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 532 /P U N/201 5 / ASSESSMENT YEAR : 20 0 9 - 1 0 MINITEK SYSTEMS (I) PVT. LTD., 1 ST FLOOR, PINGLE COMPLEX, GHANKAR LANE, OPP. RED CROSS, NASHIK 422001 . / APPELLANT PAN: AACCM3355R VS. THE DY. COMMISSIONER OF INC OME TAX, CIRCLE 1, NASHIK . / RESPONDENT / APPELLANT BY : SHRI SANKET JISHI / APPELLANT BY : SHRI SANKET JISHI / RESPONDENT BY : SHRI SUHAS KULKARNI / DATE OF HEARING : 3 1 . 0 1 . 201 7 / DATE O F PRONOUNCEMENT: 31 . 0 1 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - I , NASHIK , DATED 09 . 0 2 .20 1 5 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 2 ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.2,83,600/ - LEVIED BY THE A.O. U/S. 271(1)(C), ON THE ADDITION OF RS.8,93,811/ - ON ACCOUNT OF ALLEGED NON RECORDING OF CREDIT NOTES OF VARIOUS PARTIES. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED VIDE ADDITIONAL GROUND OF APPEAL IS BEING RAISED WHICH IS PURELY LEGAL AND D OES NOT REQUIRE INVESTIGATION INTO THE FACTS AND THE SAME MERITS TO BE ADMITTED FOR ADJUDICATING THE ISSUE AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ADDITIONAL GROUND OF APPEAL RAISED READS AS UNDER: - 1] THE ASSESSEE SUBMITS THAT IN THE NOTICE ISSUED U/S 271(1)(C) R.W.S. 274, THE LEARNED A.O. HAS NOT RECORDED PROPER SATISFACTION AS TO WHETHER THE PENALTY PROCEEDINGS ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALING INCOME AND HENCE, THE SAID NOTICE IS BAD IN LAW AND THEREFORE, THE LEVY OF PENALTY U/S 271(1)(C) IS NOT JUSTIFIED. 4. THE PRESENT APPEAL FILED BY THE ASSESSEE BEFORE THE TRIBUNAL WAS AFTER THE DELAY OF 10 DAYS . THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF THE SAID DELAY ALONG WITH AN AFFIDAVIT IN FURNISHING THE APPEAL LATE BEFORE THE TRIBUNAL. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDERS OF TRIBUNAL. SINCE THE ISSUE IN VOLVED IN THE PRESENT APPEAL IS COVERED AND IN VIEW OF SMALLNESS OF DELAY IN FURNISHING THE APPEAL , WE PROCEED TO DECIDE THE PRESENT APPEAL BY CONDONING THE DELAY AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES. 5. THE ISSUE RAISED BY WAY OF ADDITIONAL GROUND OF APPEAL IS AGAINST NON - RECORDING OF PROPER SATISFACTION FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, WHILE COMPLETING ASSESSMENT IN THE HANDS OF ASSESSEE. THE ASSESSEE IS FURTHER AGGRIEVED BY THE NOTICE ISSUE D IN THE CASE, WHEREIN ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 3 INAPPROPRIATE PORTION HAS NOT BEEN STRUCK OFF. FURTHER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT EVEN WHILE PASSING THE ORDER LEVYING PENALTY FOR CONCEALMENT, THE ASSESSING OFFICER HAS NOT COME TO A FI NDING THAT AS TO WHICH LIMB OF SAID SECTION IS APPLICABLE TO THE FACTS OF THE CASE AND THE ASSESSING OFFICER HAS LEVIED PENALTY ON THE GROUND THAT THERE IS CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS. 6. BRIEFLY, IN THE FACTS OF THE CASE, T HE ASSESSEE HAD FURNISHED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AT RS.20,72,072/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS ADDITION WAS MADE IN THE HANDS OF ASSESSEE ON THE FOLLOWING ACCOUNTS : - (A) ADDITION ON ACCOUNT OF UNDERSTATEMEN T OF CLOSING STOCK - RS.23,986/ - (B) ADDITION ON ACCOUNT OF SUPPRESSION OF PROFIT - RS.8,93,811/ - 7 . THE ASSESSING OFFICER WHILE MAKING INDIVIDUAL DISALLOWANCES HAS OBSERVED THAT PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT, 1961 ARE SEPARATELY INITIATED . SUCH OBSERVATION IS MADE INDIVIDUALLY IN RESPECT OF EACH OF THE DISALLOWANCE MADE IN THE HANDS OF ASSESSEE. WHILE CONCLUDING THE ASSESSMENT, THE ASSESSING OFFICER DIRECTS ISSUE NOTICE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THE NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED IN WHICH INAPPLICABLE PORTION WAS NOT STRUCK OFF AND THE ASSESSING OFFICER WHILE LEVYING PENALTY ON BOTH ACCOUNTS HAD HELD THE ASSESSEE TO HAVE FURNISHED INAC CURATE PARTICULARS OF INCOME AND ALSO CONCEALED THE INCOME WITHIN MEANING OF SECTION 271(1)(C) READ WITH EXPLANATION (1) OF THE ACT AND CONSEQUENTLY PENALTY WAS LEVIED AT RS.2,83,600/ - . ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 4 8. THE CIT(A) HAD UPHELD THE LEVY OF PENALTY UNDER SECTION 271(1)(C ) OF THE ACT. 9 . THE FIRST ISSUE WHICH HAS ARISEN FOR ADJUDICATION BY WAY OF ADDITIONAL GROUND OF APPEAL IS NON - RECORDING OF PROPER SATISFACTION BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THOUGH THE ASS ESSING OFFICER MENTIONS THAT PENALTY PROCEEDINGS NEEDS TO BE INITIATED AND EVENTUALLY DIRECTS ISSUANCE OF NOTICE UNDER SECTION 271(1)(C) OF THE ACT, BUT NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER AS TO WHICH LIMB OF SAID SECTION IS ATTRACTE D JUSTIFYING LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. THE PLEA OF THE ASSESSEE BEFORE US IS THAT IN THE ABSENCE OF ANY PROPER SATISFACTION RECORDED BY THE ASSESSING OFFICER, THE ISSUE ARISING IN THE PRESENT APPEAL IS SQUARELY CO VERED BY THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT IN ITA NOS.1201 TO 1205/PN/2014, RELATING TO ASSESSMENT YEARS 2003 - 04 TO 2007 - 08, ORDER DATED 30.11.2016 AND IN NANDKISHOR TULSIDAS KATORE VS. ACIT IN ITA NOS.2174 T O 2180/PN/2014, RELATING TO ASSESSMENT YEAR 2002 - 03 TO 2008 - 09, ORDER DATED 14.12.2016. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT EVEN IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT, INAPPROPRIATE POR TION IS NOT STRUCK OFF, HENCE NO PROPER SHOW CAUSE NOTICE HAS BEEN GIVEN TO THE ASSESSEE BEFORE INITIATING AND LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HAS FINALLY LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ON ACCOUNT OF EACH ADDITION. ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 5 1 0 . WE FIND THE ISSUE OF RECORDING OF SATISFACTION BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AROSE BEFORE THE TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA), WHEREIN IT WAS HELD AS UNDER: - 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT BUNC H OF APPEALS IS JURISDICTIONAL ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE REQUIREMENT OF SECTION IS THAT WHERE THE ASSESSING OFFICER OR THE COMMISSIONER OF APPEALS OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER, IN THE COURSE OF ANY P ROCEEDINGS UNDER THE ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY THE AMOUNTS AS SPECIFIED IN SUB - CLAUSE (I II) WHICH WOULD BE IN ADDITION TO TAX, IF ANY, PAYABLE BY THE SAID PERSON. THE SECTION THUS REQUIRES THE CONCERNED OFFICER TO RECORD SATISFACTION IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, THAT THE PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME O R FURNISHED INACCURATE PARTICULARS OF HIS INCOME. AFTER RECORDING THE SATISFACTION, DURING THE COURSE OF PENALTY PROCEEDINGS ALSO, THE CONCERNED OFFICER HAS COME TO A FINDING THAT AS TO WHETHER THE PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME AND THEREAFTER, LEVY THE PENALTY ACCORDINGLY. THE WORD USED BETWEEN THE TWO ACTS I.E. CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IS OR. SO THE PENALTY LEVIED BY THE CONCERNED OFFICER IS ON SATISFACTION OF ANY OF THE LIMBS AND NOT THE SATISFACTION OF BOTH THE LIMBS. WHERE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF OF BOTH THE LIMBS. WHERE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME IN PARTICULAR CIRCUMSTANCES, THEN THE ASSESSING OFFICER MAY RECORD SATISFACTION TO THAT EFFECT AND INITIATE PENALTY PROCEEDINGS AND THEREAFTER ON FIXATION OF CHARGE, LEVY THE PENALTY FOR SUCH ACT OF CONCEALING THE PARTICULARS OF INCOME. SIMILARLY, IN CASES WHERE THE ASSESSEE CONCERNED HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THE N SIMILAR EXERCISE HAS TO BE CARRIED OUT BY THE CONCERNED OFFICER. 14. THE FIRST STAGE OF INVOCATION OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS THE SATISFACTION TO BE RECORDED BY THE ASSESSING OFFICER, WHICH ADMITTEDLY, HAS TO BE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SO, WHERE THE ASSESSMENT PROCEEDINGS ARE PENDING, THEN THE ASSESSING OFFICER HAS TO APPLY HIS MIND AND ON BEING SATISFIED, HE HAS TO GIVE A FINDING THAT THE ASSESSEE BEFORE HIM HAS EITHER CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE ISSUE BEFORE HIM. THEREAFTER, THE NOTICE SHOULD BE ISSUED TO SUCH PERSON BY THE CONCERNED OFFICER, WHEREIN IT SHOULD BE CLEAR THAT THE ASSESSEE HAS TO JUSTIFY ITS CASE EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THERE MAY BE CASES WHERE THERE IS ISSUE OF BOTH CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME, BASED ON THE NATURE OF ADDITIONS, THEN IN SUCH CASES, SATISFACTION AND NOTI CE THEREON SHOULD SPECIFY EXACT CHARGE AGAINST THE ASSESSEE. THE CHARGE HAS TO BE FURTHER SPECIFIED WHILE COMPLETING PENALTY PROCEEDINGS AND THE ASSESSING OFFICER HAS TO COME TO A CONCLUSION AS TO WHETHER IT IS CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE QUESTION WHICH FURTHER ARISES WHERE THE SATISFACTION RECORDED BY THE ASSESSING OFFICER AND THE NOTICE ISSUED THEREAFTER IS WITHOUT APPLICATION OF MIND, THEN CAN THE SUBSEQUENT ORDER PASSED LEVYING PENALTY BE HELD T O BE VALID?. THE HONBLE KARNATAKA ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 6 HIGH COURT IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD DEALT UPON THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT FOR THE PURPOSE OF LEVYING PENALTY FOR CONCEALMENT AND OBSERVED AS UNDER: - 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDINGS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEED INGS 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 PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED 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 WH O 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 SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTU NITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST 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 A RE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO B E STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD 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 PARTICULARS 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 CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HI M GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SH OULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS 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 ANSWER. 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. OTHERWISE 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 GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 7 TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUS TAINABLE. 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 PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTIC ULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINE ERING WORKS REPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING P. LTD. REPORTED IN [2008] 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 PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND . 15. THE HONBLE KARNATAKA HIGH COURT HAS LAID DOWN THE PROPOSITION THAT THE ASSESSING OFFICER IS TO BE SATISFIED IN THE COURSE OF PROCEEDING S THAT THERE IS EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME UNDER CLAUSE (C) TO SECTION 271(1) OF THE ACT. IT HAS BEEN CATEGORICALLY INCOME UNDER CLAUSE (C) TO SECTION 271(1) OF THE ACT. IT HAS BEEN CATEGORICALLY HELD THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THE HONBLE HIGH COURT HAS THUS, LAID DOWN THAT THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO CONCLUSION THAT WHETHER IT IS CASE OF CONCEALMENT OF INCOME OR CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE RELIANCE IN TH IS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC), WHEREIN AT PAGE 19 IT WAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATION. APPLYING THE SAID PROPOSITION, IT WAS HELD THAT WHERE THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILARLY, FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THE STANDARD PROF ORMA WITHOUT STRIKING OF RELEVANT CLAUSES, AS PER THE HONBLE HIGH COURT WOULD LEAD TO INFERENCE AS TO NON - APPLICATION OF MIND. 16. FURTHER, THE HONBLE KARNATAKA HIGH COURT IN CIT VS. SSAS EMERALD MEADOWS (SUPRA) HAS DISMISSED THE APPEAL OF REVENUE, W HERE THE TRIBUNAL HAD ALLOWED THE APPEAL OF ASSESSEE HOLDING THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT TO BE BAD IN LAW AS IT DOES NOT SATISFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT UNDER WHICH IT HAS BEEN INITIATED THE HONBLE HIGH COURT HAD RELIED ON DECISION OF DIVISION BENCH OF THE COURT RENDERED IN CIT & ANR. VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). THE HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS (SUPRA) HAS DISMISSED THE SP ECIAL LEAVE PETITION. 17. THE PUNE BENCH OF TRIBUNAL IN M/S. SAI VENKATA CONSTRUCTION VS. ADDL. CIT (SUPRA) AND IN SANJOG TARACHAND LODHA VS. ITO (SUPRA) HAVE APPLIED THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT (SUPRA) AND ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 8 HELD THAT WHERE TH ERE IS NO STRIKING OFF OF EITHER OF LIMBS, THEN NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS INVALID AND SUBSEQUENT PENALTY PROCEEDINGS WERE HELD TO BE VITIATED. 18. THE MUMBAI BENCH OF TRIBUNAL IN SANGHAVI SAVLA COMMODITY BROKERS P. LTD. VS. ACIT IN ITA NO.1746/MUM/2011, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 22.12.2015 WHILE DECIDING SIMILAR ISSUE, WHEREIN THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOME WITHOUT STRIKING INAPP ROPRIATE WORDS OR ANY PARTS OF NOTICE AND PROCEEDED TO LEVY PENALTY FOR CONCEALMENT, THEN FOLLOWING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT, THE TRIBUNAL HELD THAT NOTICE ISSUED FOR INITIATING PENALTY PROCEEDINGS WERE INVALID AND CONSEQUENT LY PENALTY PROCEEDINGS WERE INVALID. 19. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY KOLKATA BENCH OF TRIBUNAL IN SHRI DEEPAK KUMAR PATWARI VS. ACIT IN ITA NOS.616 TO 618/KOL/2013, RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2009 - 10, ORDER DATED 03.02.2016 AN D IT HAS BEEN FURTHER HELD THAT THE PROVISIONS OF SECTION 292B OF THE ACT CANNOT CURE THE BASIC DEFECT IN ASSUMPTION OF JURISDICTION AND COULD ONLY CURE THE MISTAKE, DEFECT OR OMISSION IN THE RETURN OF INCOME, ASSESSMENT, NOTICE OR THE PROCEEDINGS. THE TR IBUNAL FURTHER HELD THAT SHOW CAUSE NOTICE AND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE WERE PART OF PROCESS OF NATURAL JUSTICE AND THE DEFECT IN SUCH NOTICE COULD NOT BE OVERLOOKED. SIMILAR PROPOSITION HAS FURTHER BEEN LAID DOWN IN OTHER DECISIONS OF VARIOUS BENCHES OF TRIBUNAL WHICH HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE US. 20. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED HEAVY RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA (SU PRA). IN THE FACTS OF THE CASE BEFORE THE HONBLE BOMBAY HIGH COURT, THE HONBLE HIGH COURT QUASHED THE PENALTY LEVIED FOR ASSESSMENT YEAR 1967 - 68 AS THE SAME WAS IMPOSED WITHOUT AFFORDING ASSESSMENT YEAR 1967 - 68 AS THE SAME WAS IMPOSED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN RESPECT OF OTHER TWO YEARS WHERE THERE WAS NON - STRIKING OF INACCURATE PORTION, THE HONBLE HIGH COURT HELD THAT THE SAME WOULD NOT INVALIDATE THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT. IT WAS FURTHER HELD THAT THE ASSESSMENT ORDERS WERE ALSO MADE AND REASONS FO R ISSUING NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WERE RECORDED BY THE ASSESSING OFFICER AND SINCE THE ASSESSEE FULLY KNEW IN DETAIL THE EXACT CHARGE OF DEPARTMENT AGAINST HIM, IT COULD NOT BE SAID THAT EITHER THERE WAS NON - APPLICATION OF MIND BY THE ITO OR SO - CALLED AMBIGUITY WORDING IN THE NOTICE IMPAIRED OR PREJUDICED THE RIGHT OF ASSESSEE OF REASONABLE OPPORTUNITY OF BEING HEARD. THE JURISDICTIONAL HIGH COURT DELIBERATED UPON THE PROVISIONS OF SECTION 274 OF THE ACT WHICH CONTAINED PRINCIP LE OF NATURAL JUSTICE OF THE ASSESSEE BEING HEARD BEFORE LEVYING PENALTY. IT ALSO HELD THAT MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRIKING OF INAPPROPRIATE PORTION COULD NOT ITSELF BE INVALIDATED THE NOTICE. IT WAS HELD THAT THE ENTIRE FACTUAL BA CKGROUND WOULD FALL FOR CONSIDERATION IN THE MATTER AND NO ONE ASPECT WOULD BE DECISIVE. 21. IN RESPECT OF ASSESSMENT YEAR 1967 - 68, THE HONBLE HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA) ACKNOWLEDGED THAT THERE COULD EXIST A CASE WHERE VAGUENESS AND A MBIGUITY IN THE NOTICE COULD DEMONSTRATE NON - APPLICATION OF MIND BY THE AUTHORITY AND / OR ULTIMATE PREJUDICE TO THE RIGHT OF OPPORTUNITY OF HEARING CONTEMPLATED UNDER SECTION 274 OF THE ACT. THE SHOW CAUSE NOTICE FOR ASSESSMENT YEAR 1967 - 68 WAS ISSUED EV EN BEFORE THE ASSESSMENT ORDER WAS MADE AND WHERE THE ASSESSEE HAD NO KNOWLEDGE OF EXACT CHARGE OF DEPARTMENT AGAINST HIM AS IN THE NOTICE NOT ONLY THERE WAS USE OF WORD OR BETWEEN THE GROUP OF CASES BUT THERE WAS USE OF WORD DELIBERATELY ALSO. THE HO NBLE HIGH COURT HELD THAT NOTICE CLEARLY DEMONSTRATED NON - APPLICATION OF MIND ON THE PART OF ASSESSING OFFICER. THE ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 9 VAGUENESS AND AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY TO THE ASSESSEE SINCE HE DID NOT KNOW OF EXA CT CHARGES HE HAD TO FACE. IN THIS BACKGROUND, QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967 - 68 WAS HELD TO BE JUSTIFIED. APPLYING THE SAID PRINCIPLE LAID DOWN BY THE JURISDICTIONAL HIGH COURT, APPLICATION OF MIND BEFORE ISSUING THE NOTICE UND ER SECTION 274 OF THE ACT HAS TO BE CONSIDERED. THE HONBLE HIGH COURT CLEARLY HELD THAT WHERE THERE IS VAGUENESS AND AMBIGUITY IN THE NOTICE ISSUED WHICH COULD DEMONSTRATE NON - APPLICATION OF MIND BY THE AUTHORITY WHICH IN TURN, WOULD ULTIMATELY PREJUDICE THE RIGHT OF OPPORTUNITY OF HEARING OF THE ASSESSEE AS CONTEMPLATED UNDER SECTION 274 OF THE ACT, THEN SUCH NOTICE IS INVALID. 22. NOW, COMING TO THE FACTS OF THE CASE BEFORE US, WHEREIN SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON CHHORIYA GROUP OF CONCERNS ON 22.08.2008 AND DECLARATION OF RS.11.44 CRORES WAS MADE IN THE HANDS OF WHOLE GROUP FOR VARIOUS YEARS. CONSEQUENT TO THE NOTICES ISSUED UNDER SECTION 153A OF THE ACT FOR VARIOUS YEARS, DIFFERENT ENTITIES FILED THE RETURN OF INCOME FOR THE RE SPECTIVE YEARS AND CUMULATIVELY FOR RS.13.99 CRORES AS ADDITIONAL INCOME. THE INCOME WAS DECLARED ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS, WHICH WAS DETECTED FROM THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH. ADMITTEDLY, EXPLANATION 5A TO SECTION 271 (1)(C) OF THE ACT IS ATTRACTED IN SUCH CASES. HOWEVER, THE CASE OF ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT PROCEEDINGS HAD TO BE SATISFIED THAT THE ASSESSEE HAD EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE P ARTICULARS OF INCOME AND IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) R.W.S. EXPLANATION 5A OF THE ACT. THE NOTICE IS TO BE ISSUED TO THE ASSESSEE UNDER SECTION 274 OF THE ACT. BEFORE ISSUING SUCH NOTICE, SATISFACTION HAS TO COME OUT FROM THE PRO CEEDINGS GOING ON BEFORE THE ASSESSING OFFICER. THE PERUSAL OF ASSESSMENT ORDER PASSED IN THE PRESENT CASE REFLECTS THAT THE ASSESSING OFFICER WHILE INITIATING PROCEEDINGS HAS CASE REFLECTS THAT THE ASSESSING OFFICER WHILE INITIATING PROCEEDINGS HAS RECORDED SATISFACTION AS TO THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME AND HAS ALSO CONCEALED THE INCOME. THE ONLY SOURCE OF ADDITION IN THE HANDS OF ASSESSEE IS ADDITIONAL INCOME OFFERED BY THE ASSESSEE PURSUANT TO SEARCH OPERATIONS. IN SUCH CIRCUMSTANCES, IT IS CATEGORICALLY A CASE OF CONCEALMENT. HOWEVER, THE A SSESSING OFFICER REFERS TO BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT AND THE SATISFACTION RECORDED IN THIS CASE SUFFERS FROM INFIRMITY. FURTHER, EVEN IN THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT, IRRELEVANT PART HAS NOT BEEN STRUCK OFF. WHILE C OMPLETING PENALTY PROCEEDINGS ALSO, THE ASSESSING OFFICER MAKES REFERENCE TO BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN THE FINAL, LEVIES PENALTY FOR CONCEALMENT OF INCOME. 23. HOWEVER, THE QUESTI ON WHICH IS RAISED BEFORE US BY WAY OF ADDITIONAL GROUND OF APPEAL IS ROOT OF START OF THE PROCEEDINGS I.E. RECORDING OF SATISFACTION AND THE ISSUE OF NOTICE, WHICH HAS BEEN CHALLENGED BY THE ASSESSEE TO BE INVALID. APPLYING THE RATIO LAID DOWN BY THE HON BLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA) AND CIT VS. SSAS EMERALD MEADOWS (SUPRA) AND IN VIEW OF SLP BEING DISMISSED, WE FIND MERIT IN THE PLEA OF ASSESSEE THAT THE SATISFACTION RECORDED IN THE PRESENT CASE TO INITIATE PENALTY PROCEEDINGS BOTH FOR CONCEALMENT OF INCOME AND FURNISHING OF PARTICULARS OF INCOME AGAINST ADDITIONAL INCOME OFFERED BY THE ASSESSEE IS INCORRECT. FURTHER, WHERE THE ASSESSEE IS NOT AWARE OF EXACT CHARGE AGAINST HIM, THE AMBIGUITY IN T HE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT BY NOT STRIKING OF PORTION WHICH IS NOT APPLICABLE, PREJUDICE THE RIGHT OF REASONABLE OPPORTUNITY TO THE ASSESSEE, AS HE WAS NOT MADE AWARE OF EXACT CHARGE HE HAD TO FACE. IT IS A CLEAR - CUT CA SE OF CONCEALMENT SINCE THE ASSESSEE HAD OFFERED ADDITIONAL INCOME PURSUANT TO ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 10 SEARCH CARRIED OUT AT ITS PREMISES. IT IS NOT THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HENCE, THE ASSESSING OFFICER SHOULD HAVE RECORDED THE SATISFACTION ACCORDINGLY AND ISSUED THE NOTICE ACCORDINGLY. 24. WE FIND NO MERIT ON THE PARTIAL RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. SMT. KAUSHALYA (SUPRA). THE HONB LE HIGH COURT HAS CLEARLY LAID DOWN THE PROPOSITION THAT THE ASSESSING OFFICER HAS TO MAKE THE ASSESSEE FULLY AWARE OF EXACT CHARGE OF THE DEPARTMENT AGAINST HIM. AS POINTED OUT, IN PRESENT CASE, IN THE ASSESSMENT ORDER ITSELF WHILE RECORDING SATISFACTION FOR INITIATING PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, EXACT CHARGE OF THE DEPARTMENT AGAINST THE ASSESSEE IS NOT CLEAR. THE ASSESSING OFFICER RECORDS THE SATISFACTION FOR INITIATING PENALTY PROCEEDINGS ON BOTH THE COUNTS I.E. CONCEALMENT OF INCO ME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT HAD ALSO UPHELD THE QUASHING OF PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 1967 - 68 TO BE JUSTIFIED ON ACCOUNT OF VAGUENESS AND AMBIGUITY IN THE NOTICE ISSUED. BUT THE HONB LE HIGH COURT FURTHER HELD THAT WHERE THE ASSESSEE WAS FULLY AWARE OF EXACT CHARGE OF THE DEPARTMENT AGAINST HIM, THEN TECHNICAL NON - STRIKING OF CERTAIN TERMS IN THE NOTICE WOULD NOT INVALIDATE THE PROCEEDINGS. WHERE THERE IS DEFAULT IN THE FIRST STAGE OF MAKING THE ASSESSEE AWARE OF EXACT CHARGE OF THE DEPARTMENT, THEN INITIATION OF PENALTY PROCEEDINGS ARE VITIATED AND THE SAME ARE TO BE QUASHED. THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT ON SUCH VAGUENESS AND AMBIGUITY MAKES SUCH NOTICE INVALID AN D PROCEEDINGS THEREAFTER ARE TO BE QUASHED. 25. THE HONBLE SUPREME COURT IN T. ASHOK PAI VS. CIT (SUPRA) HAD HELD AS UNDER: - 23. SECTION 271(1)(C) REMAINS A PENAL STATUTE. THE RULE OF STRICT CONSTRUCTION SHALL APPLY THERETO. THE INGREDIENTS FOR IMPOS ING PENALTY CONSTRUCTION SHALL APPLY THERETO. THE INGREDIENTS FOR IMPOS ING PENALTY REMAIN THE SAME. THE PURPOSE OF THE LEGISLATURE THAT IT IS MEANT TO BE A DETERRENT TO TAX EVASION IS EVIDENCED BY THE INCREASE IN THE QUANTUM OF PENALTY, FROM 20 PER CENT UNDER THE 1922 ACT TO 300 PER CENT IN 1985. 24. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION VERY OR SUGGESTION FALSI. 2 6. WHERE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT CONNOTATIONS, THEN AS PER PROVISIONS OF THE ACT, THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS AS TO UN DER WHICH LIMB THE CASE OF ASSESSEE FALLS. IN THE PRESENT SET OF FACTS, THE SATISFACTION AS RECORDED BY THE ASSESSING OFFICER WHICH IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF DOES NOT ESTABLISH THE CASE OF REVENUE AGAINST THE ASSESSEE THAT IT IS LIABLE F OR LEVY OF PENALTY FOR CONCEALMENT UNDER WHICH LIMB I.E. FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT BY THE ASSESSING OFFICER ALSO DOES NOT SHOW CAUSE THE ASSESSEE AS TO M AKE HIM AWARE OF EXACT CHARGE LEVIED AGAINST HIM. IN THE ABSENCE OF SAME, IT CAUSES PREJUDICE TO THE RIGHT OF REASONABLE OPPORTUNITY TO BE ALLOWED TO THE ASSESSEE BEFORE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. CONSEQUENTLY, PENALTY NOTICE ISS UED IN THE PRESENT CASE SUFFERS FROM INFIRMITIES I.E. LACK OF SATISFACTION AND LACK OF NOTICE BEING ISSUED IN MAKING THE ASSESSEE AWARE OF EXACT CHARGE AGAINST HIM, HENCE THE SAME IS QUASHED. ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 11 THE PENALTY PROCEEDINGS COMPLETED PURSUANT TO SUCH NOTICE ARE V ITIATED AND THE SAME ARE HELD TO BE INVALID. 27. NOW, COMING TO THE MERITS OF CASE, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS. THE ASSESSING OFFICER HAD ACCEPTED THE SAME AND HAD INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE ACT. THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS RELATING TO SECTION 271(1)(C) OF THE ACT ISSUED ENHANCEMENT NOTICE TO THE ASSESSEE. THEREAFTER, HE HAD GONE THROUGH THE SEIZED DOCUMENTS AND ELABORATELY REFERRED TO THE M AND EVEN REPRODUCED THE SCANNED COPIES OF SUCH DOCUMENTS AND COMES TO CONCLUSION THAT LOANS WERE RECEIVED FROM RATANLAL BAFNA, BUT STILL UPHOLDS THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. ONCE THE FINDING OF CIT(A) IS THAT THESE ARE LOANS RE CEIVED FROM BAFNA AND ARE NOT ON - MONEY RECEIVED ON SALE OF PLOTS, THEN IN CASES WHERE PENALTY PROCEEDINGS HAVE BEEN INITIATED ON A DIFFERENT FOOTING AND THE CIT(A) REVERSES THE SAME AND HOLDS THE SAME TO BE LOANS RECEIVED BY THE ASSESSEE, THERE IS CHANGE I N OPINION AND BASIS FOR LEVY OF PENALTY FOR CONCEALMENT VARIES. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THERE IS NO MERIT AT ALL IN LEVYING THE PENALTY @ 150%. ACCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE EVEN ON MERITS. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND ADDITIONAL GROUND OF APPEAL RAISE D BY THE ASSESSEE ARE ALLOWED. 12. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN NANDKISHOR TULSIDAS KATORE VS. AC IT (SUPRA). 13. IN THE FACTS OF THE PRESENT CASE AS AGAINST THE FACTS BEFORE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA), WHERE THE ASSESSING OFFICER HAD RECORDED SATISFACTION THAT THE ASSESSEE HAS CONCEALED ITS INCOME AND ALSO FURNIS HED INACCURATE PARTICULARS OF INCOME, HOWEVER, IN THE PRESENT CASE, THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT AND MAKING DISALLOWANCE ON EACH ACCOUNT HAD STATED THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT NEEDS TO BE INITIATED AND THE SAME WAS SO INITIATED BY ISSUE OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFICER HAS FAILED TO GIVE SATISFACTION AS TO WHICH LIMB OF THE SAID SECTION HAS NOT BEEN COMPLIED WITH BY THE ASSESSEE. IN THE ABSENCE OF THE SAME, PRO CEEDINGS INITIATED IN THE CASE BY ISSUE OF NOTICE IN WHICH INAPPROPRIATE PORTION WAS NOT STRUCK OFF , ARE VITIATED. CONSEQUENTLY, PENALTY ORDER PASSED IN THE CASE IS INVALID AND BAD IN LAW. ACCORDINGLY, WE HOLD SO. THE ADDITIONAL ITA NO. 532 /PN/20 1 5 M INITECH SYSTEMS PVT. LTD. 12 GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, ALLOWED AND SINCE THE PENALTY ORDER HAS BEEN HELD TO BE INVALID, THE OTHER GROUND OF APPEAL BECOME ACADEMIC IN NATURE. 1 3 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF JANUARY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST JANUARY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPE LLANT ; 1. / THE APPE LLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , NASHIK ; 4. / THE CIT - I, NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // ASSISTANT REGISTRAR