DINESH KUMAR VIJAY, Jaipur V. ITO, Jaipur

ITA 58/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2048 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 20-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Principle of natural justice; Question of law; Initiation of penalty proceedings; Reasonable cause; Non compliance; Revised return
• Section: 143(3); 142(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 58/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 DINESH KUMAR VIJAY, A-131, JANTA COLONY, JAIPUR. CUKE VS. THE ITO, WARD 5(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABWPV7268G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ARPIT VIJAY (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/09/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 04/10/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT (A)-II, JAIPUR DATED 20.11.2015 FOR A.Y. 2011-12. T HE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS AS UNDER:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(APPEAL) IS NOT JUSTIFIED IN CONFIRMING THE PENA LTY OF RS. 1097566/- LEVIED U/S 271(1)(C) OF THE I.T. ACT, 196 1 FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS THEREOF. ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 2 2. AT THE START OF THE HEARING, THE LD AR SUBMITTED THAT THE ASSESSEE WISHES TO TAKE THE FOLLOWING ADDITIONAL GROUND OF A PPEAL IS AS UNDER:- THE INITIATION OF PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 IS NOT VALID AS THE AO DID NOT STRIKE OFF THE INAPPROPRIATE PORTION OF THE NOTICE. THE AO OUGHT TO HAVE STRUCK OFF THE INAPPROPRIATE PORTION AND INDICATED TO THE APPELLANT THE APPLICABLE PORTION IN THE NOTICE. 3. AFTER HEARING BOTH THE PARTIES, THE ADDITIONAL G ROUND BEING A PURELY LEGAL GROUND, THE SAME WAS ADMITTED FOR ADJU DICATION. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAS SOLD A FLAT NO. 1 IN THE BUILDING KNOWN AS RAMESH MAHAL AT MU MBAI DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSEE DID NOT DISCLOSE INCOME BY WAY OF LONG-TERM CAPITAL GAINS IN HIS ORI GINAL RETURN OF INCOME FILED ON 06.01.2012. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEES A/R STATED THAT AS THE RETURN WAS A BELA TED ONE, THE SAME WAS NOT ELIGIBLE FOR RECTIFICATION. HE FURTHER STAT ED THAT THE ASSESSEE SUFFERED HUGE LOSSES IN BUSINESS AND WAS MENTALLY D ISTURBED DUE TO WHICH THE ASSESSEE FAILED TO DISCLOSE THE TRANSACTI ON OF THE SALE OF IMMOVABLE PROPERTY AND SUBMITTED A REVISED COMPUTAT ION OF TOTAL INCOME INCORPORATING CAPITAL GAINS OF RS 53,25,629. THE AO COMPUTED THE LONG TERM CAPITAL GAINS WITH A MINOR ADJUSTMENT OF RS 2,362 AS UNDER: SALE CONSIDERATION RS. 1,50,00,000/- LESS: TRANSFER EXPENSES RS. 37,500/- RS. 1,49,62,500/- LESS: INDEXED COST ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 3 F.Y. 2005-06 3180320 X 497- RS. 45,49,713 COST OF IMPROVEMENT F.Y. 2005-06 2650000 X711/497- RS. 37,91,046 COST OF IMPROVEMENT F.Y. 2009-10 1150000 X711/632- RS. 12,93,750 RS. 96,34,509 LONG TERM CAPITAL GAIN RS. 53,27,991 FURTHER, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I NCOME-TAX ACT, 1961 WERE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE AND CONCEALING HIS INCOME. 5. WE NOW REFER TO THE RELEVANT FINDINGS OF THE LD. CIT(A) WHICH ARE UNDER CHALLENGE BEFORE US. THE SAME ARE REPRODUCED AS UNDER:- 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE PENA LTY ORDER AND THE SUBMISSIONS OF THE APPELLANT. IN THIS CASE PENA LTY HAS BEEN LEVIED ON THE TRANSACTION OF SALE OF A HOUSE PROPER TY WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME FILED. THE FA CTS SHOW THAT A NOTICE U/S 143(2) HAD BEEN ISSUED ON 27.09.2012 WHI CH REMAINED UNCOMPELLED. THEREAFTER, NOTICE U/S 142(1) ALONG WI TH QUERIES WAS ISSUED ON 03.09.2013 WHICH WAS DULY SERVED ON T HE ASSESSEE. AGAIN THERE WAS NO COMPLIANCE AND A SHOW CAUSE NOTICE WAS ISSUED FOR NON-COMPLIANCE. FINALLY ON 27 .12.2013, THE ASSESSEES AR HAS APPEARED AND SUBMITTED A REVISED COMPUTATION OF INCOME AFTER A LAPSE OF 1 YEAR AND 3 MONTHS FROM DATE OF FIRST NOTICE OF LEAVING. IN THE REVISED COMPUTATION THE A R SURRENDERED THE INCOME BY WAY OF LONG TERM CAPITAL GAIN ON SALE OF A FLAT IN MUMBAI. FURTHER, IN PENALTY PROCEEDINGS BEFORE THE ASSESSIN G OFFICER IT WAS PLEADED THAT THE ASSESSEE WAS SUFFERING FROM A SERIOUS DISEASE AND WAS MENTALLY DISTURBED FROM THE FINANCI AL YEAR 2011 ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 4 ONWARDS. THE SPOUSE IS A HOUSEWIFE AND THERE WAS NO COMPETENT PERSON IN THE FAMILY TO LOOK AFTER THE BUSINESS AFF AIRS. UNDER SUCH CIRCUMSTANCES THE WIFE HAS APPROACHED SOME UNSKILLE D PERSON FOR FILING THE RELEVANT RETURN WHO FILED THE SAME ON TH E BASIS OF INCOMPLETE AND AD HOC INFORMATION. HE ALSO STATED T HAT IT WAS NOT IN THE KNOWLEDGE OF THE SPOUSE AND THE PERSON FILIN G THE RETURN THAT THE ASSESSEE HAD SOLD SOME FLAT IN MUMBAI DURI NG THE RELEVANT PREVIOUS YEAR. AFFIDAVITS OF THE WIFE AND MR. RAJESH VIJAY, WHO FILED THE RETURN OF INCOME OF THE ASSESSEE HAVE FILED. THIS MAIN EMPHASIS WAS ON THE FACT THAT THE ASSESSEE HAD MADE A VOLUNTARY DISCLOSURE AND HENCE NO PENALTY WAS LEVIA BLE. HE FURTHER RELIED ON CERTAIN CASE LAWS FOR THE PROPOSI TION THAT DISCLOSURE BEING VOLUNTARY, THE PENALTY SHOULD NOT BE IMPOSED. IN THE PRESENT PROCEEDINGS BEFORE ME THE AR HAS LAR GELY REITERATED THE SAME SUBMISSIONS AS BEFORE THE ASSES SING OFFICER. THE ISSUE TO BE EXAMINED IS WHATEVER THE DISCLOSURE IS VOLUNTARY OR NOT. IT IS SEEN THAT DURING ASSESSMENT PROCEEDINGS THERE HAS BEEN NON-COMPLIANCE TO THE NOTICES AND ASSESSEE HAS RESP ONDED ONLY AFTER NOTICE DATED WHEREIN SPECIFIC QUERY REGARDING THE DETAILS OF IMMOVABLE PROPERTIES HAS BEEN MADE. FURTHER, WHILE AT THE TIME OF ASSESSMENT DUE TO LOSSES IN BUSINESS BUT NO MENT ION OF RETURN BEING FILED BY WIFE AND UNSKILLED PERSON WAS MADE. THE AR IN HIS SUBMISSION STATES, AFTER RECEIPT OF NOTICE U/S 143(2) THE AR OF THE APPELLANT EXAMINED THE BANK ST ATEMENT AND OTHER RELEVANT RECORDS AND IT HAS COME TO HIS KNOWL EDGE THAT A FLAT OF MUMBAI HAS BEEN SOLD DURING THE RELEVANCE P REVIOUS YEAR WHICH HAS NOT BEEN DISCLOSED IN THE RELEVANT RETURN OF INCOME WHICH MEANS THAT BUT FOR THE NOTICE MAKING A SPECIF IC QUERY REGARDING THE IMMOVABLE PROPERTIES, THIS TRANSACTIO N WOULD NEVER HAVE BEEN DISCLOSED TO THE DEPARTMENT. IT HAS BEEN OBSERVED IN THE CASE OF DEEPAK CONSTRUCTION COMPANY VS. CIT 164 ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 5 TAXMANN.COM 334 (GUJARAT) AFTER THE NOTICE DATED 2 4.02.1986 WAS SERVED UPON THE ASSESSEE, HE CAME OUT OF HIS SL UMBER, STARTED ACTING HONEST AND SUBMITTED THE REVISED RET URN. IT WAS NOT THE CASE OF THE ASSESSEE EITHER BEFORE THE ASSE SSING OFFICER OR BEFORE THE TRIBUNAL THAT MUCH BEFORE SERVICE OF THE SHOW- CAUSE NOTICE, HONESTY PREVAILED UPON HIM AND TO THE CALL OF GOOD CONSCIENCE, HE FILED THE REVISED RETURN. THE REVISE D RETURN IN FACT, WAS A REACTION TO THE NOTICE ISSUED BY THE ASSESSIN G OFFICER ON 24.02.1986. THE ASSESSEE HAS FURTHER CLAIMED THAT IT HAS OFFERE D BONAFIDE EXPLANATION. THE FACT OF ASSESSEE BEING MENTALLY DI STURBED HAS NOT BEEN SUPPORTED BY ANY EVIDENCE AT ANY STAGE. TH E FACTOR OF RETURN BEING FILED BY THE WIFE AND UNSKILLED PERS ON IS STATED FOR THE FIRST TIME AT THE TIME OF PENALTY PROCEEDINGS. IN THE CASES CITED BY THE AR, THE FACTS ARE DISTINGUISHABLE. THE APEX COURT IN THE CASE OF MAK DATE HAS CLEARLY HELD THAT PLEA OF THE ASSESSEE LIKE VOLUNTARY DISCLOSURE, BUY PEA CE, AVOID LITIGATION TO EXPLANATION ITS CONDUCT ARE NOT RECO GNIZED BY THE STATUE UNDER THE EXPLANATION 1 TO SECTION 271(1)(C) . IT IS TRITE LAWS THAT VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS UNDER SECTION 271 (1)(C). THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAS TO BE AB SOLVED FROM PENALTY. FURTHER, IT WAS OBSERVED THAT IT IS THE ST ATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FRO M YEAR TO YEAR. IN THE LIGHT OF THE ABOVE OBSERVATIONS OF THE HONB LE COURT, IT IS CLEAR THAT THE ASSESSEE, HAS NEITHER MADE A VOLUNTA RY DISCLOSURE NOR RECORDED ITS TRANSACTIONS PROPERLY IN ITS BOOKS OF ACCOUNT AND ALSO NOT DECLARED THE SAME IN THE RETURN FILED BY I T. FURTHER THE SUBSTANTIAL LEG BETWEEN THE NOTICE SPECIFICALLY CAL LING FOR THE DETAILS OF PROPERTY AND THE DISCLOSURE BY THE ASSES SEE ALSO SHOWS ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 6 THAT THE DISCLOSURE WAS BECAUSE NO OTHER ESCAPE WAS AVAILABLE TO THE ASSESSEE. IT IS ALSO IMPORTANT TO NOTE THAT BUT FOR THE DETEC TION OF THIS TRANSACTION IN THE ASSESSMENT PROCEEDINGS, IN CONSE QUENCE TO THE SPECIFIC NOTICE, ISSUED BY THE ASSESSING OFFICER, T HE UNDISCLOSED INCOME WOULD NOT HAVE GOT UNEARTHED AT ALL. RELIANC E IS PLACE ON THE FOLLOWING OBSERVATIONS IN THE CASE OF 60 TAXMAN N.COM 352 (MADRAS) IN THE CASE OF LANXESS INDIA (P) LTD., IN VIEW OF THE DISCUSSION AS ABOVE, SINCE THE DISCL OSURE MADE BY THE ASSESSEE CANNOT BE SAID TO BE VOLUNTARY AND ALS O NO REASONABLE CAUSE COULD BE DEMONSTRATED BY THE ASSES SEE THE PENALTY LEVIED U/S 271 (1)(C) IS CONFIRMED. 6. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR DERIVING INCOME FROM TRADING OF PRECIOUS AND SEMI-PRECIOUS STONES. THE ASSESSEE FILED HIS RETURN OF INCOME ON 06.01.2012 DECLARING TOTAL INCOME OF RS. 1,58,970/-. THE CASE WAS SELECTED FOR SCRUTINY VIDE NOTICE DATED 27 .09.2012 AND A QUERY LETTER WAS ISSUED ON 03.09.2013 FOR FURNISHING OF B ASIS/GENERAL DETAILS. THE ASSESSEE IN RESPONSE TO FIRST QUERY LETTER DATE D 03.09.2013 FILED THE REQUISITE DETAILS ON 27.12.2013 AND SUBMITTED THAT DURING THE RELEVANT PERIOD DUE TO ADVERSE BUSINESS CONDITIONS THE ASSES SEE WAS MENTALLY DISTURBED AND COULD NOT DISCLOSE THE TRANSACTION OF SALE OF IMMOVABLE PROPERTY IN THE RETURN OF INCOME. THE ASSESSEE ON T HE SAME DAY ALONG WITH OTHER DETAILS FILED REVISED COMPUTATION OF TO TAL INCOME INCORPORATING THEREIN CAPITAL GAIN OF RS. 53,25,629 /-. THE AO AFTER MINOR ADJUSTMENTS OF RS. 2,362/- ACCEPTED THE CAPIT AL GAIN OF RS. 53,27,991/- AS DISCLOSED BY THE ASSESSEE AND MADE A DDITION OF THE ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 7 SAME TO RETURNED INCOME. THE AO SIMULTANEOUSLY INIT IATED PENALTY PROCEEDINGS U/S 271(1)(C) OF IT ACT 1961, FOR FURNI SHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME AND VIDE IMPUGNED ORDER DATED 27.08.2014 LEVIED PENALTY OF RS. 10,97, 566/-. 7. IN PENALTY PROCEEDINGS, IT WAS SUBMITTED BY THE LD AR THAT THE ASSESSEE VIDE LETTER DATED 21.04.2014 SUBMITTED THA T DURING THE RELEVANT PERIOD, THE ASSESSEE WAS SUFFERING FROM SE RIOUS DISEASES OF MENTAL DISTURBANCE AND WIFE OF THE ASSESSEE UNDER S UCH ADVERSE CIRCUMSTANCES WITHOUT HAVING ANY SPECIFIC KNOWLEDGE ABOUT THE SALE OF RELEVANT FLAT SITUATED AT MUMBAI, FILED HIS RETURN OF INCOME ON THE BASIS OF ADHOC AND INCOMPLETE INFORMATION. THE ASSESSEE I N SUPPORT OF HIS CONTENTION SUBMITTED THE AFFIDAVITS OF HIS WIFE AND SH. RAJESH VIJAY WHO FILED THE RELEVANT RETURN OF INCOME. THE APPELLANT NOT BEING WELL DID NOT OBSERVED HIS RETURN OF INCOME TILL THE DATE OF RECE IPT OF RELEVANT NOTICE U/S 143(2) OF IT ACT, 1961. AFTER RECEIPT OF NOTICE U/S 143(2), THE AR OF THE APPELLANT EXAMINED THE BANK STATEMENT AND OTHER RELEVANT RECORDS AND IT CAME TO HIS KNOWLEDGE THAT A FLAT AT MUMBAI HAS BEEN SOLD DURING THE RELEVANT PREVIOUS YEAR WHICH HAS NOT BEE N DISCLOSED IN THE RETURN OF INCOME. THEREFORE, THE ASSESSEE VOLUNTARI LY WITHOUT HAVING ANY QUERY FROM THE AO, DISCLOSED ALL THE RELEVANT F ACTS RELATING TO THE SALE OF SAID FLAT AND FILED REVISED COMPUTATION OF TOTAL INCOME BEFORE THE AO ON THE FIRST HEARING OF THE CASE. 8. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS SUBMITTED A BONAFIDE EXPLANATION FOR NOT DISCLOSING THE CAPITAL GAIN IN THE RETURN OF INCOME AND SUBSTANTIATED THE SAME BY FURNISHING AFF IDAVITS OF HIS WIFE ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 8 AND SH. RAJESH VIJAY WHO FILED THE RELEVANT RETURN OF INCOME. THE EXPLANATION OF THE ASSESSEE DULY SUPPORTED BY AFFID AVITS OF HIS WIFE AND SHRI RAJESH VIJAY HAS NOT BEEN FOUND TO BE FALSE OR OTHERWISE CONTROVERTED BY THE AO. THE AO HAS REJECTED THE EXP LANATION OF THE ASSESSEE SIMPLY FOR THE REASON THAT THE REVISED COM PUTATION OF INCOME HAS BEEN GIVEN DURING THE COURSE OF ASSESSMENT PROC EEDINGS AFTER ISSUE OF LEGAL NOTICES AND SHOW CAUSE NOTICE. IN THE CASE OF THE ASSESSEE NO NOTICE HAS BEEN ISSUED EXCEPT FORMAL NOTICE DATED 2 7.09.2012 U/S 143(2) FOR SELECTING THE CASE FOR SCRUTINY, NOTICE DATED 03.09.2013 U/S 142(1) FOR FURNISHING GENERAL AND BASIC DETAILS AND NOTICE DATED 14.11.2013 TO SHOW CAUSE FOR NON COMPLIANCE OF NOT ICE DATED 03.09.2013. THE ASSESSEE HAS DISCLOSED THE RELEVANT CAPITAL GAIN BEFORE ANY INVESTIGATION AND DETECTION ON THE PART OF THE AO. THE ADDITIONAL INCOME OF CAPITAL GAIN VOLUNTARILY DISCLOSED DURING THE COURSE OF ASSESSMENT PROCEEDINGS EVEN AFTER ISSUE OF NOTICE U /S 143(3) AND GENERAL QUERY LETTER U/S 142(1), CANNOT BE CHARACTE RIZED AS CONCEALED INCOME AND PENALTY CANNOT BE LEVIED IN RESPECT OF T HE SAME U/S 271(1)(C) OF IT ACT, 1961. 9. THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECIS IONS:- HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HAR NARAIN, I.T.A. NO. 2072 OF 2010. ACIT VS. ASHOK RAJ NATH (2013) 33 TAXMANN.COM 588 (DELHI- TRIB.) QUDAI INTERNATIONAL VS. ITO [2009] 13 MTC 622 (LUCK TRIB) SHARADA TUKARAM BHOR VS. ACIT (MUMBAI TRIBUNAL ) (I TA NO. 1871 AND 1872 MUM/2014 DATED 20.01.2017) ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 9 10. REGARDING ADDITIONAL GROUND OF APPEAL, IT WAS SUBMITTED THAT THE AO WHILE ISSUING THE NOTICE U/S 274 R.W. SECTION 27 1(1)(C) OF IT ACT 1961, HAS NOT SPECIFIED WHETHER THE ASSESSEE HAS C ONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF SUCH INCOME. THEREFORE THE NOTICE U/S 274 R.W. SECTION 271(1)(C) OF IT ACT 1961, ISSUED FOR INITIATION OF PENALTY PROCEEDINGS IS NOT VALID. IN SUPPORT, RELIANCE WAS PLACED ON DECISION OF HONBLE KARNATAK A HIGH COURT IN CASE OF MANJUNATHA COTTON (359 ITR 565), HONBLE RAJASTH AN HIGH COURT IN CASE OF SHEVETA CONSTRUCTIONS CO. PVT LTD (DB APPEA L NO. 534/2008 DATED 6.12.2016), HYDERABAD BENCH OF ITAT VIDE ORDE R DATED 04.01.2017 IN THE CASE OF SHRI NILAYA A.R. PROJECTS (ITA NO. 1572/HYD/2013) AND IN THE CASE OF SYED TAJAMUL PASHA (ITA NO. 1364/ BANG/2015 DATED 22.02.2016) . 11. THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED T HE MATTER AND SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSE D THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, REGARDING THE ADDITI ONAL GROUND OF APPEAL WHERE THE ASSESSEE HAS CHALLENGED THE INITIATION OF THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE SOLE REASON THAT THE AO DIDNT STRIKE OFF THE INAPPROPRIATE PORTION OF THE NOTICE AND WHI CH SHOWS A COMPLETE NON APPLICATION OF MIND ON THE PART OF THE AO. IN SUPPORT, THE LD AR DRAWN OUR REFERENCE TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN CASE OF MANJUNATHA COTTON (SUPRA), THE REL EVANT PARA 59-61 OF WHICH READS AS UNDER: ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 10 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDIN GS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PAS SED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDI NGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COU LD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION O F 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 O F CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE P ERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE M ADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY O N HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGH T TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEE T THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(L)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALT Y. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FORM WHERE ALL THE GRO UND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT 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 B E HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD S ATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINC IPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAG UE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON TH E ASSESSEE. ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 11 '60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, T HAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRA CT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PE NALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENAL TY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOT HER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF TH E EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(L)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUN ITY 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 I MPOSED 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 IMPOS E 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 PRINCIPLE S OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON T HE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEE DINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, T HE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 12 PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE A CT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COU RSE 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 DIF FERENT. 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 PARTICULARS. THE APEX COUR T IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMAN 156 , HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVI ED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE , WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CON CEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS T HE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROF ORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN IN FERENCE AS TO NON- APPLICATION OF MIND.' 13. FROM THE ABOVE, IT IS EVIDENT THAT HON'BLE KAR NATAKA HIGH COURT HAS HELD THAT THE PERSON WHO IS ACCUSED OF THE OFFE NCES AS STATED IN SECTION 271(1)(C) SHOULD BE MADE KNOWN ABOUT THE GR OUNDS ON WHICH ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 13 THEY INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDIN GS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(L)(C) DO NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE GROUNDS FOR LEVY OF PENA LTY ARE THUS LINKED TO THE ADHERENCE TO THE PRINCIPLES OF NATURAL JUSTICE AND IT WAS HELD THAT SUCH PRINCIPLES OF NATURAL JUSTICE SHOULD NOT BE OF FENDED. IT WAS FURTHER HELD THAT THE PENALTY U/S 271(L)(C) CAN BE LEVIED F OR TWO SPECIFIC OFFENCES; ONE IS CONCEALING THE PARTICULARS OF INCO ME AND SECOND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER CANNOT INITIATE PENALTY PROCEEDINGS FOR ONE OFFENCE AND THEN FINALLY LEVY THE PENALTY FOR ANOTHER OFFENCE, BECAUSE IN SUCH CI RCUMSTANCE THE ASSESSEE WILL NOT GET PROPER OPPORTUNITY TO EXPLAIN THE CHARGE LEVELLED AGAINST HIM. THE HONBLE HIGH COURT HAS ALSO NOTICE D THAT THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOM E CASES THERE MAY BE OVERLAPPING OF THESE TWO OFFENCES, BUT IN SUCH C ASES THE INITIATION OF PENALTY PROCEEDINGS SHOULD ALSO BE FOR BOTH THE OFF ENCES. IN THE INSTANT CASE, THE ASSESSEE HAS BEEN ISSUED A SHOW-CAUSE NOT ICE DATED 21.02.2014 ALONG WITH THE PASSING OF THE ASSESSMENT ORDER DATED 21.02.2014 WHERE THE ASSESSEE WAS MADE AWARE OF INI TIATION OF THE PENALTY PROCEEDINGS AGAINST HIM FOR BOTH THE OFFENC ES AND AN OPPORTUNITY WAS PROVIDED TO HIM TO PRESENT HIS CASE BEFORE THE AO. INFACT, THE ASSESSEE AVAILED OFF THIS OPPORTUNITY A ND A WRITTEN EXPLANATION WAS FURNISHED BEFORE THE AO ON 21.04.20 14 TO DROP THE PENALTY PROCEEDINGS. IN OUR OPINION, UNDER THE FACT S OF THE ASSESSEE'S CASE, IT MAY ATTRACT BOTH THE OFFENCES, I.E., THE C ONCEALMENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREFORE, ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 14 THE ASSESSING OFFICER RIGHTLY INITIATED THE PENALTY PROCEEDINGS FOR BOTH THE OFFENCES. SINCE THE INITIATION OF PENALTY PROCE EDINGS INCLUDED BOTH THE OFFENCES AND THE SHOW-CAUSE NOTICE ALSO INCLUDE D BOTH THE OFFENCES, THE ASSESSEE GOT THE ADEQUATE OPPORTUNITY TO EXPLAI N BOTH THE OFFENCES AND THEREFORE, THERE IS NO ILLEGALITY IN LEVYING TH E PENALTY. IT IS NOT A CASE WHERE THE NOTICE WAS ISSUED FOR ONE OFFENCE AN D THE PENALTY IS LEVIED FOR ANOTHER OFFENCE. THEREFORE, IN OUR OPINI ON, THE ABOVE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJ UNATHA COTTON & GINNING FACTORY (SUPRA) DOES NOT SUPPORT THE CASE O F THE ASSESSEE. 14. IN CASE OF SHEVETA CONSTRUCTION (SUPRA), THE S UBSTANTIAL QUESTION OF LAW FOR CONSIDERATION BEFORE THE HONBLE RAJASTH AN HIGH COURT WAS WHETHER PENALTY FOR ALLEGED CONCEALMENT OF INCOME O R FURNISHING INACCURATE PARTICULARS OF INCOME BE LEVIED WHEN LEG ALITY OF ASSESSMENT PROCEEDINGS ITSELF IS SUBJUDICE BEFORE THE HONBLE HIGH COURT AND THE QUESTION TO THAT EFFECT HAS ALREADY BEEN ADMITTED I N QUANTUM APPEAL. IN THE PRESENT CASE, THE ASSESSEE HAS NOT MOVED ANY AP PEAL AGAINST THE ASSESSMENT ORDER EVEN BEFORE THE LD CIT(A) AND THER EFORE, THERE IS NO QUESTION OF ASSESSMENT PROCEEDINGS BEING SUBJUDICE BEFORE THE HONBLE HIGH COURT. ACCORDINGLY, THE DECISION OF THE HON BLE HIGH COURT IN CASE OF SHEVETA CONSTRUCTION DOESNT SUPPORT THE CASE OF THE ASSESSEE. 15. IT IS THEREFORE A CASE WHERE THE SATISFACTION HAS BEEN RECORDED FOR BOTH THE LIMBS OF SECTION 271(1)(C) AND FINALLY , THE PENALTY HAS BEEN LEVIED FOR VIOLATION OF BOTH THE LIMBS OF SECTION 2 71(1)(C) OF THE ACT. THE INITIATION OF PENALTY PROCEEDINGS HAS HAPPENED BY RECORDING OF SATISFACTION IN THE ASSESSMENT ORDER AND THE ISSUAN CE OF NOTICE U/S 274 ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 15 IS THUS IN CONTINUATION OF RECORDING OF SUCH SATISF ACTION AND HAS THUS TO BE READ ALONG WITH THE ASSESSMENT ORDER AND NOT DIS JOINT OF THE ASSESSMENT ORDER. IT IS NOT A CASE WHERE THE PENALT Y HAS BEEN INITIATED FOR ONE LIMB AND FINALLY LEVIED IN RESPECT OF ANOTH ER LIMB. THE AO HAS BEEN CONSISTENT IN HIS APPROACH AND HIS ACTION DOES NT REFLECT ANY NON- APPLICATION OF MIND. IN LIGHT OF ABOVE DISCUSSIONS , WE THEREFORE DONOT FEEL THERE IS ANY INFIRMITY IN THE INITIATION OF PE NALTY PROCEEDINGS AS CONTENDED BY THE LD AR. THE ADDITIONAL GROUND OF A PPEAL IS THUS DISMISSED. 16. THE NEXT QUESTION THAT ARISES IS ONCE SUCH AN OPPORTUNITY IS GIVEN TO THE ASSESSEE, WHERE THE ASSESSEE FAILS TO OFFER THE EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE, T HEN THE PENALTY WILL FOLLOW AS PRESCRIBED UNDER CLAUSE (III) OF CLAUSE ( C) OF SUB-SECTION (1) OF SECTION 271. WHERE THE ASSESSEE OFFERS AN EXPLANATI ON AND SUBSTANTIATE THE EXPLANATION, THE QUESTION OF IMPOSING PENALTY W OULD NOT ARISE. EVEN IN CASES WHERE HE FAILS TO SUBSTANTIATE THE EXPLANA TION, BUT IF HE PROVES THAT EXPLANATION OFFERED IS A BONA FIDE ONE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAS BEEN DISCLOSED BY HIM, THEN, IN LAW, A DISCRETION IS VES TED WITH THE AUTHORITY NOT TO IMPOSE PENALTY. 17. IN PENALTY PROCEEDINGS, THE ASSESSEE VIDE LETT ER DATED 21.04.2014 SUBMITTED THAT DURING THE RELEVANT PERIO D, THE ASSESSEE WAS SUFFERING FROM SERIOUS DISEASES OF MENTAL DISTURBAN CE AND WIFE OF THE ASSESSEE UNDER SUCH ADVERSE CIRCUMSTANCES WITHOUT H AVING ANY SPECIFIC KNOWLEDGE ABOUT THE SALE OF RELEVANT FLAT SITUATED AT MUMBAI, FILED HIS ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 16 RETURN OF INCOME ON THE BASIS OF ADHOC AND INCOMPLE TE INFORMATION. THE ASSESSEE IN SUPPORT OF HIS CONTENTION SUBMITTED THE AFFIDAVITS OF HIS WIFE AND SH. RAJESH VIJAY WHO FILED THE RELEVANT RETURN OF INCOME. SUBSEQUENTLY, DURING THE COURSE OF ASSESSMENT PROCE EDINGS, ALL RELEVANT FACTS RELATING TO THE SALE OF FLAT AND A REVISED CO MPUTATION OF INCOME DETERMINING LONG TERM CAPITAL GAINS ALONG WITH DETA ILS OF TAXES AND INTEREST DEPOSITED THEREON WAS FILED. THE SAID EXP LANATION OF THE ASSESSEE ALONG WITH THE CONTENTS OF THE AFFIDAVITS HAVE NOT BEEN FOUND TO BE FALSE OR CONTROVERTED BY THE REVENUE AUTHORIT IES. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSES SEE WAS INCAPACITATED TO FILE HIS RETURN OF INCOME DUE TO H IS ILL-HEALTH AND INCOMPLETE RETURN WAS FILED WHICH WAS SUBSEQUENTLY REVISED BY WAY OF FILING REVISED COMPUTATION OF INCOME ALONG WITH PAY MENT OF TAXES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT SHOWS THE BONAFIDE OF THE ASSESSEE AND ACCORDINGLY, CANNOT BE MADE SUBJECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/10/2017 SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/10/2017. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DINESH KUMAR VIJAY, A-131, JANTA COL ONY, JAIPUR. ITA NO. 58/JP/2016 DINESH KUMAR VIJAY VS. ITO, JAIPUR 17 2. IZR;FKHZ@ THE RESPONDENT- ITO WARD 5(2), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 58/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR